Energy rates bode coming pain
August energy prices bode ill for September’s electricity prices. In the first six days of August, and for no apparent reason, the average price of electricity in the wholesale market was €128.98 per megawatt-hour, higher even than traditionally expensive Italy, where the average price was €123 per MWh.
On Monday, the mean price in the Greek market climbed to €143.65/MWh, with a spike of €313.14/MWh during nighttime. On Tuesday, the average price eased a little, to €131.27. By comparison, electricity wholesale prices in the French market averaged €43.61/MWh and in Belgium €66.01. On the same day, prices in Italy exceeded Greece’s at €139/MWh, and were also more expensive in Albania, Kosovo and Serbia.
In the current mix of domestic power generation, natural gas is top, with a 36.3% share, followed by renewable energy sources (29%), imports (which shot up to 18.3%), lignite (6.6%) and hydroelectric power (5.7%).
The high volatility of prices in the Greek market raises question, as there is no apparent reason, in the whole of Southeastern Europe. Things were different in July, when sector managers linked price hikes to the windfall tax (€10/MWh) imposed by legislation on the use of natural gas for power generation. Electricity producers had warned of the effect of power cuts on generation costs and retail prices. On average, a hike of €10 in power generation leads to electricity retail prices rising by €20/MWh.
In defending the windfall tax, Prime Minister Kyriakos Mitsotakis has railed against “profits plucked out of thin air that fill corporate pockets and artificially inflate consumers’ energy bills.”
A positive development is the drop in the price of natural gas on the TTF future contracts exchange. Prices for September deliveries fell below €36/MWh on Tuesday and below €40/MWh for November deliveries. Prices for Brent oil are also declining, as fears about a recession in the US, the biggest consumer of oil, more than make up for fears that a wider conflict in the Middle East will lead to price hikes. And prices have also taken a hit by fears that a weaker-than-expected global economic recovery will adversely affect the consumption of fossil fuels.
