Electricity: Ukraine and Europe September 4 – 8, 2023

Ukrainian Energy Exchange: bilateral contracts market

During the last week, 12 auctions for the purchase and sale of electricity were held at UEEX at unilateral contracts market, of which 7 in commercial section, 5 in specialized. Among imitators are: EnergoAtom Trading, Kharkiv HPP-5, Ukrhydroenergo, 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 base load with delivery in the second and third decade of September. The company failed to sell the electricity.

Kharkivska HPP-5 initiated auctions in accordance with Article 66 of the Law of Ukraine "On the Electricity Market", where it offered baseload power for delivery in September. The company was able to sell 14400 MWh of baseload at a weighted average price of 4000 UAH/MWh.

Ukrhydroenergo initiated an auction where it offered block positions (8-23) at a starting price of 4800 UAH/MWh.

During the reporting period, the Guaranteed Buyer initiated auctions offering block positions for daytime hours with delivery in September. As a result of the auction, the company sold 108000 MWh of electricity at prices ranging from 1805,87 to 3128,78 UAH/MWh with delivery in the second decade of September.

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

As of September 8, prices for the most commonly used types of sales schedules were formed, as shown in the chart below.

Market operator: day-ahead market and intraday market

During the reporting period, prices were dynamic, ranging from 3594,27 to 4314,10 UAH/MWh, within ±9% deviation from the weekly average. In general, the average weighted average price for the last week decreased compared to the same indicator of the previous week and amounted to 3995,42 UAH/MWh (-5.4%). In total, 280,35 thousand MWh were sold on the DAM during the reporting period (-22%).

During the reporting period, prices on the IDM were even more dynamic. The weighted average prices varied in the range of 2607,05 - 5304,90 MWh, and the average value of the weighted average prices for the reporting period decreased by 18,2% compared to the same period last year and amounted to 3833,13 UAH/MWh. The total volume of sales and purchases for the reporting period amounted to 16,15 thousand MWh.

European market

In the past month, the decline in prices in European electricity markets compared to the same period last year was caused by a drop in the average gas price and lower consumption. In addition, wind and solar power generation increased in almost all the analyzed markets. On the other hand, an increase in the average gas price compared to the previous month, an overall drop in solar production and a decline in wind production in markets such as Germany and France, as well as increased demand in some markets, contributed to the price increase compared to July. As a result, the average monthly price exceeded 90 EUR/MWh in almost all European electricity markets. The highest monthly price of 111,89 EUR/MWh was recorded on the IPEX market in Italy. In other markets, the average values ranged from 90,87 EUR/MWh in the EPEX SPOT market in France to 97,86 EUR/MWh in the MIBEL market in Portugal. At the same time, the largest drop occurred in the Scandinavian market - 85% and was the lowest since December 2020.

Last week, prices on European electricity markets declined compared to the previous week due to an increase in wind generation, lower average gas prices and CO2 emission rights, lower demand and normalized average temperatures. The largest price drop was recorded on the IPEX market in Italy - by 18%. In other countries, prices fell by 12% on the EPEX SPOT market in Germany and the Netherlands, on the MIBEL market in Spain and Portugal; by 16% on the EPEX SPOT market in France. The exception was the Nord Pool market in the Nordic countries with a 9,5% increase.

Solar power generation increased in all markets analyzed. Electricity generation from wind turbines in Europe in the first four days of last week provided 12,6% of the region’s needs, according to the WindEurope Association. The leading countries were Germany, Spain and Sweden, while a significant increase in wind generation was recorded in Italy. The same week, prices rose significantly in the MIBEL market, where there was a significant decline in wind energy production.

As of September 8, the price of basic electricity in France decreased and amounted to 100,71 EUR/MWh; in Hungary, the price was 107,16 EUR/MWh, in Poland 110,25 EUR/MWh. In October 2023, electricity was traded in the range of 88-106 EUR/MWh.

Monthly futures for November 2023 for electricity increased by an average of 24% in the countries analyzed. As of December 2023, prices increased by 6% on average.

Futures contract prices, EUR/MWh, 07 September, 2023

At the end of August, EU ETS prices reached an average price of 86,06 EUR/ton, which is 2,2% lower than in July.

Last week, European carbon prices fell to a one-month low while natural gas prices fluctuated sharply amid conflicting reports of a planned strike at LNG plants in Australia. Prices for CO 2 futures on the EEX market for the benchmark December 2023 contracts on Thursday, September 7, reached a settlement price of 82,93 EUR per tonne, which is 3% lower than last week.

EU Regulation imposes restrictions on ETS allowance transactions as part of security measures for the market-based "Union Registry", with a regulation coming into force on Sunday, September 10, which includes provisions for a new fee for access to the registry.

On Thursday, September 7, the spot price of thermal coal in Europe (according to API-2) amounted to 108,11 EUR per ton.

During the reporting week, Ukraine received imports from Moldova and Slovakia. Exports during daytime hours were made to Slovakia.

Public procurements

Over the past week, more than 20 electricity procurement tenders were held by customers. Sold volume of the 10 largest contracts amounted to 4,97 million kWh for a total value of UAH 24,41 million excluding VAT. The average price amounted to UAH 4,92 per kWh, excluding VAT. The largest contract was awarded to Energy Company of Ukraine JSC, which will supply 3,6 million kWh of electricity to the Black Sea branch of USPA at an initial price of UAH 4,98 per kWh, excluding VAT. Other tenders are shown in the graph below. Prices ranged from UAH 4,29 to UAH 6,13 per kWh.

News from the wholesale electricity market

News from the wholesale electricity market NEURC has prepared a mechanism for "import PSO" - a corresponding draft resolution of the Cabinet of Ministers of Ukraine has been developed, which provides for the provision of balance reliability services by the importer to the transmission system operator. According to the draft, such a service will be paid for by the transmission system operator. This is stated in the rationale for the NEURC’s decision to approve the draft resolution of the NEURC "On the marginal prices on the day-ahead market, intraday market and balancing market", which is scheduled to be considered at a meeting on September 12.
The Draft Law provides for the imposition of special obligations on: the importer in terms of purchasing electricity on the markets of the EU Member States in the amounts and within the timeframe determined by the transmission system operator, and selling imported electricity in all segments of the Ukrainian electricity market at prices prevailing in these markets or under the contract for the supply of electricity to the consumer; the transmission system operator in terms of calculating and communicating to the importer information on the forecasted hourly volumes of electricity.

NEURC continues to implement the legislation required by the REMIT Regulation. The National Energy and Utilities Regulatory Commission has approved the Procedure for Acquiring, Terminating and Suspending the Status of Data Transmission Administrator. At a meeting on September 5, 2023, the National Regulator approved the Resolution "On Approval of the Procedure for Acquiring, Terminating and Suspending the Status of Data Transmission Administrator", the draft of which was developed in pursuance of the Law of Ukraine "On Amendments to Certain Laws of Ukraine on Prevention of Abuse in Wholesale Energy Markets" No. 3141-IX dd. June 10, 2023 (REMIT Law), which transposes into Ukrainian law the provisions of Regulation (EU) No. 1227/2011 of the European Parliament and of the Council of 25 October 2011 on the integrity and transparency of the wholesale energy market.
As noted by the National Regulator, this Procedure applies to wholesale energy market participants, legal entities that are responsible for collecting, aggregating and submitting information on economic and trade operations carried out by a wholesale energy market participant in accordance with wholesale energy products, or who wish to carry out such activities, on the basis of a data transfer agreement with a wholesale energy market participant.