wholesale electricity prices

Energy transition proving to be expensive, 30% price hike seen

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Unprecedented price rises in the wholesale electricity market, up by as much as 80 percent between July 1 and August 8 and tripled since the beginning of the year, will inevitably impact consumers with imminent increases of approximately 30 percent, market officials have told energypress.

The average wholesale electricity price for this year has been estimated at between 80 and 90 euros per MWh, up 30 percent compared to levels in 2019, used as the base year as price levels in pandemic-hit 2020 were distorted by the unprecedented conditions.

Households and businesses should soon expect elevated electricity bills as a result of wholesale-related clauses triggered by suppliers in response to the sharp wholesale electricity price increases recorded since early July.

These developments, largely attributed to European Commission policies implemented to combat climate change, have prompted comments by key energy market officials, including Evangelos Mytilineos, chairman and chief executive of the Mytilineos group, who recently warned “the energy transition will be expensive.” Another official noted this is a “new era of higher-priced electricity.”

CO2 emission right costs have more than doubled since the beginning of the year, reaching levels, at present, of between 54 and 55 euros per ton.

Natural gas prices have doubled since January at the TTF Dutch trading platform, to 42 euros per MWh.

Greek market officials widely acknowledge the country has no other option but to gradually end its reliance on lignite and fossil fuels, while stressing, however, the need for swifter legislative revisions facilitating quicker RES penetration and energy storage development.

 

 

Authorities on alert, heatwave leads to record price levels

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The country’s latest prolonged heatwave conditions have made huge impact on the energy market, driving up today’s wholesale electricity average price to 136 euros per MWh and the price of natural gas to a 16-year high, once again testing the grid’s limits, as well as those of suppliers and their household and business customers.

Today’s wholesale price ascent to 136 euros per MWh adds to the steady rise of recent days, which began the week at 93 euros per MWh on Monday, following an average level of 75 euros per MWh last week. The increase represents an 83 percent wholesale electricity price increase in a week.

Continual use of air condition systems over the next few days of extreme hot weather, that has been forecast, is expected to further increase electricity demand and price levels, placing on high alert market players and officials, from the operators to RAE, the Regulatory Authority for Energy, the energy ministry, power utility PPC and independent energy producers.

Despite the increased pressure, grid sufficiency, for the time being, appears to be under control. No power station damages have been reported, while PPC’s lignite-fired power stations, nowadays representing a high-cost option, along with big RES units, have been mobilized, creating safe conditions for the challenging evening hours, from 7pm until midnight.

At present, supply is exceeding demand, typically reaching levels of approximately 9.5 GW in recent days, all hot.

 

 

Wholesale ascent prompting hefty retail electricity price hikes

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The activation, by electricity suppliers, of wholesale cost-related clauses included in their supply agreements is prompting significant retail increases, seen rising, compared to three months earlier, by 40 percent for the medium-voltage category and at least 33 percent for the low-voltage category.

Medium-voltage tariffs, previously at levels ranging between 64 and 65 euros per MWh, have reached 90 euros per MWh, a 40 percent increase, since the wholesale cost-related clauses were triggered by suppliers earlier this year, and are expected to rise further.

In the low-voltage category, concerning households, tariffs have increased from levels ranging between 70 and 90 euros per MWh, depending on the supplier and agreement, and will need to be raised to 120 euros per MWh for the recovery of increased wholesale costs.

Higher wholesale electricity prices have been attributed to a combination of factors, including higher CO2 emission right and natural gas prices, as well as a sharp rise in demand.

The situation is exacerbated during periods when RES output is subdued, prompting record-level price levels in the wholesale electricity market.

Last week, CO2 emission right prices set a new record of 58.25 euros per ton, up from 32 euros per ton in December, an 82 percent increase.

Natural gas prices have hit a 13-year high, TTF contracts reaching 29 euros per MW/h following levels of between 15 and 17 euros per MW/h in spring, a 93 percent increase. In June last year, gas prices had sunk to record-low levels of as low as 4.9 euros per MWh.

Last week, the average clearing price on the energy exchange ranged from 100.33 to 118.56 euros per MWh, up from 63.16 euros per MWh a month earlier.

In June, the average day-ahead market price on the energy exchange was 83.47 euros per MWh, more than double the level of 40.74 euros per MWh a year earlier.

Wholesale price level starts July on high, consumers facing cost hikes

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Wholesale price levels, significantly increased in recent months, have begun the month of July at an extremely high level of 105.42 euros per MWh, a level expected to persist in coming weeks, which, if so, will lead to further electricity-cost increases for consumers.

