Analysis Energy
Oil more expensive and concerns about electricity grid capacity
The electricity market remains at a stable level, but there is quite a lot of energy news this week. CO2 emission rights rose last month. This often has consequences for the electricity price in the long run. And Enexis sounded the alarm this week. According to the grid operator, the infrastructure of the electricity network is lagging behind the requirements imposed by the energy transition. The oil market is also on the rise. This is mainly due to a surprising report from OPEC+.
The oil price has risen sharply this week. Last Tuesday, March 2, the price for a barrel of Brent oil was still at $62,59. That has now risen to $68,47 per barrel, the highest price in a year. The price increase was caused by the decision of the OPEC+ countries to leave the current production restrictions unchanged in April. That decision came as a surprise to many. Most analysts previously expected OPEC+ members to pump more oil.
Saudi Arabia's voluntary production limit of 1 million barrels per day will also remain in effect in April. Russia and Kazakhstan have been given permission to increase their production slightly. The big winner of the agreement is the United States. The expensive shale oil can be extracted well above the cost price at these high prices.
Small increase in diesel price
Like crude oil, the price of diesel is on the rise. The increase is less extreme. At the beginning of this week, the price of diesel on delivery from 4.000 liters was still €102,26 per 100 liters. After a dip on Wednesday, the price rose today (Friday 5 March) to €103,07 per 100 liters.
Weather brings calm to the electricity market
There is a calm mood on the electricity market. Partly due to the stable weather, there are no major peaks and troughs in energy demand. As a result, the supply is also fairly stable. Prices on the EPEX SPOT will continue to fluctuate around €50 per MWh this week.
Analysts do not expect major changes in electricity prices in the short term. After the weekend it will be a bit warmer according to most weather reports. As a result, the electricity price could drop even further.
snag in the grass
CO2 emission rights have risen sharply in February. In January, the emission rights cost around €33 per tonne of CO2. In February, the price broke through the €40 per tonne. The price has since dropped again. On Thursday, March 4, an emission allowance for one tonne of CO2 was worth €38,38. In the longer term, this can have a price-increasing effect on the electricity price. After all, power stations must have these rights to be allowed to produce energy and want to pass these extra costs on to their customers.
Major task for electricity grid infrastructure
Grid operator Enexis expressed concerns this week about the requirements imposed on the electricity grid by the energy transition. The company says it is doing everything it can to connect sustainable initiatives as quickly as possible. "But there are limits to what you can expect from the current infrastructure. Investing unlimitedly in expanding the grids is not only a practical challenge, but it also entails unnecessary social costs," says Evert den Boer, CEO of the Enexis Group. He therefore argues in favor of using the existing grid more efficiently. "This can be done, for example, by locating plans for large-scale energy generation near large customers. But it is also possible to cap the peak production of wind or solar parks."
According to Enexis, the regional energy strategies have a significant impact on the energy network. There are also ambitious plans for housing, sustainable industry and mobility. According to Enexis, the infrastructure task is so great that not all work can be performed simultaneously. The company therefore advocates a stronger directing role for the national government.
Jurphaas Lugtenburg
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
