This year will be in the history of the electricity market with the largest price records in the last 10 years, Rodika Prokhorova, the company’s senior market analyst, points out in the Electricity Market Review of AS Latvenergo.
“Energy prices have risen across Europe since May this year, and will continue to do so in December. Disruptions in production and supply, along with high electricity demand and the rapid onset of winter, are pushing up the price of electricity in 2021 with the highest price records in the last 10 years. “says Prokhorova, noting that the price of electricity in the Baltic States in November this year was three times higher than the average price during the entire market.
She explains that the increase in electricity prices in 2021 is observed not only in the Baltic and Nordic region, but also in other European countries. Since 2010, the highest monthly average electricity price of Nord Pool has been observed in September this year at 86.01 euros per megawatt hour (MWh), moreover, in November the average monthly electricity price increased again to 84.05 euros per MWh. Prokhorov points out that the rise in prices can also be seen in December, reaching new price “ceilings”, which doubled.
In November, the effects of the European electricity crisis can also be seen at record price levels not seen before. In Poland, for example, the average electricity price on the Nord Pool exchange in November was € 109.82 per MWh, the highest price since Poland joined the Nord Pool exchange in February this year. In November, the highest electricity prices were in Germany – 176.15 euros per MWh, in the Netherlands – 186.25 euros per MWh, and in France – 217.06 euros per MWh. In the United Kingdom, the highest monthly price was in September – 220.94 euros per MWh, however, already in November it was 218.29 euros per MWh, again approaching a record high. In December, these prices continue to rise at the same pace.
In the Baltics, the highest average electricity price since the opening of the electricity market was observed in November this year, where in Latvia it reached 125.39 euros per MWh, in Lithuania – 127.82 euros per MWh, and in Estonia 116.78 euros per MWh.
Prokhorova points out that at the end of November, electricity prices, which were already high, continued to rise due to colder weather and rising demand.
“If you look at this year’s average weekly prices, then in the Baltic States they have quadrupled since the beginning of the year, with unified electricity prices of 39.54 euros per MWh and an average of 157.06 euros per MWh in the last week of November,” says Prokhorova. According to Nord Pool, the price of the Nord Pool system rose fivefold from € 24.50 per MWh to € 122.93 per MWh at the end of November, and electricity prices continued to rise in December.
Prokhorov explains that the beginning of winter has been full of challenges for electricity prices. Air temperatures in the region were below normal, leading to a sharp rise in electricity demand, a record shortage of wind power and record high prices for natural gas, coal and emissions allowances. All these processes lead to higher electricity production costs. At present, the weather will play an important role in electricity consumption, which will affect demand.
“In these circumstances, the further development of energy prices will also depend on the expected growth of energy demand and the stability of its supply, as well as available electricity generation capacities not only in the Baltics and the Nordic countries, but also throughout Europe,” said a Latvenergo representative. .
She emphasizes that it can already be seen that European electricity prices continue to rise in December. Weather in the coming weeks, the operation of French nuclear power plants, Russia’s daily gas supply and China’s coal policy will determine whether prices continue to rise even higher in the future.
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