Electricity suppliers have activated wholesale cost-related clauses as protection against higher wholesale price levels. Consumers are expected to encounter electricity cost increases in the next round of billing, expected over the next few weeks.

June’s wholesale price level, which averaged 83.47 euros per MWh, compared to 63.16 euros per MWh in May, will impact the next round of electricity bills for households.

The situation is even worse for medium-voltage consumers as June’s 83.47 euros per MWh average will reach close to 100 euros per MWh once extra costs for suppliers are added.

If current wholesale price levels persist for a further week or two, as sector officials have forecast, then the average price for July is estimated to reach 90 euros per MWh, well above the June average.

This would represent a 40 percent increase in the clearing price level over just three months.

 

 

Wholesale prices up nearly 20% in first 5 months, retail levels impacted

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Wholesale electricity market prices rose by nearly 20 percent in the first five months of the year, official market data provided by power grid operator IPTO has shown.

These wholesale price increases directly impact retail price levels for consumers who have opted for floating-tariff supply agreements linked to wholesale price-related clauses.

The overall cost of electricity in the wholesale market rose 19.1 percent between January and May, from 64.111 euros per MWh to 76.373 euros per MWh.

Electricity prices in the day-ahead and intraday markets rose by 14.1 percent between January and May, from 55.612 euros per MWh to 63.499 euros per MWh, the data showed.

Discrepancy cost nearly doubled during this period, rising from 0.836 euros per MWh to 1.643 euros per MWh.

Power utility PPC, which, until now, has incorporated CO2-price clauses into its electricity bills, has announced it will adopt wholesale price-related clauses in August.

PPC asked to replace CO2 clause with wholesale clause

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Power utility PPC is facing pressure by RAE, the Regulatory Authority for Energy, to replace its CO2 emission rights price clause with a wholesale electricity price clause adopted by all rival suppliers.

PPC’s decision to activate, early in May, its CO2 emission rights clause in response to rallying CO2 emission right prices has prompted regulatory issues, the authority contends.

PPC was asked, late last month, to explain its decision, as part of a series of meetings organized by the authority with all  suppliers.

RAE, demanding detailed data, is examining whether irregularities exist, the legality of these clauses, and if consumers have been misled.

Independent suppliers have also needed to explain their decisions to activate wholesale price clauses included in  supply agreements. Like CO2 emission right prices, wholesale electricity price levels have also risen.

The authority has received numerous complaints by consumers over costlier electricity bills.

PPC’s low-voltage power bills have risen by levels of between two and three euros since its activation of the CO2-related clause.

Though PPC, the dominant retail player, was the last to activate its clause, it was the first to be summoned by RAE.

CO2 emission right prices have persisted at elevated levels of over 52 euros per ton in recent times, peaking with a record high of 56.65 euros per ton on May 14, before easing slightly in recent days. CO2 emission right prices dropped to 50.14 euros per ton yesterday.

 

Wholesale electricity price ascent a major concern for industry

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Wholesale electricity market prices have made further increases in recent times, driven by rising carbon emission right prices, which have exceeded 50 euros per ton.

Over the past few days, not including Sunday, the wholesale market’s day-ahead price rose well above 60 euros per MWh on energy exchange, reaching as high as over 72 euros per MWh last Thursday.

Besides the impact of increased carbon emission right prices, the energy market is also being pressured by higher gas prices, driven by greater usage of natural gas-fueled power stations being anticipated.

Natural gas prices have risen from 16 to 23 euros per MWh over the past few days.

This increase in wholesale electricity prices is directly impacting the retail electricity market, energy-intensive industrial consumers, both in the medium and high-voltage categories, already feeling the effects.

Given the energy market’s current uncertainty, suppliers are limiting the duration of contracts offered to three months.

The industrial sector is voicing concern about ambiguity ahead and rising energy costs that threaten to severely undermine the competitiveness of producers.

The activation, by suppliers, of carbon emission cost clauses included in agreements have increased industrial electricity prices by as much as 20 euros per MWh in recent times.

Though the industrial sector is compensated for this additional cost, compensation calculations are based on the previous year’s price levels, meaning industrial enterprises will end up covering a large percentage of the recent electricity cost increase.

Based on latest calculations, industrial enterprises will be compensated just 9 euros per MWh for the recent 20 euro per MWh hike.

