Electricity prices increased in most of Europe in December 2022

In 2022, the highest average monthly wholesale price in the EU was in August

European prices. According to Ember’s data, in the EU, the monthly average day-ahead wholesale prices in December 2022 were:

• Italy – €294.8/MWh;
• France – €270.4/MWh;
• Germany – €256.6/MWh;
• Spain – €96.7/MWh;
• Belgium – €268.9 MWh.

In the UK, according to Nordpool, the average monthly spot price per day in December was €287.05/MWh.

Compared to November, prices in the last month of the year increased by about 1.5 times.

In particular, in mid-December 2022, a sharp increase in day-ahead spot prices in the EU (Italy, Germany, France) was recorded due to forecasts of a decrease in wind energy production – to over €420/MWh.

The highest average monthly wholesale electricity price in the EU was recorded in August 2022 at €543.4/MWh. It was caused by a rise in gas prices, which prompted European politicians to consider intervening in the energy market to protect consumers and businesses and work on reforming it.

In early 2023, European electricity prices fell, thanks to lower gas prices to levels around the start of the Russian invasion of Ukraine.

Due to milder temperatures, as well as due to a decrease in demand for gas and the activation of alternative energy, the filling of gas storage facilities in the EU countries remains high. According to AGSI platform’s data, as of January 9, 2023, in the EU, this figure was 83%, it was the highest in Portugal – more than 98%. However, according to experts, the energy crisis has not yet passed. At the same time, some governments are already reviewing national measures to support businesses and households.

United Kingdom. On January 9, the UK government announced plans to cut energy support for businesses in the 2023/2024 fiscal year by around 85% – to $6.7 billion. The current scheme, proposed by the government of Leese Truss, went into effect in October 2022 and limits the cost of energy for businesses until the end of March 2023. The maximum electricity tariff for industry has been set at £211/MWh.

It is expected that the Treasury will replace this scheme with a new one that includes a discount on wholesale prices. Energy-intensive industries (steel, glass and ceramics) will receive more support than other sectors.

By new scheme, from April 2023 to March 2024, trade and energy-intensive businesses will be eligible for a maximum discount of £89.1/MWh, for these sectors it will be effective when electricity prices exceed £185/MWh.

Industry association UK Steel, most of whose members will be covered by the government’s new scheme, welcomed the initiative. However, they note, that this support is insufficient compared to what is offered in other countries, such as Germany. According to UK Steel CEO, Gareth Steiss, the German government provides its industry with a fixed electricity price of €130/MWh for 2023, which guarantees its competitiveness.

According to Kallanish, based on projected electricity wholesale prices for FY2023/2024 and taking into account the costs of carbon emissions, various fees and incentives in the UK and Germany, UK Steel calculated: British steelmakers will pay £174/MWh, German – £107/MWh.

Spain. In December 2022, energy prices in the fourth largest economy in the eurozone continued to decline, inflation in the country is slowing down for the fifth month in a row.

On January 9, the Spanish government announced that it would ask the EU to extend the so-called Iberian model until the end of 2024, while a review of the rules of the market as a whole for the bloc is expected, informs Reuters. The Iberian model allowed Spain and Portugal to decouple the price of electricity from the price of gas and cut costs for consumers. The restrictions came into force in June 2022 and will remain in effect until the end of May 2023. The two countries have long fought to change the pricing system, arguing that it is not suitable for the Iberian Peninsula, which is poorly connected to the rest of the European electricity grid and uses a lot of renewable energy.

As GMK Center reported earlier, at the end of 2022, the Turkish Energy Market Regulator (EPDK) announced a discount 16% on the price of electricity for industrial consumers. The agency also reduced the maximum electricity price on the free market from 4.8 thousand liras/MWh to 4.2 thousand liras/MWh.