The heat warmed up the energy prices // The exchange value of electricity broke a historical record

The exchange value of electricity in the European part of Russia and the Urals has reached a historic high. The weighted average price for the entire price zone of the wholesale energy market exceeded 1.67 thousand rubles. per 1 MW • h, and in the south of the country – 2.6 thousand rubles. The reasons are record indicators of electricity consumption due to abnormal heat and scheduled repairs of power plants. The generators consider the increase in performance “adequate market reaction”, indicating an even more volatile European market. The Energy Ministry expects prices to stabilize after the temperature returns to normal.

The cost of electricity for industry on the stock exchange amid hot weather reached its highest levels in the entire history of observations: on July 21, the weighted average day-ahead market index (RSV, the main sector of electricity trading) in the first price zone (European Russia and the Urals, 80% of Russia’s consumption) exceeded 1.67 thousand rubles. for 1 MW • h. The volume of purchases on the RSV as a whole in the zone exceeded 1.6 million MWh, according to the data of the Administrator of the trading system (ATC). The volume of exchange trading per day amounted to about 2.62 billion rubles. (income from DAM forms on average about 60% of generators’ revenue). In the second price zone (Siberia), the situation is more stable: on Wednesday, the RSV index there was 863 rubles.

The first price zone includes five interconnected energy systems (UES) – Center, North-West, Ural, South and Middle Volga. The highest price increase was recorded in the IES of the South (South and North Caucasus Federal Districts), where the RSV index exceeded 2.66 rubles. for 1 MW • h, according to the analytical review “SCM Market Predictor”. Key factors are a decrease in the output of the Rostov NPP and hydroelectric power plants and an increase in consumption (by 3.4 GWh). The record price of DAM was also recorded in the IES of the Middle Volga – 1.65 thousand rubles, where consumption increased by 4.3 GWh.

According to the Market Council (regulator of energy markets), the weighted average value of the RSV index from July 1 to 21 amounted to 1.51 thousand rubles. for 1 MW • h – an increase of 8.4% compared to the previous month. Moreover, in the IES of the South, the RSV index increased by 23.4%, in the IES of the Center – by 7.1%, in the Middle Volga – by 6.7%. Due to a decrease in supply, almost all thermal power plants in the region (0.5 GW) had to be withdrawn from the cold reserve.

Because of the heat, the Unified Energy System (UES) of Russia has already passed the summer maximum of electricity consumption five times, according to the “System Operator” (SO, energy system dispatcher). In the southern regions, there is a special situation: in the IES of the South, not only summer, but also winter maximums were recorded. On Wednesday, the peak of consumption exceeded 17.4 GW, which is 823 MW higher than the historical maximum on January 21 this year, according to CO. The dispatcher notes that all power systems are working stably.

Electricity consumption in the UES has grown by 5.3% year-on-year since the beginning of the year, and by 2.4% compared to 2019, the Energy Ministry told Kommersant. In the country as a whole, demand increased by 5.2% year-on-year, and compared to 2019 – by 2.3%. “When the temperature norm returns, the prices will return to the normal level,” the Ministry of Energy believes.

Alexandra Panina, Board Member of Inter RAO and Head of the Supervisory Board of the Council of Energy Producers, December 23, 2020

The market seems to be there, but the price signals are very tightly squeezed on it. Specifically, the price of RSV cannot grow sharply

The increase in the price of RSV is caused by an increase in consumption and the withdrawal of part of the capacity for repairs to prepare for winter, agree in the “Council of Energy Producers”. They believe that a short-term rise in prices (+ 4.4%) in a competitive trade sector is an adequate market reaction. At the same time, the association recalls that on the Nord Pool exchange, the volatility of the average monthly price in Finland over the past year and a half was 292%. According to the Nord Pool website, on Wednesday the spot price in Finland was € 69.12 per 1 MWh, in Lithuania and Latvia – € 84.77.

Along with technical restrictions, the Community of Energy Consumers note, a decrease in the supply of efficient generation and an increase in electricity consumption could have influenced price manipulations by suppliers associated with deliberate withdrawal of capacity from bidding to overstate energy prices, the possibility of which has not yet been limited by the regulator. …

Polina Smertina

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