PPC triggering carbon cost clause as CO2 right prices soar

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Higher wholesale electricity and carbon emission right prices are applying sustained pressure on the electricity market, forcing suppliers to continue activating related clauses incorporated into customer supply terms.

Over the next 12 months, wholesale electricity price levels are forecast to rise to 89 euros per MWh in the low-voltage category and roughly 79-80 euros per MWh in the medium-voltage category.

In response to an ongoing surge in CO2 emission right prices, power utility PPC recently decided to finally activate a CO2-related clause after holding back for months. The move is seen increasing the cost of PPC’s electricity bills to be issued in May by two to three euros, sources told energypress.

CO2 emission right prices reached a new record level of more than 52 euros per MWh yesterday, rising by nearly 3 percent in a day. They have approximately doubled over the past six months and registered a 23 percent increase in the last month, alone.

In February, PPC had announced it would not trigger a CO2-related clause for low-voltage supply, but has now been forced to do so as a result of this persisting rise in price levels.

The more recent rise in CO2 emission right prices has been attributed to several factors, including a gradual rise in consumption levels as the European economy begins to recover, weather conditions, and a new, more ambitious, EU carbon emission reduction target, set last month, of at last 55 percent by 2030.

Consumers returning to PPC, led by wholesale-linked hikes

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Higher wholesale electricity prices, prompting independent suppliers to activate wholesale-cost clauses included in their supply agreements to avoid losses, are tightening up the market by leading disappointed consumers back to the power utility PPC, a clear regression in the effort to establish a broader, more competitive field of players, latest data has indicated.

Consumers opting to leave independent suppliers and return to PPC rose by 56 percent in the first quarter of 2021 compared to the equivalent period a year earlier, market data obtained by energypress has shown.

The number of consumers leaving independent suppliers for any other supplier increased by approximately 40 percent in the first quarter of 2020, the data showed.

This increase in consumer returns to PPC is expected to be reflected in forthcoming market-share data, market officials believe.

Last year, the wholesale market price, represented, at the time, as the system marginal price, ended April last year at 38.02 euros per MWh, whereas this year, in the form of the recently launched target model’s day-ahead market, the wholesale price in April has exceeded 63 euros per MWh.

Increased CO2 emission right costs and elevated TTF and Brent prices are factors that have driven wholesale electricity prices higher. So, too, are higher balancing costs, currently more than double levels of previous years.

Wholesale electricity prices for the next twelve months are seen averaging 89 euros per MWh in the low-voltage category and 79-80 euros per MWh in the medium-voltage category.

PPC, which has never achieved its commitment to lower its market share to less than 50 percent, is offering customers significant discounts at below cost, and, as a result, hampering the market liberalization process and further narrowing the profit margins of independent suppliers, a prominent market official has told energypress.

RAE, the Regulatory Authority for Energy, has the authority and responsibility to take action against suppliers selling electricity at  below cost and protect consumers against misleading offers, the official added.

Wholesale electricity cost up 8% in 1Q, surcharges double

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The cost of wholesale electricity averaged 65.412 euros per MWh in the first quarter of 2021, up 8 percent compared to the equivalent period a year earlier, when the level averaged 60.67 euros per MWh, data provided by power grid operator IPTO has shown.

It should be pointed out that a direct price comparison of all components making up wholesale cost during these two quarters is not possible as, during this time, the structure of the wholesale electricity market changed from a mandatory pool system to the target model.

For example, a minimum RES-supporting surcharge burdening wholesale costs by an average of 3.4 euros per MWh during the first quarter last year has since been abolished. Also, the market-clearing price fell to 0.72 euros per MWh in the first quarter from 2.11 euros per MWh in the equivalent period a year earlier.

Even so, the reduction in these costs was outweighed by the increase in wholesale electricity prices. The total cost in the day-ahead and intraday markets averaged 55.17 euros per MWh in the first quarter this year, compared to last year’s average cost of 50.39 euros per MWh in the mandatory pool.

Surcharge costs also increased, averaging 9.53 euros per MWh in the first quarter this year, double the level of 4.78 euros per MWh a year earlier.

Particularly high prices registered late in 2020, during the early days of the target model launch, have eased so far this year. Last November and December, surcharge costs reached 17 and 16.09 euros, respectively.

Electricity consumption fell by 6 percent in the first quarter this year, compared to a year earlier, to 12.39 TWh from 13.175 TWh, as a result of lockdown measures amid the pandemic.

