Electricity: Ukraine and Europe October 02 – 06, 2023
Ukrainian Energy Exchange: bilateral contracts market
During the last week 11 auctions for the purchase and sale of electricity in unilateral auction mode were held at UEEX, of which 5 in commercial section, and 6 in specialized. Among the initiators were: Guaranteed Buyer, Centrenergo, Ukrhydroenergo, Starokonstantinovtsukor, USPs and DSOs, etc.
Centrenergo initiated auctions in accordance with Article 66 of the Law of Ukraine "On the Electricity Market", where it offered baseload and block positions for delivery in October. The company was able to sell 3125 MWh of baseload at a weighted average price of 3700 UAH/MWh.
Ukrhydroenergo initiated an auction where it offered block positions with a delivery period of October 7-15. As a result, the company was unable to sell electricity.
LLC STAROKOSTIANTYNIVTSUKOR initiated an auction offering baseload with a delivery period of October 2, having sold 240 MWh at a weighted average price of 3700 MWh.
During the reporting period, the Guaranteed Buyer initiated auctions, offering block positions for delivery in October. According to the results of the auction, the company sold 17000 MWh of daytime electricity at prices in the range of 2002,38 - 2426,7 UAH/MWh for the delivery period of the second decade of October, 3700 MWh of block positions (1-7) at a weighted average price of 2200 UAH/MWh for the delivery period of October 11-31.
In the commercial sections, the companies bought/sold electricity on individual profile loads.
| Trades type | Sales volume, MWh |
|---|---|
| Auctions pursuant to Article 66 of the Law of Ukraine On Electricity Market | 3 365 |
| Commercial section | 21 344,6 |
| Special sessions for the sale of electricity generated from alternative energy sources | 20 700 |
| Totaly | 45 409,6 |
As of October 6, prices for the most commonly used types of sales schedules were formed, as shown in the chart.
Market operator: DAM and IDM
During the reporting period, prices were less dynamic, ranging from 3804,35 to 4439,94 UAH/MWh, within ±7% deviation from the weekly average. In general, the average weighted average price over the past week increased compared to the same indicator of the previous week and amounted to UAH 4147,26/MWh (+4,7%). In total, 302,4 thousand MWh were sold on the DAM during the reporting period (-7%).
During the reporting period, prices on the DAM were even more dynamic. The weighted average prices varied in the range of 3717,17 - 5097,41 MWh, and the average value of the weighted average prices for the reporting period increased by 9% compared to the same period last year and amounted to 4529,57 UAH/MWh. The total volume of sales and purchases for the reporting period amounted to 16,7 thousand MWh.
European market
Last week, prices on European electricity markets declined, driven by lower average gas prices and increased wind power generation in some markets. Electricity markets will enter the last quarter of 2023 with more generation capacity than in 2022.
Solar power generation decreased in all analyzed markets. Electricity production from wind turbines in Europe covered 19% of the region’s needs in the first four days of last week, according to the WindEurope Association. The leading countries were Germany, Poland, the UK and Sweden. Wind generation in Italy and France decreased.
Demand in most of the analyzed markets increased last week, with the exception of France, Germany and Italy. In the fourth quarter of 2023, Europe is expected to see the first significant year-on-year increase in electricity and gas demand since the crisis, but prices remain sensitive to possible gas supply disruptions, despite the fact that the level of gas storage in storage facilities is already above 95%. Temperatures in Northwest and Southern Europe are forecast to be consistently above average during the first week of October and beyond, delaying the start of the heating season and thus a significant increase in demand.
On Sunday, October 1, negative hourly prices were recorded in the markets of Germany, Belgium, France, and the Netherlands. On the Scandinavian market, negative hourly prices were recorded on September 30 and October 1.
