Record Electricity Prices in South-East Europe: What Is Causing Them and What to Expect for the Rest of the Summer

South-East Europe is going through a heatwave but this is not the only reason we are seeing record electricity prices in countries such as Greece and Romania. We find out what is behind the hike and look at the trend for the rest of the summer.

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High temperatures in South-East Europe are soaring and this has increased the demand for cooling. In Greece, electricity consumption reached record levels last week. On 30 July, we saw a daily average of 8.8 GW. Electricity prices have followed suit.

The weather is expected to remain hot in the coming days, which will keep electricity consumption and prices high.

Our Volue Insight forecast shows that Greek demand will reach another record – a daily average of 9.4 GW on Tuesday, 3 August.

In the graph below, you can observe the historical hourly consumption profiles for Greece.

SEE Greece consumption

We expect Greek prices to remain on the bullish side for the week to come. However, this is not only because of high electricity consumption. Our forecast also takes into account low wind generation and the fact that the interconnector between Greece and Italy South is offline until mid-August.

In Romanian, day-ahead prices reached a record high on 30 July. For this record, we’ve observed several factors at play. In addition to increased electricity demand, Romania experienced an unplanned outage at one of the two nuclear reactors at Cernavoda, as well as low output of renewable energy.

A combination of high temperatures, lack of wind power production, unplanned outages, as well as high carbon costs and increased gas prices (which have reshuffled the merit order curve significantly lately) have caused electricity prices in South-East Europe to soar.

In the picture below you can observe the day ahead spot prices for selected hubs in South-East Europe between 26 July and 2 August.

SEE forecast

The graph demonstrates that Romanian and Hungarian spot prices have been mostly coupled during the past weeks. However, the two hubs also decoupled often from the rest of the 4MCC countries since the launch of the interim market coupling in June.

We expect temperatures to return to close to normal levels by mid-August in the SEE area.

However, electricity prices will not go down as quickly. Market prices closed on Friday above 100€/MWh for the August baseload contract for most areas in the SEE region. This shows a continuing bullish trend for the summer. The main drivers supporting this trend are the bullish emission prices and fuel prices.

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