Suppliers unimpressed by plan ending PPC lignite monopoly

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Independent electricity suppliers have remained unimpressed by measures taken to end stare-controlled power utility PPC’s exclusive access to lignite, noting resulting lignite-generated electricity amounts offered to third parties are too small to bring about changes to competition.

The country’s independent suppliers had until yesterday to respond to a 15-question questionnaire forwarded by the European Commission as part of a market test on the effectiveness of the measures, recently agreed on between Brussels and new energy minister Kostas Skrekas.

Certain respondents explained that low-priced lignite electricity purchases, even at levels well below day-ahead market price levels, would not offer benefits as they cannot offset extremely higher wholesale electricity prices, pushed up by increased balancing market costs.

Some of the vertically integrated suppliers, not facing problems by the wholesale price shifts, noted the measures would end the prospects of a futures market operating at the energy exchange any time soon.

RAE wants measure of balancing market distortion cost

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RAE, the Regulatory Authority for Energy, has requested power grid operator IPTO to calculate the financial impact of balancing market distortion costs since November’s launch of new target model markets.

RAE has since decided to impose restrictions on balancing market offers. These are expected to be published in the government gazette today or tomorrow, enabling their implementation three days after the date of publication.

RAE estimates it will have implemented the balancing market restrictions by the end of this week.

It remains to be seen if RAE’s request towards IPTO for a measure of the higher balancing market costs incurred by suppliers will result in retroactive returns for affected parties dating back to the early-November launch of the target model.

Non-vertically integrated electricity suppliers, severely impacted by the increased balancing market costs that resulted in higher wholesale market prices, are demanding retroactive rebates.

PPC to hold back on CO2 cost clause until at least March 31

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Power utility PPC, facing rising CO2 emission costs, will not activate a related clause included in low-voltage supply agreements for protection until at least March 31, energypress sources have informed.

Otherwise, the overwhelming majority of the country’s households would soon be subject to significant electricity cost increases as CO2 emission costs have been on the rise over the past four months or so.

State-controlled PPC’s low-voltage supply agreements have included a CO2 emission clause since November 1, 2019.

Yesterday, carbon emission futures were priced at 32.78 euros per ton, slightly below a level of 35.14 euros per ton in mid-January.

CO2 emission costs have risen consistently since first hitting levels of 29 euros per ton in November, 2020.

According to recent forecasts by ICIS, specializing in commodity pricing, the upward trajectory of carbon emission costs will continue over the next three years, averaging 39.24 euros per ton in 2021, before skyrocketing to levels of 46 euros per ton in 2022 and 50 euros per ton in 2023.

PPC’s CO2-cost clause has already been activated for its medium and high-voltage supply.

The corporation plans to reexamine its CO2 clause freeze for low-voltage consumers beyond March 31.

Contrary to PPC, independent suppliers have incorporated wholesale market price clauses, not CO2 emission cost clauses, into their supply agreements.

Independent suppliers have activated their clauses as a result of higher balancing market costs. Their low-voltage consumers have consequently faced electricity bill increases ranging from 7 to 30 percent.

Consumers paying the price for balancing market turbulence

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Low and medium-voltage consumers – households, businesses, small-scale producers and industrial producers – are paying the price for the target model’s persisting market turbulence that has led to higher wholesale prices, especially in the balancing market, nearly three months after the launch of new markets.

Interventions made by authorities have yet to fully resolve issues and offer market stability.

Additional costs have been passed on to consumers despite no official price-hike announcements by electricity suppliers.

In the medium-voltage category, prices have risen to levels of between 67 and 69 euros per MWh from 59 to 61 euros per MWh prior to November’s launch of target model markets, introduced as a step towards harmonizing Greece’s market with EU markets.

The market turbulence has also overwhelmed consumers in the low-voltage category, where prices have risen consistently.

With the exception of the power utility PPC, whose prices have remained steady as the company’s supply contracts do not include wholesale market-related clauses, independent suppliers have passed on their elevated electricity purchasing costs to consumers through higher tariff rates. Most independent suppliers include wholesale market clauses in their supply agreements.

Making matters more troubling and confusing for consumers, independent suppliers each employ different wholesale market clause-activation levels and resulting pricing formulas, meaning it is difficult to tell whether their supply terms are being adhered to or not.

Price hikes by independent suppliers have ranged from 7 to 35 percent, electricity bills sent to energypress by frustrated consumers show.

At present, there is no sign of any price de-escalation. The cost of wholesale electricity in the balancing market has remained on an upward trajectory. Last week (January 18-24), price levels averaged 10.82 euros per MWh, up from 7.77 euros per MWh in the previous week.

