The electricity market has been turbulent and stable at the same time this week. Although power prices fluctuated wildly, the range of the price was about the same as last week. The incident with the Nordstream pipe and rising prices caused unrest in the oil market. Still, prices are quickly returning to their usual patterns. Presumably, the announcement of the European Commission's plan for price reduction brought calm to the market.
With the exception of the weekend dip, EPEX Spot prices fluctuated approximately between €250 and €400. On September 27, the spot price of electricity was €282,89. On September 29, the price reached its highest level in two weeks at €405,64. The well-known weekend dip was quite sharp this week. On Saturday, October 1, the EPEX Spot was at its lowest point and a megawatt hour of electricity cost €123,55. After the weekend the price rose considerably. At the time of writing, a megawatt hour of electricity costs 325,54.
According to analysts, the sharp price increase on Wednesday, September 27 is mainly the result of the suspected attack on the Nordstream pipelines. On Wednesday, September 28, the price of TTF gas had risen from €173,83 to 207,19. The increase in gas prices proved to be unstable. Within two days the price made a downward move again. On Friday, September 29, the price for a megawatt hour of gas had fallen to €188,80. The electricity price followed this trend with a slight delay of one day. The drop in the price of the EPEX Spot, which takes place almost every weekend, can even be seen as significant this week at €280.
Price increases on the oil market also cause instability. Due to the slowing economy, the price of oil fell slowly but steadily until recently. On Monday, September 26, the oil market opened at its lowest point in more than a year and a half, with a barrel of Brent priced at $82,86. After increasingly concrete rumors about a significant production reduction by the OPEC+ countries, the market found its way back up again last week. On Monday, October 3, the market opened at $89,25.
European Union
The fact that the market remains relatively stable despite these destabilizing movements appears to be mainly the result of European energy policy, which is taking increasingly concrete forms. The European Commission also brought peace on Friday, September 30, with the announcement of various measures aimed at lowering the electricity price. Within these new plans, the European Union has chosen to leave the lion's share of the implementation to the member states. The committee sets goals, but only provides a few binding criteria to 'enable customization', the committee writes in a press release.
In principle, the committee proposes a maximum price of €180 per megawatt hour that applies until June 30, 2023. However, this ceiling is not absolute, because the credo of flexibility also applies here. Member States may apply a higher maximum price if they deem this desirable for their specific market. In addition to the price ceiling, member states are obliged to reduce peaks in electricity consumption by at least 31% until March 2023, 5. The aim of this measure is to reduce the price via the supply side of the market. The solidarity contribution will also become more concrete. Member States have agreed to impose additional taxes on profits that are 20% higher than last year.