Electricity prices have doubled and will continue to rise

Electricity prices on power exchanges are rising, with the average trading price increasing from 83.96 euros per megawatt-hour in June to 98 and 116 euros per MWh in the first days of July, according to data from SEEPEX, the Serbian power exchange.

“Electricity prices on the exchange are set to rise. Summer is coming, contributions from wind and hydropower naturally decrease, solar contributions are negligible. Gas will be used sparingly, the Russians have started targeting storage facilities in Ukraine, having destroyed a 17 billion cubic meter storage facility near Lviv. For comparison, our storage in Banatski Dvor holds 450 million cubic meters. Coal imports are difficult and significantly more expensive. Anyone talking about reducing electricity prices is engaging in demagoguery,” said energy expert Miloš Zdravković back in April.

He adds that not only are these same reasons still valid, but new factors have emerged that will push prices higher by the end of the year.

Miloš Mladenović, the Director of the Serbian Power Exchange, stated that due to the heat wave, the price of electricity on exchanges has increased, which is also the reference price in the wholesale market.

“Compared to March and April, when the prices averaged 65 euros per megawatt-hour (MWh), they rose to 80 euros in May, 98 euros in June, and now the price per megawatt-hour is between 120 and 125 euros,” Mladenović said.

Prices will continue to rise until the end of the year

Speaking about additional reasons for the price increase, Zdravković explains that Ukraine is one of the largest electricity exporters, which is often forgotten, and in recent months its energy infrastructure has been severely affected by Russian targeting.

“The price of electricity always depends on the price of gas, and the price of gas has been falling in recent months, but now storage facilities are starting to fill up and prices are going up. Why is the price of electricity so dependent on gas? In Europe, there was an attempt to move away from this formula, primarily due to geopolitics and Russian gas,” Zdravković says.

He also explains that all energy systems are designed to operate continuously, 24 hours a day, seven days a week, 365 days a year.

“When there is no wind, wind farms do not operate; when there is no water, hydroelectric plants do not operate; when there is no sun, solar panels do not operate. You have to maintain voltage in the grid in a short time. The technology is such that a thermal power plant can only operate if a gas-fired power plant achieves maximum installed voltage in less than an hour. The more renewable energy sources there are, the more gas is needed, and vice versa,” Zdravković says.

(Nova Ekonomija, 04.07.2024)


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