The Ukrainian day-ahead market price in September was €123.7/MWh
In the EU, average monthly wholesale prices for the day ahead in September 2024 mostly fell significantly compared to the previous month.
According to Ember, they were:
- Italy – €117.08/MWh (-8.8 m/m);
- France – €51.61/MWh (-5.4%);
- Germany – €78.06/MWh ( -4.8%);
- Spain – €72.54/MWh (-20.4%);
- Sweden – €15.49/MWh (+20.2%).
September trends
According to AleaSoft Energy Forecasting, September electricity prices in European markets primarily depended on the volume of renewable energy production and the level of demand in a particular week of the month.
At the end of September, weekly averages were below €70/MWh in most markets, except for the UK and Italy. The Scandinavian market registered the lowest weekly average of €19.11/MWh in the last week of the month.
Overall, in the third quarter, prices in the European electricity market increased compared to the previous quarter, despite historical records for solar energy production set in some countries. Higher gas prices, increased demand against the background of high temperatures and a decrease in wind generation led to their increase.
According to forecasts as of October 7 of The European Energy Exchange (EEX) – the Central European exchange of electricity and related products, the base settlement price of e/e futures on the German market in November 2024 will be €86.44/MWh, in French – €72.55/MWh, in Spanish – €75/MWh, in Italian – €118.3/MWh
The situation in Ukraine
In Ukraine, in September of this year, the average weighted price of purchase and sale of electricity on RDN, according to «Market Operator», decreased by 1.3% m/m – to UAH 5,664.16/MWh (€123.7/MWh – at the average monthly exchange rate of the hryvnia to the euro).
The volume of trading on RDN in the specified period decreased by 1.44%, Demand on the day-ahead market in September compared to August fell by almost 3%, and supply decreased by 0.95%.
According to the analysis of “D.Trading”, last month Ukraine reduced the import of electricity by 7% compared to the previous month – to 437 million kWh. The largest volumes came from Hungary, followed by Slovakia, and Poland in third place.
The company’s analysts noted that in September imports never reached the maximum technically permitted capacity of 1,700 MW, the maximum was 1,595 MW on September 11 at 5:00 p.m.
At the same time, the largest volume of imports arrived on September 14, when it amounted to 21.2 million kWh per day, or more than 9% of the total electricity consumption in Ukraine. In general, the disposal of the exposed intersection increased to 71% (64% in August of the current year).
As “D.Trading” noted, in September, taking into account all costs, import was economically feasible in almost 60% of hours. The lack of disconnection of consumers in Ukraine and a decrease in its consumption, a significant drop in prices on the markets of European countries were the main factors in the dynamics of electricity imports last month.
At the same time, electricity prices, along with logistics and unfavorable market conditions, remain one of the main problems for the Ukrainian mining and metallurgical complex.
In particular, Yuriy Ryzhenkov, CEO of the Metinvest group, noted in an interview for Forbes Ukraine that auctions for access to the crossing are sensational. According to him, the greater the competition for the crossing, the more you have to pay for it. In addition, these auctions are daily, that is, it is impossible to buy a cross for a month, half a year or a year and have predictability. The CEO of the company believes that Ukraine needs long-term contracts.
General Director of ArcelorMittal Kryvyi Rih, Mauro Longobardo, for his part, announced that the company will reduce capacity in October-December of this year due to the increase in electricity prices and the slowdown in exports. In the IV quarter, one blast furnace will remain in operation – BF No. 8, and 2-3 sintering machines.
In addition, on October 1, the National Commission for State Regulation in the Energy and Utilities Sectors (NEURC) began a regulatory procedure for revising price caps. The regulator approved the draft resolution proposing an increase in the maximum price for RDN and DAM from 11:00 a.m. to 5:00 p.m. by 23% – up to UAH 6.9 thousand/MWh (it was UAH 5.6 thousand). Price caps on these segments in other periods of the day should remain unchanged. The proposal is explained by the need to attract electricity imports to balance the power system and avoid disconnection of consumers. If the draft resolution is adopted, it will enter into force on October 31.
Europe
According to S&P Global, demand for electricity in the EU will grow by 2% year-on-year in the fourth quarter, but this growth should be offset by supply at the expense of nuclear power. In the structure of energy consumption in the main markets, wind generation will play a leading role, which will lead to greater price volatility. In the hourly price distribution, the leading role is still played by solar energy.
At the same time, the French nuclear power industry is returning to normal indicators – it did not show high results for several winters in a row.
Note that the European Commission’s report on the State of the Energy Union for 2024, which was published on September 11, notes that wind energy has overtaken gas to become the second largest source of electricity in the EU after nuclear, and that by the first half of 2024, renewable energy sources produced 50 % of electricity in the block.
At the same time, it is said that it is necessary to intensify efforts to improve energy efficiency and solve the problem of high energy prices. This is key to increasing the competitiveness of the bloc’s industry and accelerating investment in Europe’s integrated infrastructure networks, which are essential for the electrification of the European economy.
Fullness of gas storages
According to the AGSI platform, European gas storage facilities were more than 94.56% full as of October 7, 2024.
Analysts consider the main risks for the European gas market this winter to be geopolitical tensions, including in the Middle East, the possibility of new supply disruptions, and increased competition from Asia for LNG cargoes. In addition, a cold start to the winter (after two mild winters in Europe in a row) can lead to withdrawal of stocks already at the beginning of the season. At the same time, weak macroeconomics, greater involvement of renewable energy sources, and increased energy efficiency can positively affect gas consumption levels.
The market is preparing for the termination of Russian gas supplies through Ukraine – at the end of 2024, the term of the five-year transit agreement between the parties expires. As reported, Azerbaijan is conducting negotiations on the transit of gas through Ukraine to Europe, but analysts express doubts that it will be possible to reach new agreements by the end of this year, or call it unlikely.
As for the price of gas in the near term, the Swiss UBS, for example, raised its price expectations in Europe for the fourth quarter of 2024 to €42/MWh. UK-based Energy Aspects forecasts the average day-ahead TTF price this winter to be around €40/MWh this winter.
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