After a period of high prices and large fluctuations, a cautious decline in the price of electricity is emerging. Lower energy prices and the further elaboration of European support measures will provide some degree of stabilization in the electricity market.
Last week the EPEX Spot fluctuated between €250 and €400. The extreme price fluctuations that we have seen in recent weeks have disappeared and the electricity price has fallen on average. On Thursday, September 22, prices were at the peak of the week. At that time, the Dutch spot prices for electricity were €383,93. After the usual drop between Saturday and Sunday, the electricity price fell by another €2 on Monday. When writing the article, prices were at their lowest point, namely €246,51.
The fall in electricity prices is related to a continuing decline in raw material prices. At the time of writing, a megawatt of TTF gas costs €169,00, the lowest point since July 22, 2022. At $84,93, the price of a barrel of Brent oil is even at the lowest point since January 24, 2022.
Although plans by the European Union for price caps and additional taxes on energy and raw materials companies remain vague, the measures are depressing energy prices, according to analysts. Stabilizing news also came from the European Securities and Markets Authority (ESMA). The European market watchdog advised the European Commission on Thursday to introduce a temporary brake on trade in electricity and gas derivatives. This measure should smooth out the biggest shocks from the market.
November help package for entrepreneurs
Concrete plans to compensate for the effects of the energy crisis also came from The Hague. More is now known about the price ceiling for electricity and gas that the Dutch government announced last week. On Budget Day, the cabinet revealed the target prices for this measure. For one kilowatt hour of electricity, consumers pay a maximum of €0,70, this rate applies to the first 2.400 kilowatt hours. The rate is €1.200 for the first 1,50 cubic meters of gas. However, uncertainty about the market remains lingering, because a support package for the business community is not forthcoming for the time being. Clarity about these measures will have to wait a while. In the current affairs program Nieuwsuur, Minister Micky Adriaansens of Economic Affairs and Climate announced that 'there should be an aid package for entrepreneurs in November'.
Uncertainty
It is unlikely that energy prices will slowly but surely fall to pre-Ukraine war levels. The partial mobilization announced by Russia last week and the referendum in the Occupied Territories in Ukraine are continuing uncertainty surrounding commodity prices. The EU faces a huge challenge to become independent from fossil fuels from Russia. Until 2030, almost €600 billion would have to be invested in the European electricity infrastructure to get rid of the Russian gas infusion. This is apparent from a draft EU document that Reuters news agency has seen. €400 billion is needed to upgrade the grid and €170 billion for digitization to make the grid 'smart'. This is necessary to absorb the variable yields of solar panels and wind turbines on the grid. By making the grid smart, the peaks and troughs in the production of electricity can be accommodated as well as possible.