The geopolitical crisis “stings” electricity prices upwards – Economic Postman

A slight de-escalation of prices in the wholesale electricity market for April, a course that will probably be interrupted in May due to the upward trend in natural gas prices, predicts the General Manager of the “Natural Gas” company, Mr. Yannis Mitropoulos.

As he pointed out yesterday while speaking to journalists, “we are now talking about an average Market Clearing Price (MTP) for the month of April of around 60 euros per megawatt hour, when in March it was 63 euros”. However, the picture in the electricity market for May may change due to the “turbulence” in natural gas prices.

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Referring to international gas prices, the head of “Natural Gas” and president of the Hellenic Energy Suppliers Association (ESPEN) noted the following: “We had low prices of 23 euros per megawatt hour at the beginning of February. But again a small increase is recorded. We are at 29 to 30 euros per megawatt hour. The geopolitical events that are happening do not allow gas to fall significantly below 30 euros. But it still moves at much lower levels than in the last two years”, he pointed out. And although predictions in the energy market are difficult, Mr. Mitropoulos believes that gas prices will continue to move at current levels and perhaps slightly higher in May.

As for April, an important role in the partial de-escalation of prices, according to him, was played by the large participation of Renewable Energy Sources (RES) in the country’s energy mix, especially at the beginning of April. “That’s why we recently experienced several zero prices, which brought down costs,” he emphasized. As he explained, the average April TEA could close below 60 euros per megawatt hour, if the prices were not “bitten” due to the cold in Germany, which also affected the rest of the European markets.

In any case, Mr. Mitropoulos expressed his concerns about the future of the energy market. “Already the entry of RES is affecting the European markets. In Spain the average price in 2024 was at 38 to 39 euros per megawatt hour and in April at 5 to 6 euros per megawatt hour. This means that investments in green energy were now considered unprofitable. Will we see this in Greece? It’s so complicated how the market works that I don’t think anyone can give an answer. We will see how it will develop”, he pointed out.

Half the cost for gas users

In relation to natural gas, Mr. Mitropoulos stated that it is now extremely competitive with wholesale prices now hovering around 30 euros per megawatt hour. Savings rates reach 50% for residential consumers and 64% for businesses.

In particular, gas during this year’s heating season (October 2023 – April 2024) was cheaper than heating oil by 45.5% for a household with central heating and by 49% for a household with autonomy.

“What does this mean in practice? That consumers who used natural gas to heat their homes paid exactly half the cost of fuel compared to an apartment building that used heating oil. So we have returned to the savings we had just before the energy crisis”, Mr. Mitropoulos emphasized.

The picture is the same for businesses. A restaurant that used gas had a savings of 64% compared to the cost if it used electricity, while for an oven the savings reached 42% compared to the consumption of diesel. Even in a ten-year horizon (2014-2024), according to the head of “Natural Gas”, an apartment building has saved 18,000 euros, while an apartment has saved 3,500 euros.

And as Mr. Mitropoulos noted, the savings during the current heating season would have been greater had it not been for a recent upheaval in the gas market.

The growth dynamics of the company

Regarding the company’s growth dynamics, Mr. G. Mitropoulos emphasized that Natural Gas, in 2023, was the provider that came first in the choices of consumers.

Specifically and according to the data of the Regulatory Authority for Waste Energy and Water (RAAEF) and the Gas Network Operators, it managed to increase its customer base by 34,722 connections (in electricity and natural gas in total), surpassing all the competition. In total the company serves 600,000 households (333,948 connections).

In terms of financial results, for the full year 2023 the company’s turnover decreased to 584 million euros from 883 million euros in 2022, mainly due to the drop in electricity and gas prices, while a net profit of 32 million euros was announced, almost the same as in 2022, when they reached 32.9 million euros.