As of October 6, the price of basic electricity in France amounted to 82,68 EUR/MWh. The forecasts for French nuclear power for the 4th quarter of 2023 are about 12 GW higher year-on-year than last year’s production. In Hungary, the price of basic electricity as of October 6 was 108,68 EUR/MWh, in Poland 93,37 EUR/MWh. As of November 2023, electricity was trading in the range of 98-103 EUR/MWh.
Monthly electricity futures for December 2023 increased by an average of 12% in Hungary and France and decreased by 2% in Poland. As of January 2024, prices in Hungary and France increased by 14% on average.
Futures contract prices, EUR/MWh, 05.10.2023
| Type | Contract | Date | France | Hungary | Poland |
|---|---|---|---|---|---|
| Base | Моnth | Nov/23 | 98,09 | 107,08 | 103,22 |
| Dec/23 | 112,30 | 117,92 | 101,59 | ||
| Jan/24 | 131,76 | 131,14 | - |
Last week, on Wednesday, European EUA carbon prices rose above EUR 81 per tonne on the background of recovering energy prices. Prices for CO2 futures on the EEX market for the benchmark December 2023 contracts reached a settlement price of EUR 80,51 per tonne on Thursday, October 5. In the fourth quarter, prices are likely to recover starting in December due to seasonal demand and reduced auction liquidity.
On Thursday, October 5, the spot price of thermal coal in Europe (API-2) amounted to EUR 110,58 per ton. Russia has redirected some of its coal exports to China (and India) from Western countries that have banned Russian exports. Australian coal is currently trying to regain its share of the Chinese market. Currently, exports to China remain insignificant: in July 2023, about 200 thousand tons of Australian hard coal were exported, compared to a monthly average of 3,6 million tons in 2019. Higher coal production in Australia is expected to be offset by lower spot prices. With the opening of new deposits, production will increase to 178 million tons in both 2023-2024 and 2024-2025 from 168 million tons in 2022-2023.
Last week, enemy shelling damaged power lines and cut off power to consumers in seven regions of Ukraine. Electricity production from renewable energy sources was also restricted. Exports were made to Slovakia and Moldova, while imports came from Slovakia.
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 8,81 million kWh for a total value of UAH 46,5 million excluding VAT. The average price amounted to UAH 4,81 per kWh, excluding VAT. The largest contract was awarded to Euro Trade Energy LLC, which will supply 4,1 million kWh of electricity to the Housing and Maintenance Department of Poltava at a starting price of UAH 6 per kWh, excluding VAT. Other tenders are shown in the graph below. Prices ranged from UAH 4,12 to UAH 6,04 per kWh.
News of the wholesale electricity market
The Regulator approved the Procedure for registration of wholesale energy market participants, which is one of the important documents within the framework of REMIT implementation. Market participants must register by February 1, 2024. The decision was made at a meeting on October 2. The registration procedure is currently underway. The resolution comes into force on October 15. According to the resolution, NPC Ukrenergo, JSC Ukrtransgaz, LLC GTS Operator of Ukraine, JSC Market Operator, SE Guaranteed Buyer, electricity distribution system operators, gas distribution system operators, within 10 working days from the date of entry into force of this resolution, must take measures to notify potential participants in the wholesale energy market of the need for their registration.
Starting from October 1, EU trading partners must report CO2 emissions. On Sunday, the EU carbon tax entered a trial period. As of October 1, EU trading partners will have to report greenhouse gas emissions associated with the export of iron, steel, cement, aluminum, fertilizers, hydrogen, and electricity. According to the Carnegie Europe Center, the impact is likely to be most severe for the EU’s largest trading partners - China, the UK, Turkey, India, South Korea, and the US. However, Ukrainian businesses will be exempt from paying taxes because of the war. A representative of the European Commission confirmed that the legislation contains "provisions to address exceptional and unprovoked situations with devastating consequences for economic and industrial infrastructure in Ukraine." "The CBAM will encourage industry worldwide to adopt greener technologies," EU Economic Commissioner Paolo Gentiloni said in a statement.