The wholesale market clauses of independent suppliers are expected to keep producing price hikes for some time even if possible additional measures by RAE, the Regulatory Authority for Energy, lead to an overall price de-escalation. This is due to a latency between the wholesale clearing procedure and clause activation.

 

Wholesale prices in Greece well over European average in 3Q

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Wholesale electricity prices in Greece during the third quarter of 2020 were three times over the €16/MWh European average, based on the Nord Pool power exchange, a European Commission report covering European electricity markets for this period has shown.

The report also traces the market’s 3Q rebound following a heavy slump in the preceding quarter.

Average prices rebounded at a slower pace in southeast Europe, compared to other regions, before reaching pre-pandemic levels in September as a result of weak demand and high production of wind energy and hydropower facilities, according to the Brussels report.

The average price in the third quarter rose by 43 percent, against 2Q, to €43/MWh, and was 30 percent lower, annually.

European price shifts in August moved in coordination, while the price gap between Greece and the European average narrowed significantly in 3Q as a result of the use of lignite-fired units and weak demand.

This gap vanished in September as a result of stronger wind energy output, which exceeded one TWh for the first time. As a result, prices in the region were between €46 and €47/MWh in September.

As for energy-mix developments, lignite-based production in Greece experienced a decreased share, captured by natural gas-fueled output.

In southeast Europe, the lignite-based output share contracted to 29 percent in 3Q from 35 percent in the equivalent period a year earlier; the gas-fueled sector’s production share rose to 20 percent from 18 percent; and the RES sector’s share of the energy mix increased to 34 percent from 30 percent.

Household electricity tariffs in Greece averaged €16.54/MWh (not including taxes and surcharges), while the country’s average for industrial tariffs was €10.62/MWh, the report showed.

Balancing market prices down for third successive week

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Balancing market price levels have fallen considerably for a third consecutive week, between December 21 and 27, latest figures published by power grid operator IPTO have shown.

According to this data, the balancing market price averaged 7.18 euros per MWh for the seven-day period, considerably lower than levels of about 10.5 euros per MWh registered a week earlier.

RAE, the Regulatory Authority for Energy, is making an effort to normalize the target model’s new markets, launched two months ago.

Balancing market prices rose sharply during the first few weeks of the launch, especially troubling non-vertically integrated suppliers and forcing the authority to prepare a price ceiling for producer offers.

The recent downward trajectory in balancing market prices has been interpreted as an effort for price restraint by producers.

RAE now considers that it should wait before imposing tough restrictions on producer offers.

 

 

Wholesale electricity soared to over €83/MWh in November

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The average cost of wholesale electricity in November was 50.1 percent higher than the average for the year, official market data just released by power grid operator IPTO has shown.

Wholesale electricity prices averaged 83.095 euros per MWh in November, well over the current year’s average of 55.332 euros per MWh, the data showed.

Of November’s 83.095-euro average, 57.284 euros concerns the day-ahead and intraday markets.

Surcharge costs in November were also well over the average level for 2021, reaching 16.456 euros per MWh last month compared to this year’s average of 5.665 euros per MWh.

The year’s lowest average wholesale electricity cost, over a month, was recorded in June, at 38.677 euros per MWh. The second-highest monthly average, below November’s peak, was recorded in January, at 67.326 euros per MWh.

Electricity consumption fell to levels below 4 million MWh for five months this year, in April, May, June, October and November, according to the IPTO data.

 

Suppliers want lower price limits for producers, retroactive returns

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Electricity suppliers are demanding a further reduction to a price ceiling proposed by RAE, the Regulatory Authority for Energy, for balancing market offers by gas-fueled producers, and, in addition, also want an upper limit of 3.5 euros per MWh imposed on compensation for this service.

This 3.5-euro compensation rate per MWh, which reaches approximately 5 euros per MWh when system-loss charges are added, is one of the highest in Europe, suppliers contend.

Suppliers also want electricity and balancing market cost limits to apply retroactively as of November 1, 2020 with returns of resulting amounts owed by the end of this accounting year.

Non-vertically integrated electricity suppliers have reacted strongly against sharply increased balancing market costs and far higher wholesale electricity prices since the launch of the target model’s new markets several weeks ago.

Three of the country’s non-vertically integrated electricity suppliers took part in public consultation staged by RAE, the Regulatory Authority for Energy, to present their objections and proposals, energypress sources informed. The procedure ended yesterday.

