In September, the average monthly electricity prices in the Baltics deviated from the high electricity prices in August, largely due to lower electricity prices in neighboring countries.
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The previous month’s average price of electricity in Estonia fell 3% to 39.60, while in the Lithuanian trade area the electricity price fell 9% to 39.50 EUR / MWh, whereas in Latvia the average monthly electricity price fell by 8% to 39..91 EUR / MWh. In the Baltics, the hourly price range ranged from 1.46 EUR / MWh to 189.25 EUR / MW.
Wholesale electricity prices in Nord Pool sales areas
Source: Nord Pool
In September, the price of the electricity system increased from 8.79 EUR / MWh to 15.73 EUR / MWh, Norway’s trading areas were still affected by the low level. Price differences between Nord Pool sales areas were affected by capacity flow constraints and production allocation. At the beginning of the month, a reduction in reservoir fill was affecting higher electricity prices, however, as the weather changed at the end of the month, higher precipitation led to higher filling levels and, consequently, hydropower in the countries Nordic. At the same time, wind farm development in the Nord Pool region also increased by almost 5 TWh or 15% more than in September of the previous year.
In the Baltics, electricity prices were affected by electricity prices in neighboring countries and higher energy flows – from Finland 19%, Sweden’s SE4 region 17%, as well as from Kaliningrad region, but from Belarus.
Wholesale electricity prices in September at Nord Pool retail areas
Source: Nord Pool
High volatility of future electricity prices
In September, changes in the hydrological situation due to the weather affected the volatility of future electricity contract prices. At the beginning of the month, the hydrological balance was 11.5 TWh higher than the norm, but at the end of the month it increased to 16.2 TWh due to higher weather forecasts. In addition, price movements in the emissions trading market also affected price fluctuations in the Nordic futures market.
Future electricity contract (Nordic Future) system prices increased 22% to 19.57 EUR / MWh in October, the contract closing price dropped to 15.70 EUR / MWh. The average contract price for the system in the 4th quarter of 2020 increased by 13% to 23.29 EUR / MWh, the contract closing price dropped to 25.55 EUR / MWh at the end of the month. In September 2021, the average price of the futures system increased by 10% to 24.34 EUR / MWh, and at the end of the month the contract price was 24.00 EUR / MWh.
Latvia’s average future price of electricity for the October contract increased by 1% to 43.52 EUR / MWh, the closing price of the contract was 37.20 EUR / MWh. In September 2021, Latvia’s “futures” price increased in September, following market trends, 14% to 44.28 EUR / MWh.
Electricity production in the Baltics has declined
Compared to September of the previous year, electricity consumption in the Baltics fell by 1% to 2,109 GWh. In Latvia, Estonia fell 1% to 556 GWh, compared to September 2019, in Estonia it dropped 2% to 604 GWh, while in Lithuania it stayed at the September level of the previous year – 949 GWh.
In September, the amount of electricity generated in the Baltics fell by 7% to 1247 GWh compared to the previous month. In Latvia, electricity production fell by 14%, producing an average of 333 GWh per month. In Estonia, production volume also decreased, and was 12% lower than in the previous month – 433 GWh. In Lithuania, by contrast, electricity generation increased by 6% to 481 GWh.
In September, production in the Baltics covered 59% of electricity consumption; In Latvia, the ratio of development to consumption was 60%, in Estonia 72%, but in Lithuania 51%.
Entry to the Daugava at the norm level
In Latvia, the total precipitation exceeded the September level. The average monthly inflow to the Daugava was 250 m3/ s jeb par 50 m3/ s above the 30 year average inflow level.
Due to a slightly higher inflow in September, electricity generation at Latvenergo hydropower plants increased by 38% to 101 GWh compared to August. In turn, electricity generation at Latvenergo CHP fell 45% to 132 GWh compared to August, and the first TEC-2 power unit was not available on the market due to annual maintenance.
Oil prices have fallen, while other commodity markets are experiencing price increases
The price of the Brent Crude Futures crude oil futures contract fell 8% to USD 42.07 / bbl in September, and the contract closed at USD 41.03 / bbl at the end of the month.
The continuing nature of demand continued to affect oil market prices as a result of the Covid-19 pandemic, as well as fluctuations in global financial markets. Higher US oil inventories also contributed to the downward trend in oil prices.
Coal futures contract (API2 Forward Coal Future the average price in September increased 6% to 53.70 USD / t, the contract closing price was 57.05 USD / t.
Prices in the coal market were affected by supply disruptions from Colombia and reduced coal mining in Russia. In August, 13% of the total electricity generated in Europe was generated by coal-fired power plants, while in September production increased to 15%. Demand has been affected by natural gas prices and higher allowances, forecasting seasonal increases in demand. However, future fluctuations in coal prices will be dictated by weather and economic developments.
In September (TTF Dutch) The average price of the October natural gas contract increased 22% to 11.33 EUR / MWh, and the contract ended at a higher price of 12.28 EUR / MWh.
In the natural gas market, price fluctuations have been determined by higher demand. At the same time, there was a disruption in Norway’s natural gas supplies, as well as the volatile nature of emission allowance prices. In Europe, the volume of natural gas storage at the end of the month was 94.7%, lower than the 2019 – 96.7% level.
European emissions quota (Future of the USA) The price of “EUA Dec.20” increased 3% in September to 27.80 EUR / t, and the contract price at the end of the month was 26.93 EUR / t.
In September, the carbon market experienced a higher level of market allocation. Due to higher supply and fluctuating demand, closing prices for the trading day during the month ranged from 26.17 EUR / ti 30.47 EUR / t. Such fluctuations were affected by fluctuations in commodity markets and new outbreaks of Covid-19. In addition, the European Commission’s publications on the new goals of the European Climate Act or the Green Course to achieve climate neutrality by 2050 also set a price direction.