Suppliers fear record prices at next week’s NOME auction

Prices at next week’s NOME auction, the third for the year, scheduled for July 18, are forecast to reach unfavorably high levels, even record levels, for independent electricity suppliers despite the considerable quantity of 400 MWh/h planned to be offered, a key factor being rising wholesale electricity prices around Europe, still only partially reflected in the Greek market.

CO2 emission right costs are on an upward trajectory and could rise further, pundits believe, while oil and natural gas price levels have remained steadily high.

These factors have driven up prices of forward contracts in Germany, setting the European beat, as well as regional markets directly influencing local conditions, namely Hungary, the base shaping price levels of interconnected Balkan countries leading to Greece, and Italy, a main market sharing a grid interconnection with Greece.

Prices of forward contracts for August are higher than those of July, even though higher consumption levels are traditionally recorded in July.

Forward contracts for this year’s fourth quarter and all of 2019 are rising in value at a rate that is greater than price increases being recorded on a daily basis in the spot market, traders have pointed out.

Besides these external factors, other Greek market concerns are also believed to be motivating firms for aggressive bids at next week’s auction. The currently bigger NOME auction amounts are set to shrink at the end of the year. The amount of electricity to be offered at future auctions once the main power utility PPC’s bailout-required sale of lignite units has been completed remains unclear. This is expected to motivate auction participants to bid hard next week and secure electricity amounts covering future needs.

It also remains uncertain whether NOME-related electricity exports will be permitted in the future. This factor should also motivate suppliers to buy large quantities now.

The NOME starting price has been increased to 36.36 euros per MW/h, from 32.05 euros per MW/h, as of next week’s auction.

Price levels at the previous NOME auction reached 42.05 euros per MW/h. Extremely high NOME auction prices reached late in 2017, up to 45.2 euros per MW/h, no longer seem outrageous, given the current market conditions, and will soon be sorely missed, one pundit stressed.