Region: Electricity prices surge in SEE amid declining renewables and shifting demand in Week 44

In Week 44 of 2024, several factors contributed to a surge in electricity prices across the European electricity markets, particularly in the South-East Europe (SEE) region. The key drivers included an increase in CO2 emissions prices, a decrease in solar energy production, lower wind energy output, and changes in demand patterns, all of which had varying impacts on the region’s electricity prices and energy generation.

Electricity price trends:

• Increased prices in SEE: The biggest price increases were seen in Bulgaria and Romania, with a jump of 16.33% each, followed by Croatia (+8.56%) and Hungary (+8.12%). Italy was the only country to see a price decrease (-3.03%), possibly influenced by lower demand due to the All-Saints’ Day holiday.
• Regional price variations: Prices ranged from €82.84/MWh in Portugal to €126.13/MWh in Bulgaria and Romania. The Iberian Peninsula had notably lower prices, with Portugal and Spain both seeing prices around €82.8/MWh. Meanwhile, SEE countries saw higher prices, with Türkiye as the exception, where prices remained below €100/MWh at €62.47/MWh.
• Central Europe: Prices also surged in countries like Slovakia (€116.84/MWh) and Slovenia (€113.46/MWh), while France remained the cheapest in Central Europe at €85.27/MWh despite a notable increase of 20.66% compared to the previous week.

Electricity demand:

• Overall, electricity demand in SEE decreased by 5.24% compared to Week 43, largely due to lower temperatures and holidays (e.g., Italy’s All-Saints’ Day and Greece’s “Ochi Day”). The biggest drops in demand were seen in Italy (-9.93%) and Greece (-4.03%).
• Impact of holidays: These holidays likely led to reduced industrial and residential demand, particularly in Italy and Greece.

Energy generation mix:

• Variable renewables: Wind energy output was notably lower, particularly in countries like Serbia (-84.3%) and Hungary (-26.3%) due to low wind speeds. However, Romania and Bulgaria saw a significant increase in wind energy generation, with Romania up by 136.8%. Meanwhile, solar generation in SEE rose by 2.8%, mostly driven by a 43.5% increase in Italy’s solar production.
• Hydropower: Hydropower generation in SEE decreased by 8.16% compared to Week 43, largely due to drier conditions in countries like Italy, Greece, and Bulgaria. However, countries like Croatia (+10.45%) and Turkey (+1.45%) saw increases in hydropower output.
• Thermal power: Thermal generation, especially gas-fired, declined by 4.23%. This drop in generation was felt across the region, with countries like Italy experiencing a significant decline in gas-fired generation (-14.93%). On the other hand, coal-fired generation increased slightly in Türkiye and Bulgaria.

Cross-border trade:

• Electricity imports and exports: Net electricity imports across the SEE region fell by 8.88%, with the largest decreases seen in Romania (-34.02%), Hungary (-31.69%), and Bulgaria (-14.79%). Meanwhile, Türkiye’s electricity exports grew by 13.89%, while Serbia’s exports decreased by 50.80%. Greece also saw a sharp decline in its net exports (-47.94%).

Summary of key trends:

1. Price surge: A combination of higher CO2 prices, lower renewable energy output (especially wind), and increased gas prices drove electricity prices higher across the SEE region.
2. Demand decrease: Lower temperatures and public holidays reduced overall electricity demand, particularly in Italy and Greece.
3. Renewable output: Solar and wind energy production had a mixed performance, with wind output declining overall but experiencing growth in Romania and Bulgaria. Solar energy production increased in Italy but declined in other countries.
4. Thermal generation: A drop in gas-fired generation contributed to the overall decrease in thermal power output, while coal-fired generation saw slight growth in some countries.

In summary, Week 44 saw higher electricity prices due to a variety of factors, including a reduction in renewable energy output, particularly wind and increased fuel prices, as well as lower overall demand. These dynamics varied across countries, with some regions (such as Bulgaria, Romania, and Hungary) experiencing the most significant price hikes.