In the Baltic states, average monthly electricity prices also fell in October. Electricity prices in the trading areas of Latvia and Lithuania amounted to EUR 37.72 / MWh, where Latvian prices fell by 6%, while in Lithuania there was a decrease of 5%. In Estonia, electricity prices fell by 5% in October to EUR 37.62 / MWh. In the Baltic States, the hourly price range varied from EUR 2.29 / MWh to EUR 174.91 / MW.
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In October, the price of the electricity system fell by 15.73 EUR / MWh to 14.64 EUR / MWh or 7% compared to September. The low level of electricity prices was still maintained by the rich hydrological situation in the Nordic countries, as well as warmer weather conditions in the season, and electricity consumption in the Nord Pole region was lower compared to October of the previous year. High rainfall affected the hydro reservoir filling in Scandinavia, which averaged 90.5% per month (the norm is 83.3%). The volatile development in wind farms, in turn, had an impact on hourly price dynamics. In the previous month, development in wind farms was 5% higher than in September and 34% higher compared to October of the previous year.
Electricity prices in the Baltic states were impacted by electricity prices in neighboring countries – 16% higher energy flows from Finland and 24% higher from Sweden’s SE4 area as the Estlink-2 and Nordbalt interconnections returned from annual maintenance.
Wholesale electricity prices in October in Nord Pool shopping areas
Source: “Nord Pool “
Future fall in electricity prices
In early October, futures contract prices rose sharply, but fell sharply for the remainder of the month due to changes in the hydrological balance (storage of water in reservoirs, soil and snow). Weather forecasts for more precipitation contributed to an increase in the hydro balance to 18.5 TWh above the norm, compared to 2019 it was 6.4 TWh below the norm. The rich hydrological situation indicates the development of potentially high hydropower plants in the Scandinavian countries.
Futures contract prices rose in early October, but fell sharply for the remainder of the month due to changes in the hydrological balance (water storage in reservoirs, soil and snow). Weather forecasts for more precipitation contributed to an increase in the hydro balance to 18.5 TWh above the norm, compared to 2019 it was -6.4 TWh below the norm. As a result, the rich hydrological situation predicts the development of potentially high hydropower plants in the Nordic countries.
The future contract of the electricity system will come in October (Nordic Futures) prices for the November forward contract fell by 15% to EUR 20.70 / MWh, the closing price of the contract fell to EUR 13.95 / MWh. In the 1st quarter of 2021, the average system price of the contract decreased by 8% to EUR 26.31 / MWh, the closing price of the contract fell to EUR 21.30 / MWh at the end of the month. The average futures system price for 2021 also decreased by 8% to EUR 22.28 / MWh in October, and at the end of the month the contract price was EUR 18.80 / MWh.
The average price of Latvian electricity futures for the November forward contract fell to 45.45 EUR / MWh, the closing price of the contract was also 45.45 EUR / MWh. In September 2021, following market trends, the price of Latvian futures fell by 2% to EUR 43.31 / MWh.
Generation in the Baltic States accounted for 50% of the total electricity consumption
Electricity consumption in the Baltic states decreased by 2% in October to 2,302 GWh compared to October of the previous year. In Latvia, electricity consumption was 611 GWh, which was unchanged from October 2019. In Estonia, consumption decreased by 5% to 672 GWh compared to the same month a year earlier. In Lithuania, consumption fell by 1% to 1,019 GWh.
In October, the amount of electricity generated in the Baltic states decreased by 8% to 1,142 GWh compared to the previous month. As production in the Baltic states decreased, imports from neighboring countries increased. In Latvia, electricity generation decreased by 2%, with an average production of 326 GWh per month. In Estonia, production volumes decreased by 3% to 421 GWh. In Lithuania, on the other hand, electricity production fell by 18% to 395 GWh.
Last month, generation covered 50% of the total electricity consumption in the Baltic states, 63% in Latvia, 63% in Estonia and 39% in Lithuania.
Decreaseds Latvenergo TEC development
In Latvia, the total rainfall was slightly below the October norm. The mean monthly inflow into the Daugava was 250 m3/ s jeb 33 m3/ s below the 30-year average intake level.
In October, electricity generation at Latvenergo’s hydroelectric plants decreased by 4% to 112 GWh compared to September generation, but was 25% lower than October 2019. Electricity production at Latvenergo CHP decreased by 17% to 110 GWh compared to September . The decline in development was due not only to the seasonally warmer weather, which affected demand, but also to the fact that the first TEC-2 power unit was not available on the market due to maintenance work.
Fluctuations in the commodity market have driven changes in demand
The price of the Brent Crude Futures crude oil futures contract fell 2% to $ 41.52 / barrel in October and closed at $ 37.46 / barrel at month-end.
The main factor influencing oil market prices in October was the rapid spread of the Covid-19 pandemic in Europe and the United States. This not only had a significant impact on the demand for petroleum products, but also caused fluctuations in related markets.
Coal future contract (API2 Coal Futures Front month) the average price in October rose by 4% to 56.59 USD / ton, the closing price of the contract was 51.80 USD / ton.
In October, the fluctuations in coal prices were affected by restrictions on extraction from Colombia and South Africa, and by the volatility of demand in Europe and Asia. At the same time, there was a disruption to China’s domestic coal mining and transportation as consumption increased and coal prices rose. In addition, China had also banned the import of coal from Australia, but no official statement from the government confirms this.
In October (Dutch TTF) The average price of the natural gas futures contract in November increased by 9% to 14.14 EUR / MWh and the contract ended at a higher price of 14.49 EUR / MWh.
In the natural gas market, prices were affected by a fall in supply, mainly from Norway, and changes in demand. At the same time, higher prices in the Asian market limited imports of liquefied natural gas to Europe. In addition, the filling level of natural gas storage facilities in Europe at the end of the month was 94.5%, which is below the 2019 level of 97.3%.
European emission quotas (US Futures) The price of EUA “December 20” fell by 9% in October to EUR 25.18 / tonne, and the contract price fell to EUR 23.71 / tonne at the end of the month.
In October, the price movement in the carbon market was determined not only by changes in demand, but also by political events. One of the factors influencing the price is uncertainty about the Brexit deal and the future relationship between the United Kingdom and the European Union. The new wave of Covid-19 in Europe has had a significant impact on the market, which could have a significant impact on future economic development and thus demand. As a result, the high supply of allowances and weak demand from traders contributed to lower prices.