Electricity: Ukraine and Europe August 5 – 9, 2024

Ukrainian Energy Exchange: bilateral contracts market

Last week, UEEX held 13 auctions for the purchase/sale of electricity in the unilateral auction mode, including 7 in commercial sections and 6 in specialised sections. The initiators included: Guaranteed Buyer, Ukrhydroenergo, Chornobyl district heating companies, DSOs and TSOs, etc.

Ukrhydroenergo initiated the auctions, offering base load with different delivery periods for August. According to the results of the auctions, the company sold 33504 MWh of baseload at prices in the range of 5112,12 - 5220,5 UAH/MWh.

During the reporting period, initiated auctions ME TKE CHCC, offering base-load with delivery in August. According to their results, the company sold 14400 MWh of electricity at a weighted average price of 5000 UAH/MWh with the delivery period from 12 to 31 August.

In addition, in the specialised section last week, the Guaranteed Buyer offered block positions of daytime hours with annual delivery for August. As a result of the auction, the company sold 91850 MWh of block positions at prices ranging from 1586,15 to 4390,05 UAH/MWh.

In the commercial sections, the companies mainly purchased/sold electricity to individual loads.

As of 9 August, the prices for the most commonly used types of sales schedules were as follows.

Market operator: day-ahead and intraday markets

During the review period, the day-ahead market prices were less volatile, ranging from 4901,34 to 6782,98 UAH/MWh. Overall, the average weighted average price over the last week increased by 6.2% compared to the same indicator last week and amounted to 6042,82 UAH/MWh. The highest daily price was 6782,98 UAH/MWh on 6 August, and the lowest was 4901,34 UAH/MWh on 5 August. Sales volume for the reporting period 3 August - 9 August amounted to 428,72 thousand MWh, (-3,22%).

During the reporting period, prices on the IDM were volatile. The weighted average prices varied in the range of 4532,15 - 6667,95 UAH/MWh, and the average weighted average price for the reporting period increased by 6,3% compared to the same period last year and amounted to 5812,59 UAH/MWh. The total volume of purchases and sales for the reporting period amounted to 30,31 thousand MWh.

European market

Although the general trend of the week was upwards, most markets recorded negative hourly prices on 4 August. The main reason for last week’s price increases was the rise in gas prices and the persistence of high CO2 prices. In addition, there was an almost universal reduction in wind power generation.

Spot electricity prices in Europe fell by more than 1% on Thursday amid lower demand ahead of the weekend. The German spot price for electricity closed at EUR 93,81/MWh, while the French DA market price was set at EUR 78,49/MWh. Electricity generation from wind turbines in Europe averaged 7,6% of the region’s needs over the first four days of last week, according to the WindEurope association. The largest volumes were generated by the following countries: France, Spain, Germany, Sweden, Norway, and Portugal.

In Europe, solar power generation decreased by 267,8 GWh in the first four days of last week compared to the same period of the previous week and totalled 4 358,3 GWh. On Monday, 5 August, the French market again broke the historical record for solar power generation with 129,3 GWh.

Demand for electricity in the main European electricity markets varied heterogeneously. Demand for electricity decreased in the Spanish, Portuguese, Polish, Italian and French markets. Over the first four days of last week, pan-European demand declined to an average of 292,3 GW.

In terms of hourly prices, the markets in Belgium, Germany and the Netherlands recorded negative hourly prices on Sunday, 4 August. On 8 August, the Italian IPEX market recorded the highest daily average price so far in 2024 at EUR 133,75/MWh.

As of 9 August, the price of basic electricity in France was EUR 23,79/MWh; in Hungary: 85,77 EUR/MWh; in Poland: EUR 84,06/MWh.

As of September 2024, prices were in the range of EUR 62-102/MWh in the countries analysed.

Monthly electricity futures for October 2024 increased by an average of 9,7% in France and Hungary and decreased by 1,6% in Poland. As of November 2024, prices increased by 17,8% in the analysed countries.

Germany’s benchmark energy contract Cal ’25 closed last Thursday, 8 August, at EUR 97,66/MWh. Similarly, the French equivalent contract was EUR 82,17/MWh.

Futures contract prices, EUR/MWh, 08.08.2024

Last week, the EU carbon market was not affected by any fundamental influences and trading was "restrained" amid uncertain geopolitical tensions, which supported the gas TTF. On 8 August, the price of EU carbon permits settled at EUR 71,06 per tonne, down 0,2% from the previous period. On 9 August, the EUA’24 price traded higher at EUR 71,08 per ton, driven by gas TTF contracts.

According to Michelle Della Vigna, an analyst at Goldman Sachs, carbon prices in the EU Emissions Trading System (ETS) could reach EUR 130 (USD142) per ton by 2028. In the next 5 years, the European carbon market will no longer be dependent on gas prices, as significant LNG supplies in the bloc will cut gas prices in half. This, along with a reduction in ETS allowances, will spur a revival of European heavy industry, which will increase carbon dioxide emissions and push prices up.

At the same time, BloombergNEF analysts predict that prices could approach EUR 150 by 2030 due to increased compliance obligations and market tightening.

On 8 August, the spot price of thermal coal in Europe (according to API-2) was EUR 111,78 per ton.

Last week, Ukraine received imports from Slovakia, Romania, Hungary, Poland, and Moldova. There were no exports.

Public procurement

Over the past week, more than 10 tenders were held for the purchase of electricity by customers. The volume of the 10 largest contracts totalled 2,05 million kWh for a total value of UAH 12,21 million excluding VAT. The average price was UAH 6,42 per kWh, excluding VAT. The largest contract was awarded to SC ENERGY GROUP LLC, which will supply 750 000 kWh of electricity to the Southern Branch of SE USPA at a starting price of UAH 5,37 per kWh, excluding VAT. Other tenders are shown in the graph below. Prices ranged from UAH 5,37 to UAH 8,33 per kWh.

Новини оптового ринку електроенергії

News from the wholesale electricity market
A 1,8 MW turbine at a wind farm has been put into test operation in the Zakarpattia region, the first in the region. "It (the wind farm - IF-U) is equipped with a 4,8 MW turbine, has a tower height of 120 m and a rotor diameter of 152 m. One such windmill has the potential to provide electricity to up to 3000 households," said the State Energy Supervision Inspectorate of Ukraine (Derzhenergonadzor). According to the company, the total installed capacity of the planned wind farm will be 80 MW, and the amount of electricity produced will be enough to supply 50 000 households annually. According to the Ukrainian Wind Energy Association (UWEA), as of the beginning of 2024, the total installed capacity of Ukrainian wind farms was 1,9 GW, of which 71% were located in the temporarily occupied territory. In 2022-2024, three new wind farms with a capacity of 238 MW were commissioned.

The Romanian Ministry of Energy this week approved "Contracts for Difference"
"Contracts for Difference (CfD) are long-term contracts between electricity producers and consumers that will stabilise producers’ revenues, aimed at facilitating the distribution of 5 GW of wind and solar capacity through competitive tenders by 2025. The CfD support mechanism will guarantee a minimum level of profit to project owners. Its bidding process will set the strike price, while the base price will be calculated as the market weighted average price of electricity on the DAM.