Electricity price on Romania’s spot market spikes and is highest in Europe

The electricity price on the Romanian day-ahead market (DAM) spiked to RON 406 (EUR 85.8) per MWh, the highest level in Europe, Profit.ro reported.

Such price levels are typical for cold winter days when households use more electricity for heating. The heat wave that hit Romania this week may have increased the energy consumption for cooling.

The price for the electricity delivered in the interval 20:00 to 21:00 reached EUR 117 per MWh, a new record for the summer season. The high prices were caused partly by several production capacities not working: several hydro power production units are in technical outage, the level of water in dams is low due to dry weather across Europe, and calm weather has not provided enough energy to the wind farms.

The architecture of the market, with producers having first to set aside production capacities for residential users and sell on DAM market what is left might have increased the prices on the free market. This latest provision is likely to be abrogated by the Parliament, though. This will result in slightly higher prices paid by residential users, but not as much as the record DAM prices might suggest. Indeed, some 40% of the electricity delivered to industrial users now is purchased by suppliers from the DAM market.

Residential users are to a larger extent supplied under long term contracts at lower prices. Price hikes will continue to occur, however, even if the lawmakers amend OUG 114 and liberalise the market, because local producers can’t technically meet the demand during peak hours and such situations become more frequent during adverse weather periods.

During the first part of August 27, Romania has constantly imported electricity sometimes at a rate of over 1GW (out of 7 to 8GW consumed).

(Photo: Pixabay)