The average price of electricity in January 2023 on the Bulgarian IBEX exchange is 266 BGN (136 EUR) per MWh, compared to an average of close to 500 BGN (about 255 EUR) per MWh in 2022.
Contrary to all forecasts, the spot price of electricity in Bulgaria and all of Europe in January fell to a record low level in at least 12 months.
The average spot price in January on the Bulgarian IBEX stock exchange is BGN 266 (EUR 136) per MWh. This is the lowest average price since September 2021, when there was no compensation mechanism and businessmen paid market prices for electricity.
Almost all of last year, the limit of 127 euros per MWh was valid in Bulgaria, above which the cost of electricity for companies was borne by the state. From the beginning of 2023, a lower ceiling was set – 100 euros per MWh, above which the difference in price is covered by the state. However, due to lower market prices, the amount of compensation will also be lower.
For the sake of comparison, the average annual spot price in 2022 is slightly below BGN 500 (about EUR 255) per MWh, and in the summer months at peak hours it reached EUR 1,000 per MWh.
It is estimated that in the coming months, with inflation slowing down and energy prices stabilizing, the price of electricity will remain at the January level. It will be an additional lever for reducing consumer price inflation.
Due to the energy crisis in the last few months, it has been extremely difficult to make long-term price forecasts. Futures levels over the summer pointed to a very different scenario, which did not materialize largely due to the drop in natural gas prices and the somewhat successful policy of the European Union to balance the capacity shortage.
This was partly contributed by the stabilization of permits for CO2 emissions, which largely determine the price of electricity from coal-fired thermal power plants. In recent months, quotas have hovered around 70-80 euros per ton, although a serious jump has been noticed in recent days, to 90 euros per ton. On the other hand, the forecasted price for 2023 was over 100 euros per ton.
Of course, a relatively mild winter across Europe, the commissioning of new LNG terminals, the restart of some nuclear power plants in France and the commissioning of thousands of megawatts of new renewable energy capacity over the past year have also contributed to the stabilization of electricity prices at a significantly lower level.
