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An increase in evening price peaks and negative price hours
During the July and September heatwaves, as well as during the dark calm in November, there were extremely high next-day hourly wholesale electricity prices of around 900-1000 euros/MWh in Hungary. This, as we wrote: well pointed out that “in vain” for the very high installed capacity of the solar power plant (now over 7400 MW), this does not really help us at the time of the rising power consumption around sunset. As electrification progresses in Europe and the evening peak in electricity demand increases, these spike prices could be even higher in the years ahead.
Obviously, this large solar power plant capacity in Hungary would help us if there was much more built-in energy storage capacity as well, and thus the release of the (green) energy stored during the day in the evening would dampen these price spikes considerably. However, we are still years away from this situation, both at the European and domestic level, although transmission and distribution network projects, as well as local energy storage projects, are taking place here with great momentum, as a result of which the storage capacity may increase from the current few dozen to over 1,000 MW in a few years.
One of the reasons for the very high wholesale electricity prices in the evening is that with the rapid spread of renewable energy production solutions on a European level in more and more places, in more and more periods, coal and gas power plants are pushed out of the given hours of the electricity production mix, and thus have to earn their operating costs and the costs arising from the European quota system in relatively less time. One of the proposals of the consecutive Hungarian presidency was supposed to alleviate the latter by amending the quota regulation, but most member states did not support this at the December energy council meeting.
With the rapid spread of solar and wind power plants, another important phenomenon on the electricity market has been in the news more and more often: the increase in the number of negatively priced hours, which, in parallel with other countries, was also very rough in Hungary until the autumn months. Since then, we haven’t experienced anything like this, partly due to the permanently gloomier period and the increased demand for electricity. From next spring, however, there will be a large number of such hours again, as solar power plants that produce at the same time are spreading rapidly both here and throughout Europe, thus lowering prices during the day, and the resulting payback/cannibalization effect may continue to increase until sufficient energy storage and transport capacities are developed.
The increase in the number of negative or zero euro hourly prices, as well as the evening price peaks, are also closely related to each other and to the need for money of coal and gas power plants, and together
the so-called led to an even more significant change in the shape of the duck’s curve.
As shown in the figure below: the duck’s belly, which describes the intraday trend of hourly prices, sank much deeper this year in the midday hours, and its head rose much higher in the evening hours, i.e. the intraday volatility of the electricity price rose considerably. This meant that the increasingly harsh “rump-up” period, i.e. the price of electricity rising by hundreds of euros during the evening consumption peak, came from the wholesale electricity price, which plunged into the depths of the midday hours, even falling below minus 100 euros. These were partly caused by power supply limitations and partly by the above-mentioned money-making aspects of coal and gas power plants, and they will probably remain with us next year as well. shaping the duck curve even better.
TOP10 stories
As every year, the editorial staff of Portfolio compiled the most decisive events and news of the year. This article is also one of 10.
Europe is divided into price blocs
The stimulus threshold of Hungarian public opinion was also hit by the numerous extreme electricity market situations that arose during the dark calm of November, and the splitting of Europe into price blocs. Then one spectacular map drew attention to the fact that In the region of Hungary, Romania, Bulgaria, and Greece, the price of electricity can jump amazingly high in one hour of the evening compared to the rest of the continent, even though we live in an officially connected European electricity market, which helps price convergence.
As one of our comprehensive articles pointed out:
differences in electricity demand and supply are important reasons behind these price blocks, as are the limitations of cross-border capacities.
These factors, the strengthening of the supply side and the increase of transmission capacities, can only improve over many years, so unfortunately, the price block phenomenon is also likely to affect the electricity market from time to time for a long time to come.
In addition to monitoring and responding to these price signals, it is not worth presenting them in a distorted and distorted way, it is better to focus on more lasting processes. However, on this front, the situation of our region is not so unfavorable compared to the rest of the continent, as if we were to map the electricity price data for one hour at a time. Longer-lasting processes are well indicated if we look at the cumulative average of daily string prices (arithmetic average of the 24 hourly prices of each day) in each country from the beginning of the year. The table below shows that
the Hungarian average price this year was 100.4 euros/MWh, which is one of the highest on the entire continent, but the difference is not as striking as if we were to single out the price differences of one hour.
At the same time, it is noteworthy and worrying from a competitive point of view that compared to the German average price, which is considered a reference in the whole of Europe, the Hungarian surcharge is 22 euros, 28% this year. In addition, it is also important that among the neighboring countries also highlighted in burgundy, the average price in Hungary this year is higher than the average price in Austria, Croatia, Slovakia and Slovenia by a few euros or a percentage.
Prices are still very high compared to global competitors
The above led us well to the third important phenomenon, which, among other things, also hit the stimulus threshold of Hungarian public opinion due to the agenda of the successive Hungarian presidency: to the situation of electricity and gas prices that are still very high worldwide. It was published at the beginning of September, and was regularly referred to by the Hungarian Prime Minister Draghi report as one of the essential European competitiveness problems and as a task to be solved, he highlighted that
European companies still pay 2-3 times more for electricity and 4-5 times more for natural gas than their American competitors. In addition, European actors pay significantly more than Chinese companies.
Partly this, partly the EU competitiveness declaration adopted in Budapest catalyzed the fact that, according to the latest news the European Commission is already working on an electricity market package aimed at reducing pricesand is expected to be on the agenda next spring, in parallel with the package of complete separation from Russian gas and oil.
The decrease in energy prices is probably one of the most anticipated by Hungarian companies, since as we wrote: In Europe, Hungary has the third to seventh highest non-residential electricity prices in the various consumption categories (and the gas price is also one of the highest). The distorting effect of the residential utility reduction system and the burdens of the KÁT system on industrial consumers play an important role in this, and changes in the modification of these rigid systems are conceivable next year, which will also have to be paid attention to.
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Source: www.portfolio.hu
