The price of gas, the CO2 tax and tropical temperatures have led to the fact that now there is no chance to buy electricity for next year at a price lower than 90 euros per MWh.
The average wholesale price for deliveries in 2022 will range from 80 to 85 euros per MWh.
And the electricity market in Serbia is part of the European market, says Dejan Stojcevski, technical director of SEEPEX a.d. Belgrade, commenting that the sale of electricity without the price of CO2 would lead The Electric Power Industry of Serbia (EPS) directly to ruination.
Whoever bought electricity for 2022 in March this year paid 60 euros per megawatt hour (MWh). Now the price has already reached 92 euros / MWh. Below 90 euros, there is now no chance to buy electricity for next year. With a tendency to increase. Because, as we approach the end of the year, the price rises, says Stojcevski.
“Currently, no one will give them a price lower than 90 to 95 euros per MWh. That is the current price. According to current parameters, the average wholesale price of electricity for deliveries in 2022 will range from 80 to 85 euros per MWh. It is now a new reference price in the coming period,” says Stojcevski, noting that “he personally thinks that these prices will remain in the next period, at least two to three years.”
It should be said that these projected wholesale electricity prices are much lower than 130 euros – the price at which MWh, on the wholesale market, on electricity exchanges in Southeast Europe, was sold last week.
Gas increased the price of electricity
“In general, the causes of this increase compared to the pre-pandemic period, when the price of MWh was around 50 euros, are the price of CO2, the price of gas and increased consumption due to tropical temperatures, the causes that led to a drastic increase in the price of electricity, with a tendency for it not to return to the level before the pandemic,” Stojcevski points out.
Earlier, the gas and electricity markets were separate, and now, when one gas price jumps, everything else jumps.
The technical director of SEEPEX points out that the price of gas has increased three times compared to the period from February to March this year. This indirectly affected the increase in the price of electricity, which is also produced in gas power plants.
Gas has now risen in price at auction. The price of 1,000 cubic meters of natural gas last week cost 585 dollars on the stock exchanges, which certainly influenced the jump in the price of MWh to around 130 euros.
“In essence, gas will dictate the price of electricity the most. And we will see what will happen to gas because gas storages are not filled enough,” says Stojcevski.
However, gas has already started to become cheaper, although its price will certainly depend on the start of the North Stream 2 gas pipeline and geopolitical circumstances regarding the conditions of transit through this new pipeline, that is, the quantity that Gazprom will transport through Ukraine. But, it is realistic that speculators have contributed to this astronomical price.
“The price of CO2 is currently around 56/57 euros per ton, which is roughly a pandam of the price of CO2 per MWh. This price may vary but will not be significantly lower. It can only increase, so this item remains an important parameter in determining future electricity prices in Europe,” explains Stojcevski.
Important when buying
This increase indicates the differences in price that are achieved when buying long-term contracts, for a year or more in advance and electricity sold on the stock exchange.
“There is already a big difference now. We at SEEPEX have pointed this out in recent years. We have even organized seminars for large end customers. We have indicated that it is time for end customers, talking about large consumers, to unite or start on their own. To create a trade team that will optimize the purchase of electricity. It has long been known that electricity is never bought at the end of the year. Whoever waits for the next year will always do worse. The cheapest way to buy for the next year is from February to the beginning of May,” says Stojcevski, stating that he speaks from his many years of experience.
In bilateral contracts, customers contract procurement with electricity suppliers. If they buy from a supplier they can agree on a price. If they buy on the market, for final consumption, that is the price on the stock exchange.
The current price is significantly higher compared to the pre-pandemic period. In the period of 2017, 2018 and 2019, there were peaks and falls in the price of electricity, but the average annual wholesale price (constant) was between 50 and 51 euros per MWh.
“During the pandemic, the price dropped to 39 euros. But that is not a reference case at all, because there was less consumption, the industry did not work… We know what was happening,” explains Stojcevski, emphasizing that this is the average wholesale price for Southeast and Central Europe.
In Western Europe (Germany, France…), electricity is always about 10 euros per MWh cheaper than in these countries from the Czech Republic to the south, to Greece.
Where is Serbia?
The price of electricity in Serbia depends on the price in Europe. It cannot be viewed in isolation. The Technical Director of SEPEX points out that our country is part of the European market.
“EPS is a safe and reliable supplier, but Serbia is too small to dictate a price to me,” says Stojecvski, and to those who say that EPS should sell electricity without the price of CO2, he says that it would “lead EPS directly to ruination.”
He also points out that with this wholesale price of electricity, there is no need for incentives for RES producers.
“Green energy with these prices can go to the market. Without any incentives,” Stojcevski is categorical, noting that green capacities in our region have not yet compensated for the exit of thermal power plants from production, B92 reports.
