New increase in the wholesale price of electricity – What is changing in the market

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Of Haris Fludopoulos

The price of electricity in the wholesale market moved upwards in the month of June, according to the data of the energy exchange.

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In particular, the average price of electricity in the next-day market was 240.49 euros/MWh, increased by 6.8% compared to May (225.07 euros/MWh).

It is recalled that in May and April the wholesale price of electricity had moved downwards, as the market had appeared to balance after Russia’s invasion of Ukraine and the jump in natural gas prices.

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However, in June we had the problems with the operation of the Nord Stream pipeline which once again affected the natural gas market, with the result that the turbulence also reached the electricity market.

It is noted that for today the average price of the next day’s market is expected to reach 296.62 euros/MWh with the maximum price being 419.69 euros/MWh.

The Greek price falls short of the European ones, which move significantly above 300 euros/MWh with the highest price in Slovakia (391.36 euros/MWh).

Changes in the market

However, with the changes expected to be implemented within the next few days, the day-ahead market price will not determine the compensation of all power plants.

As is well known, by imposing a ceiling on the remuneration of power producers, it is sought to decouple the prices of electricity and natural gas. Thus, with the application of the cap, each unit will not be compensated with the maximum offer that joined the system from a natural gas unit, but based on the maximum compensation limit established for it.

So while the prices of the energy exchange will not change as they will continue to be determined by the gas plants, the remaining production plants will be paid based on the ceiling that will be determined and the difference of the extra income will end up in the Energy Transition Fund in order to finance the subsidies to reduce electricity prices in the retail market.

The changes are expected to be implemented with the issuance of the relevant ministerial decision, which will determine the height of the ceiling per technology.

Source: Capital

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