Electricity: Ukraine and Europe October 16 – 20, 2023

Ukrainian Energy Exchange: the bilateral contracts market

During the last week, 15 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 9 were in specialized sections. Among the initiators were represented: Energoatom-Trading, Guaranteed buyer, Centerenergo, Ukrhydroenergo, Aquaresurs, Starokostyantinivtsukor, USP and DSO, etc.

Energoatom-Trading 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 November. The company was able to sold 28,080 MWh with a weighted average price of UAH 3913.08/MWh.

Centerenergo initiated auctions in accordance with Article 66 of the Law of Ukraine "On the electricity market", where he proposed base load and block positions with delivery in October. The company was able to realize 3835 MWh of base load at the weighted average price of UAH 3804.82/MWh, 1030 MWh. by block positions (17-9) at a weighted average price of UAH 4,210/MWh, 664 MWh by block positions (17-7) at a weighted average price of UAH 4,050/MWh.

The Ukrhydroenergo company initiated auctions where it offered block positions with a release period of October. According to the results, the company was able to sold 5400 MWh of block positions (8-16) at a weighted average price of UAH 3,229.47/MWh.

Aquaresurs initiated an auction where it offered a block position (8-24) with a delivery period in the third decade of October, selling 1309 MWh at a weighted average price of UAH 4,800/MWh.

The Starokostyantinivtsukor company initiated an auction where it offered base load with a delivery period in October, selling 265 MWh. at the weighted average price of 3,553 MWh.

During the review period, auctions were initiated by the Guaranteed Buyer, offering block positions with November delivery. According to the results of the auctions, the company sold 49,500 MWh of daytime electricity at prices in the range of UAH 2,757.5 - UAH 3,546.53/MWh.

In the commercial sections of the company, the purchase/sale of electricity was carried out by the load of an individual profile.

As of October 20, 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, prices were dynamic, being in the range of UAH 3,218.86 - 4,453.28/MWh, within ±15% 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 3,912.96/MWh. (+12.8%). A total of 358,900 were sold at the DAM during the review period. MWh (+5.2%).

During the review period, prices were even more dynamic on the IDM. Average weighted prices varied in the range of 2730.65 - 5484.56 MWh, and the average value of weighted average prices for the review period decreased by 13.3% relative to the similar indicator of the previous period and amounted to UAH 4026.21/MWh. The total volume of sales during the review period amounted to 27.1 thousand MWh.

European market

Prices in European electricity markets held high last week, driven mainly by volatile natural gas trading amid conflicting reports about supply risks affecting Europe’s pipeline network. The trend was also supported by demand growth in most markets and a general decline in solar energy production. In the short-term perspective, experts note a possible further rise in prices, as the above-mentioned factors are joined by the influence of lower average temperatures, as the weather forecast in Europe indicates cooling.

Last week, solar energy generation decreased, compared to the previous week, in the main European electricity markets. Wind power generation in Europe in the first four days of last week provided 21.3% of the region’s needs, according to the WindEurope association. At the same time, the leading countries were Germany, France, Spain and Great Britain.

Demand increased in most analyzed markets last week, except Germany.

As for hourly prices, on Monday, October 16, hourly prices above 200 EUR/MWh were recorded in all analyzed markets, with the exception of the markets of Portugal and Scandinavia. On this day, the highest hourly prices were registered from 19.00 to 20.00. A price of EUR 240.00/MWh was reached on the markets of Germany, Belgium, France, Italy and Holland. On French and Italian markets, this price was the highest since August 24. On the other hand, in the Spanish market, an hourly price of EUR 220.00/MWh was reached on October 16 from 19:00 to 20:00, which was the highest price since the end of January.

As of October 20, the basic electricity price in France was 86.11 EUR/MWh, in Hungary: 105.63 EUR/MWh, in Poland 84.79 euros/MWh. As of November 2023, electricity was traded in the range of 99-124 EUR /MWh.

Monthly futures for December 2023 on electricity increased by an average of 6%. As of January 2024, prices in Hungary and France increased by 18% on average.

Prices of futures contracts, EUR/MWh, 10/19/2023

European carbon prices stabilized and trended lower last week, despite energy markets being hit by the conflict between Israel and HAMAS and damage to the Balticconnector gas pipeline between Finland and Estonia, which renewed concerns about the vulnerability of Europe’s underwater gas pipelines. CO 2 futures prices on the EEX market for benchmark December 2023 contracts hit a settlement of EUR 81.76/t on Thursday, October 19, down 4% from the previous reading.

The spot price of thermal coal in Europe (according to API-2) on Thursday, October 19, amounted to EUR 129.16/ton, which is 2% higher than the previous indicator.

Last week, as a result of enemy shelling, electricity was cut off in eight regions. Exports were made to Slovakia and Moldova. Imports came from Slovakia.

Public procurement

Over 60 tenders for the purchase of electricity by customers were held last week. The sold volume of the 10 largest contracts is 4.86 million kWh for a total cost of UAH 22.8 mln excl. VAT. In general, the average price was UAH 4.76 per kWh excluding VAT. The largest contract was received by "Tolk Ukraine" LLC, which will supply 1.06 million kWh of electriciry to the KP "Boyarka Main Production Department of Housing and Communal Services" of the Boyarka City Council at the initial price of UAH 4.48 per kWh excluding VAT. Other tenders are shown in the graph below. Prices ranged from UAH 4.34 to 6.23/kWh.

News of the wholesale electricity market

A joint auction for the crossing with Romania will be held on November 2. "The first auction for the sale of access to the interstate crossing between Ukraine and Romania in the new format will take place on November 2. The date of the auction was chosen by our Romanian colleagues, as their legislation provides a deadline for the preparation of market participants. The auction will be joint for Ukrainian and Romanian companies and will be held on the Ukrenergo platform. The day of delivery is November 3," Volodymyr Kudrytskyi, the chairman of the board of NEC "Ukrenergo", wrote. Joint auctions with Romania will be held on the platform of NEC "Ukrenergo". For other areas (Hungary, Poland, Slovakia), auctions will be held at JAO a little later. The NEC itself is planning to start from January 2024. But, according to the Ukrainian operator, there are delays on the part of European colleagues.

The British energy regulator Ofgem has approved a modification of the British Balancing and Settlement Code (BSC). Virtual Lead Parties (VLP) have now gained access to the wholesale market to provide flexibility. Before that, they could offer services only within the framework of the balancing mechanism. Around 15 VLPs have entered the UK market since 2019, when entry into the balancing mechanism began. These VLPs will now be able to trade on the wholesale electricity market a new type of settlement volume known as deviation volume.