Electricity: Ukraine and Europe 8 - 12 May, 2023

Ukrainian Energy Exchange: bilateral contracts maket

Last week, UEEX held 19 auctions for the purchase/sale of electricity in the unilateral auction mode, of which 7 were in commercial sections and 12 in specialized sections. Among the initiators were: Ukrhydroenergo, Centrenergo, Guaranteed Buyer, DTEK Group companies, USPs and DSOs, etc.

During the reporting period, the Guaranteed Buyer initiated the auction, offering block positions for daytime hours with delivery in May. As a result, the company sold 93445 MWh of block positions at prices in the range of 2500 - 2607,63 UAH/MWh.

Last week, Ukrhydroenergo offered electricity for delivery in May. The company was able to sell 330 MWh of maximum-load block positions at a weighted average price of 3680,00 UAH/MWh, 11440 MWh of minimum-load block positions at a weighted average price of 1830,62 UAH/MWh.

Last week, Ukrhydroenergo offered electricity for delivery in May. The company was able to sell 330 MWh of maximum-load block positions at a weighted average price of 3680,00 UAH/MWh, 11440 MWh of minimum-load block positions at a weighted average price of 1830,62 UAH/MWh.

DTEK Kurakhivska TPP, Dniproenergo and Zakhidenergo initiated auctions in accordance with Article 66 of the Law of Ukraine "On the Electricity Market", where they offered block positions for delivery in May. The companies were able to sell a total of 1086,6 thousand MWh at prices in the range of UAH 1555,2-2960/MWh.

In the commercial sections, companies mainly purchased electricity for individual loads.

As of May 12, prices for the most commonly used types of sales schedules were formed, as shown in the chart.

Market operator: day-ahead and intraday markets

During the reporting period, prices were dynamic, ranging from UAH 2625,97 to UAH 2933,75/MWh, within ±5% deviation from the weekly average. In general, the average weighted average price for the last week increased compared to the same indicator of the previous week and amounted to UAH 2828,60/MWh (+5,4%). In total, 402,2 thousand MWh were sold on the DAM during the reporting period (-0,3%).

During the reporting period, prices on the DAM were more dynamic. The weighted average prices varied in the range of 2851,59 - 3247,80 MWh, and the average value of the weighted average prices for the reporting period increased by 4% compared to the same period last year and amounted to 3124,71 UAH/MWh. The total volume of sales and purchases for the reporting period amounted to 17,3 thousand MWh.

European market

Last week, electricity prices on European markets were lower compared to the previous week. This was facilitated by lower prices for CO2 and natural gas, which fell to almost the lowest level in 2 years. At the same time, lower wind generation in markets such as Germany and France kept prices high in these countries.

Solar power generation increased in Germany and decreased in Spain and Italy. Historical maximum of hourly solar photovoltaic power generation was recorded in Italy: on Saturday, May 6, from 13:00 to 14:00, the maximum value of 13400 MWh was reached.

Electricity generation from wind turbines in Europe in the first four days of last week covered 14,7% of the region’s needs, according to the WindEurope Association. The leading countries were Germany and Spain.

As for electricity demand, it was low last week due to the favorable period when there is no need to use air conditioners and the heating season is also over. As for the UK market, the weekend strengthened the downward trend in the UK.

In terms of hourly prices, German market reached negative hourly prices on Sunday, May 7, from 12 p.m. to 3 p.m. The lowest hourly price of EUR 0,99/MWh was recorded from 1 p.m. to 2 p.m.

As of May 12, the price of basic electricity in France was 96,73 EUR/MWh, in Hungary - 105,18 EUR/MWh, in Poland - 95,86 EUR/MWh. In June 2023, electricity was traded at prices in the range of 95 - 115 EUR/MWh in the above countries.

Monthly futures for July 2023 for electricity increased by an average of 7,6% in the analyzed countries. As of August 2023, prices increased by 4% in Hungary and decreased by 1% in France.

Futures contract prices, EUR/MWh, May 11, 2023

European carbon prices were on the rise last week. UK carbon allowances remained lower than their EU counterparts amid supply-side pressure and political uncertainty in the country. Prices for CO 2 emission rights futures on the EEX market for the benchmark December 2023 contracts fell for the first time in a week on Thursday, May 11, 2023, and reached a settlement price of EUR 88,38 per tonne, which is 4,4% higher than last Thursday.

Spot price of coal in Europe has been declining over the past week and fell to a new 15-month low. On Thursday, May 11, the price of coal in Europe (API-2) amounted to EUR 108,61 per ton, which is 5,8% less than last Thursday.

Last week, Ukraine exported electricity to Poland and Moldova, while Slovakia direction was closed. No imports were carried out.

The aggressor continues to attack the energy infrastructure and shelling along the front line, which left some consumers without electricity.

Public procurements

Over the past week, more than 40 electricity procurement tenders were held by customers. Sold volume of the 10 largest contracts amounted to 9,89 million kWh for a total value of UAH 36,61 million excluding VAT. The average price amounted to UAH 3,84 per kWh, excluding VAT. The largest contract was awarded to Cherkasyenergozbut, which will supply 5,4 million kWh of electricity to the Housing and Maintenance Department of Cherkasy at an initial price of UAH 3,94 per kWh, excluding VAT. Other tenders are shown in the graph below. The prices ranged from UAH 3,09 to 4,58 per kWh, excluding VAT.

Wholesale electricity market news

The alliance, launched last month at the Nuclear Energy Forum in Japan and linked to the G7, "aimed at driving Putin out of the international nuclear energy market" with the UK, US, Canada and Japan, hopes to strengthen domestic nuclear energy sectors. The sale of enriched uranium to European countries is considered unacceptable, as Moscow has also supplied fuel for reactors in Bulgaria, the Czech Republic, Finland, Slovakia and Hungary. And France, which is not dependent on Russia for nuclear fuel and security of supply, last year bought enriched uranium from Moscow for 359 million euros, which is more than three times the amount it spent in 2021, and the country continues to cooperate strategically in Russian projects to build nuclear power plants, etc.

Germany and Estonia are planning to develop a 750 km-long hybrid wind power project. German transmission system operator (TSO) 50Hertz and Estonian TSO Elering have signed a letter of intent (LoI) to jointly develop a 750 km long hybrid interconnector project that will cross the Baltic Sea and link the two countries. The 2 GW Baltic WindConnector will connect the Estonian mainland coast with the Mecklenburg-Vorpommern coast (northeast Germany) and transport electricity generated by wind farms off the Estonian Baltic Sea coast.

The shortage of electricity from repairs at NPPs will be compensated by TPPs and imports. Energoatom has announced the start of a repair campaign to prepare for the 2023/2024 heating season. According to the nuclear company, the shortage of electricity from nuclear power units will be compensated by the commissioning of thermal power plants and imports from abroad. As noted by Energoatom, nuclear generation during the 22/23 heating season provided about 55% (and on some days this figure reached even 65%) of the total electricity consumption in Ukraine. In winter, each of the power units, with the exception of Zaporizhzhya NPP, operated at the maximum capacity possible at that time.