 

EVIKEN requests balancing market restrictions for at least 6 months

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EVIKEN, the Association of Industrial Energy Consumers, wants a price ceiling imposed for at least six months in the balancing market, warning producers are seeking to elevate industrial electricity tariffs despite the absence of any corresponding production cost increases.

Restrictive measures for a three-month duration, as proposed by RAE, the Regulatory Authority for Energy, in its related public consultation procedure would not suffice, EVIKEN warned.

The association, in a letter submitted to the public consultation procedure, also requested retroactive implementation of a price ceiling in the balancing market, beginning November 1, 2020.

Balancing market costs have risen sharply since the launch of new target model markets six weeks ago, pushing up wholesale and retail electricity prices.

The electricity market’s current structure enables oligopolistic practices that are not subject to monitoring, EVIKEN noted in its letter.

RAE consultation on balancing market restrictions ends today

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RAE, the Regulatory Authority for Energy, will need to make decisions following today’s conclusion of its public consultation on a price ceiling proposed by the authority for electricity producer offers in the balancing market.

The authority held a series of meetings yesterday with all producers operating gas-fueled power stations and will now need to decide on whether to incorporate observations made by producers into its plan as part of the effort to resolve issues that have become apparent during the first six weeks of the target model’s new markets, including the balancing market. Wholesale electricity prices have risen sharply.

Producers have tabled a number of varying, even conflicting, proposals. Some producers insist that the imposition of any restrictive measure runs contrary to the free-market principles promised by the target model. Others believe any restrictions should be set at low levels, but not as low as levels proposed by RAE.

Producers believe the balancing market’s problem is linked to energy quantities not price restrictions, warning that supply sufficiency problems could result during periods of high demand if levels as low as those proposed by RAE are eventually set.

Balancing market restrictions have applied until recently in more mature markets such as those of Belgium and the Netherlands. Balancing market conditions differ from country to country as respective levels of flexibility vary.

 

 

RAE discusses balancing market ceiling with producers

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RAE, the Regulatory Authority for Energy, is staging a series of meetings today with major-scale electricity producers to discuss its proposal, forwarded for public consultation last Thursday, for the imposition of a price ceiling on offers made by producers in the balancing market. Its price levels have risen sharply since a launch several weeks ago as part of the target model’s new markets.

Representatives of three electricity producers, power utility PPC, Protergia and Elpedison, all vertically integrated, have been invited by the authority to separately present their views on its price-ceiling proposal before they submit their official views to the matter’s public consultation procedure by tomorrow morning’s 11am deadline.

Producers operating gas-fueled power stations are generally believed to oppose the prospect of a price ceiling on their offers, as they consider the balancing market to be a useful tool measuring supply and demand in the electricity market, as is the case around Europe.

RAE has attached a three-month limit on the duration of its price-ceiling proposal. Restrictive measures such as the authority’s proposal are generally not embraced by the European Commission, as RAE chief executive Thanassis Dagoumas has admitted.

Non vertically integrated electricity suppliers, hit hard by price rises in the wholesale electricity market, of which the balancing market is a component, have called for the restrictive measure to take retroactive effect. This is considered an unlikely prospect by market officials.

Many critics of the target model preparation procedure had warned that its new markets should not begin operating unless a RAE monitoring mechanism is in full working order.

Latest market data published by power grid operator IPTO showed a mild de-escalation of balancing market price levels to between 12 and 13 euros per MWh for December 7 to 13, the new target model’s sixth week, but these levels are still regarded as being excessive.

CO2 right prices up 39% in 45 days, adding to wholesale market price ascent

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CO2 emission right prices have hit new records, trading at levels of over 30 euros per ton in recent days for a rise of 39 percent over the past month and a half that has contributed to the wholesale market price ascent.

These elevated CO2 right levels peaked on Tuesday, at 32.02 euros per ton, well over a price of 23.05 euros per ton recorded just weeks ago, at the end of October.

The upward trajectory of CO2 emission right costs is also contributing to even higher prices in Greece’s wholesale electricity market.

Last Wednesday, the day-ahead market’s average price exceeded 80 euros per MWh, rising further to 93 euros per MWh hour yesterday.

If CO2 emission right trading prices persist at levels of more than 30 euros per ton, power utility PPC will activate a related wholesale price clause incorporated into its supply agreements.

Besides the increase in CO2 emission right costs, the Greek day-ahead market has followed the upward trajectory of other European markets, where the combination of higher demand and deteriorating weather conditions is pushing price levels higher.

