Electricity: Ukraine and Europe August 14 – 18,2023

Ukrainian Energy Exchange: bilateral contracts market

During the last week, 16 auctions for the purchase/sale of electricity were held at the UEEX in the one-way auction mode, of which 6 were in commercial sections and 10 were in specialized sections. Among the initiators were represented: Energoatom-Trading, Guaranteed buyer, Ukrhydroenergo, companies of the DTEK group, USP and DSO, etc.

The Energoatom-Trading company initiated auctions in accordance with Article 66 of the Law of Ukraine "On the electricity market", where it offered a base load with delivery in September. The company was able to realize 864,000 MWh of base load at the weighted average price of UAH 3,880.49/MWh with September supply and 263,424 MWh of base load at the weighted average price of UAH 3,872.65/MWh with delivery on September 3-30.

The companies DTEK Kurakhivska TPP, Dniproenergo and Zahidenergo initiated auctions in accordance with Article 66 of the Law of Ukraine "About the electricity market", where they offered block positions with a supply period for September. The companies were able to realize 1,313,790 MWh at prices in the range of 2,255.52 - 5,254.68 UAH/MWh.

During the review period, auctions were initiated by the Guaranteed Buyer, offering block positions of daytime hours with delivery in September. According to the results, the company realized 24,300 MWh of electricity at prices in the range of UAH 2,272.73 - UAH 3,198.1/MWh.

In the commercial sections of the company, electricity was mainly purchased by the load of an individual profile.

As of August 18, prices were formed for the most frequently used types of sales charts presented on the chart.

Market operator: day-ahead market and intraday market

During the review period, the prices were dynamic, being in the range of UAH 3359.95 - 4260.20/MWh, within ±11% of the deviation relative to the average weekly value. In general, the average value of the weighted average price for the last week decreased relative to the similar indicator of the previous week and amounted to UAH 3,926.29/MWh (-5 %). A total of 345.50 MWh was sold at the DAM during the review period (-16.5%).

During the review period, prices were even more dynamic on the IDM. Average weighted prices varied in the range of 3429.25 - 4990.40 MWh, and the average value of weighted average prices for the review period decreased by 4.7% relative to the similar indicator of the previous period and amounted to UAH 4114.04/MWh. The total volume of sales during the review period was 35.69 thousand MWh.

European market

European electricity markets saw prices rise last week amid rising temperatures and concerns about LNG supplies. In addition, the drop in wind energy generation contributed to the increase in prices in most European electricity markets.

Solar generation increased on German and Spanish markets, while there was a decline in Italy.

Wind power generation in Europe in the first four days of last week provided 9.8% of the region’s needs, according to the WindEurope association. At the same time, the leading countries were Germany, Spain and Sweden.

Last week, the demand for electricity decreased, as some European countries celebrated public holidays.

As for hourly prices, several markets recorded negative prices on August 13. On August 13, from 1:00 p.m. to 2:00 p.m., the price was recorded at -0.95 EUR/MWh in Belgium on the EPEX SPOT market, and -3.79 EUR/MWh in the Netherlands.

As of August 18, the basic electricity price in France was 95.68 euros/MWh, in Hungary 108.66 euros/MWh, in Poland 113.01 EUR/MWh. As of September 2023, electricity was traded in the range of EUR 94-117/MWh.

Monthly futures for October 2023 on electricity increased by 12% in Hungary and by 20% in France and decreased by 6% in Poland. As of November 2023, prices increased by an average of 23% in the analyzed countries.

Prices of futures contracts, EUR/MWh, 08/17/2023

EUA CO 2 prices trended higher last week and set an August high amid slower trading in the summer holiday rush, while natural gas prices rose significantly. CO 2 futures on the EEX market for the benchmark December 2023 contract rose to a 13-day high on Thursday, August 17, reaching a settlement price of EUR88.84/t.

Greenhouse gas emissions from sectors covered by the EU ETS showed mixed signs of decline in the first months of 2023, as total emissions in the 27-nation bloc fell by almost 3% year-on-year overall, according to EU data published on Wednesday. Through the remainder of 2023, energy and industrial emissions continue to decline.

The spot price of thermal coal in Europe (according to API-2) on Thursday, August 17, was EUR 106.72/ton.

Australia is regaining lost coal market share, while Russia is losing its price advantage. russian federation may have to look for other sources to export its coal, given that the country had to find willing buyers amid economic sanctions imposed on the country after the military invasion of Ukraine. The average price of Russian NAR 6,000 kcal/kg coal fell from USD210.33/t FOB Pacific in 1H2022 to USD101.36/t in 1H2023, according to Platts. It averaged USD104.81 per ton between May and July, indicating a gradual increase in prices. Average Australian low-ash coal price NAR FOB Newcastle fell 5.5% y-o-y to USD117.66/t in 1H2023.

Last week, imports came to Ukraine from Moldova, Poland and Slovakia, and emergency aid was received from Romania in the amount of 1,200 MWh to cover increased demand on August 16.

Night rocket attacks damage the energy infrastructure of the front-line and border regions with the russian federation, in particular in the Kharkiv, Kherson, Dnipropetrovsk, and Donetsk regions.

Public procurement

Last week, more than 20 tenders were held for the purchase of electricity by customers. The sold volume of the 10 largest contracts is 7.75 million kWh for the total cost of UAH 36.26 million excluding VAT. In general, the average price was UAH 4.87 per kWh excluding VAT. The largest contract was awarded to "Svitlo dla vsikh" LLC, which will supply 5 million kWh of electricity to the Interregional Office of the Dnipro Reservoirs’ Protection Areas at the initial price of UAH 4.48 per kWh excluding VAT. Other tenders are shown in the graph below. Prices ranged from UAH 4.28 to 5.98/kWh excluding VAT.

News of the wholesale electricity market

"ECU" won the tender for the supply of electric power to "Ukroboronprom" for UAH 1 billion. "ECU" won the tender for the supply of electricity to "Ukroboronprom" for UAH 1 billion so JSC "Ukrainian Defense Industry" saved almost UAH 50 million during the joint purchase of electricity in the Prozorro system for about 60 of its enterprises. In the auction, which took place for three lots, six leading domestic electricity suppliers - both state and private - took part, the purchase amount exceeds UAH 1 billion, according to the press release of JSC "Ukroboronprom". The winner of the auction was the state energy trader JSC Energy Company of Ukraine (JSC ECU).

"DTEK" has increased the production of electricity by 26% over the past 3 months. "DTEK" in May-July 2023 increased electricity production by 26% compared to the same period last year, reports Energoreforma. This was announced in the press release of the energy holding on August 16. "In the last three months, largely due to the heat, DTEK Energo thermal power plants have been under increased load. In particular, in May-July this year, they generated 26% more electricity in the Ukrainian energy system than in the same period last year," the document states. As noted in the energy holding, in the midst of the repair campaign and preparation for the upcoming heating season, DTEK Energo TPP continues to support the stability of the Ukrainian energy system with its maneuvering capacities. In total, the company’s thermal power plants released about 8.4 billion kWh of electricity in January-July this year.