The European Agency for the Cooperation of Energy Regulators (ACER) has submitted this week its preliminary assessment of the current wholesale electricity market. Last month, the Agency was tasked by the European Commission to carry out this assessment, following the recent surge in power prices.
According to ACER, “is no obvious indication nor evidence of systematic manipulative behavior or insider trading likely to affect the current high-energy price situation. Surveillance is ongoing.” Concerning the debate about manipulative behavior on EU ETS, ACER said that the functioning of the carbon market is not within its mandate and that it “is in close contact with ESMA”. The European Securities and Markets Authority (ESMA) has been asked by the European Commission to “further enhance monitoring of developments in the carbon market”.
The analysis made by ACER concluded that high gas dependency, as well as low interconnectivity with neighboring countries, increases exposure to high electricity prices. For example, Spain is one of the European countries that was hit hard by the sudden increase in electricity prices, with an average above €150/MWh. The Iberian country has a high dependency on gas, accounting for 25% of total energy supply, and a limited interconnection level with only 4% of the power demand being covered by imports.
Romania is among those countries with an average reliance on gas but “well interconnected with other countries that can provide cheaper sources of electricity.” For this group of countries, the average electricity prices are between €120/MWh and €150/MWh.
Besides higher gas prices, there are several factors that lead to electricity prices increases including rising coal and carbon prices, high power demand due to the economic recovery, weather patterns, low renewable generation, and lower gas supplies.
Regarding Gazprom’s reluctance to book additional gas transit capacity through Ukraine and Poland, the Agency simply stated that there are “discussions on potential linkages to the possible entry into operation of the Nord Stream 2 pipeline”, adding that “according to publicly available information, Gazprom has delivered its contractual gas commitments”.