According to Greek energy exchange data for today’s day-ahead market, the price will average 82.31 euros per MWh, peaking at 114.1 euros per MWh and dropping as low as 44.38 euros per MWh.

 

Market restrictions on the way for electricity cost reduction

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Energy minister Costis Hatzidakis’ recommendations to gas-fueled electricity producers for price restraint in the market have proven to be just partially effective, prompting RAE, the Regulatory Authority for Energy, to forward for public consultation restrictive measures, which, when legislated, will limit the levels of offers by producers in the balancing market.

Balancing market costs have risen sharply over the past six weeks, since the launch of target model markets, leading to elevated wholesale electricity prices that are now being passed on to the retail market, affecting consumers in the mid and low-voltage categories – households and businesses.

Sixth week target model market data made briefly available yesterday by power grid operator IPTO before being swiftly removed from the company website admittedly showed a de-escalation of price levels compared to unrealistically high levels reached in recent weeks, but, on average, these latest levels remained considerably high.

Taking this latest data into consideration, along with sharp price hikes recorded in the day-ahead market, the energy ministry is fully aware of the fact that electricity market prices could spin out of control if action is not taken.

The package of measures forwarded by RAE for public consultation is intended to restore market rationalization. It remains to be seen if these measures will prove effective.

Non vertically integrated electricity suppliers, hit hard by the increase in wholesale prices, are pushing for retroactive implementation of these upcoming restrictions.

 

Consumers hit with tariff hikes of over 20% in low, mid-voltage

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Sharply higher wholesale electricity prices registered over the past five weeks or so in the energy exchange’s new target model markets have, to a great extent, been quietly passed on by suppliers to consumer tariffs in the household, business and industrial categories, without any related announcements  from suppliers.

Price hikes by electricity suppliers have applied to approximately 35 percent of total electricity consumption, during this period, while tariff hikes have exceeded 20 percent in the low and mid-voltage categories.

In the low-voltage category, suppliers have activated clauses enabling tariff increases when wholesale price levels exceed certain levels.

Very few independent electricity suppliers, both vertically integrated and not, carry fixed-tariff agreements in their portfolios, exposing most consumers to wholesale electricity price fluctuations.

On the contrary, power utility PPC, representing roughly 65 percent of overall consumption, does not include wholesale price-related clauses in its supply agreements, meaning its tariffs have remained unchanged over the past few weeks.

Instead, PPC includes clauses linked to emission right prices in international markets. These have remained relatively steady in recent times.

Even if wholesale electricity prices happen to deescalate in the next few weeks, a likely prospect, some latency should be expected in any downward tariff adjustments by suppliers.

Numerous consumers have lodged complaints with RAE, the Regulatory Authority for Energy, over the tariff hikes by suppliers. Complaints by suppliers against energy producers setting excessively high prices in target model markets have also been made.

EVIKEN chief warns of wholesale market crisis impact on industrial sector

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The head official of EVIKEN, Greece’s Association of Industrial Energy Consumers, has warned of dangers faced by the industrial sector as a result of higher wholesale electricity prices and serious balancing market issues.

Balancing market costs have spun out of control amid the pandemic, whilst the market, as currently structured, enables players to achieve windfall profits by differentiating their offers in the day-ahead and balancing markets, Antonis Kontoleon, the EVIKEN chief, pointed out in comments to energypress.

Players are overstating grid needs or understating RES output projections, or doing both, a tactic that further increases the need for far greater energy quantities and leads to higher energy prices, Kontoleon warned.

 

Target model balancing cost skyrockets, suppliers on edge

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Balancing costs in the electricity market have exceeded rational limits, skyrocketing to 57 million euros in the fifth week of the target model after totaling 71 million euros during the model’s first four weeks of operation.

Stubbornly high price levels in the wholesale electricity market have created perilous conditions that could lead non-vertically integrated suppliers to bankruptcy, while consumers, beginning with the mid-voltage category, now face tariff hikes as a consequence.

Balancing market costs between November 30 and December 6 doubled compared to a week earlier.

Despite energy minister Costis Hatzidakis’ warning of intervention to producers, whose overinflated offers have prompted this ascent, balancing market costs on December 5 and 6 exceeded 20 euros per MWh, well over levels of between 3 and 4 euros per MWh prior to the target model.

The target model, designed to ultimately homogenize EU energy markets into a single unified market, has been pitched by the Greek government as a price-reducing tool.

Though authorities have played down the price ascent of recent weeks, describing it as a nascent target model abnormality that will settle into place and not prompt consumer tariff hikes, suppliers, under severe pressure as a result of sharp cost increases, have called for immediate measures.

Suppliers have warned they will take legal action against all responsible parties in letters forwarded to the RAE, the Regulatory Authority for Energy, the energy ministry and power grid operator IPTO.

RAE held a meeting yesterday with major-scale producers, who defended their actions, according to sources. The authority limited its reaction to proposals, the sources added.

Ministry set to intervene if wholesale prices do not fall

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The energy ministry is seriously examining the prospect of imposing a price ceiling, next week, on wholesale electricity prices if they do not deescalate over the next three days.

Wholesale electricity prices have risen sharply since last month’s  launch of the target model, pitched by the government as a price-reducing tool.

Day-ahead market prices for today – based on offers made prior to on online meeting between energy minister Costis Hatzidakis and electricity producers – fell mildly to 77 euros per MWh from 90 euros per MWh on Thursday.

If current prices do not fall further, it is a matter of time before suppliers pass them on to the retail market. Prior to the target model, wholesale electricity price levels ranged between 55 and 60 euros per MWh.

Some suppliers are considering to activate cost-related clauses for their tariff prices, while others have done so already, sources informed.

Producers contend the ascent in wholesale electricity prices reflects actual market conditions, adding that their power stations were previously incurring operational losses under the preceding pricing system.

However, energy ministry officials believe producers are exploiting certain rules to artificially raise prices. Hatzidakis, the energy minister, has urged producers to heed the government’s call or face intervention as of Monday.

Wholesale prices surging with target model, ceiling considered

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The target model, pitched by the government as a price-reducing tool ahead of its recent launch one month ago, is developing into a major problem for the energy market as it has sparked a continual rise in wholesale electricity prices, which, if not brought under control, will eventually be rolled over to households and the industrial sector.

Mid-voltage tariffs are on an upward trajectory, while in the low-voltage category, many electricity suppliers are now reshaping clauses to incorporate increased costs.

The day-ahead market price for today reached 90 euros per MWh, up from 74 euros per MWh yesterday, and, prior to the target model, levels ranging between 55 and 60 euros per MWh.

This upward price surge has prompted strong concerns, even bankruptcy fears, among electricity suppliers who are not vertically integrated. Meanwhile, this worrying development has coincided with diminishing water levels at hydropower plant reservoirs.

The energy ministry has called for restraint from producers, warning it may need to intervene. The ministry’s secretary-general Alexcandra Sdoukou, in initial talks with producers yesterday, requested an end to overinflated prices, warning that a price ceiling may need to be imposed if the results are not satisfactory.

Whether such intervention could be implemented for an extended period remains unclear as measures of this nature are forbidden by the European Commission.

Producers content with target model markets, suppliers edgy

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Any nervousness felt by producers over the target model’s new markets ahead of their November 1 launch are swiftly being quelled by rational trading results. On the contrary, non-vertically integrated suppliers have experienced cost increases and, as a result, are concerned about their company prospects.

Although it still too early to tell, electricity producers believe day-ahead market prices are reflecting actual conditions, rising with shortages and falling with any oversupply.

Day-ahead market prices began at 60.44 euros per MWh on November 11, fell as low as 41.11 euros per MWh on Saturday and rose to 68.36 euros per MWh for today.

These price levels for the day-ahead market, known as the System Marginal Price under the previous system, are regarded as being at rational levels.

Producers have also expressed satisfaction over the balancing market, a largely unknown entity prior to the target model’s launch. Prices have been high, enabling units with flexibility to ensure solid earnings.

Day-ahead market prices are projected to fall, which would subsequently limit electricity imports and require domestic power stations to operate for longer hours.

Higher earnings for producers mean greater costs for suppliers. Non-integrated suppliers are concerned about their prospects under such conditions.

Target model wholesale prices up as uplift charges at €8.55/MWh

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Uplift charges rose to reach a total of 8.55 euros per MWh during the first week of the model, significantly pushing up wholesale electricity price levels.

One of three uplift charges, applied to share costs of national grid losses, reached 1.39 euros per MWh in the first week of the target model, the Greek electricity market’s most significant reform, enabling market coupling with equivalent European markets.

The second uplift charge, applied to share capacity balancing costs, reached 2.02 euros per MWh.

A third uplift charge, for additional balancing costs, reached 5.14 euros per MWh.