Electricity prices surge, next-year prices in Czechia and Germany up nearly 20% since early November

The price of electricity for next year in Germany, i.e. the Cal 21 product on the EEX exchange, climbed back above 43.5 EUR/MWh this week. The rise in electricity prices was supported by higher emissions allowance prices, fuel costs and optimism over future developments surrounding the COVID-19 pandemic.

The Cal 21 contract rose above 44 EUR/MWh during Thursday, with traders pointing to fuel costs, as, for example, the price of gas for next year on the TTF benchmark market stands at around 13.67 EUR/MWh, as well as the price of emissions allowances, which climbed above 30 EUR/tCO₂ during the week.

“Many industrial companies appear to be active in the market at present and are closing out their positions for next year,” a trader told news outlet Montel, referring to increased buying activity in the market.

In his view, many companies had been betting that electricity prices would fall, enabling them to reduce their energy costs.

The price of the contract for next year has risen by more than 7 EUR/MWh since November. At the time, the German Cal 21 product was trading on EEX at as little as 36.6 EUR/MWh. According to the trader, the main reason for the price increase is the outlook for higher electricity demand, driven primarily by growing economic optimism linked to news about a COVID-19 vaccine.

Countering this optimism, however, is the growing threat of a no-deal Brexit, as well as the possibility that the European Council, meeting on 10 and 11 December, will fail to reach agreement on setting the EU's climate targets.

Leaders had already postponed a decision on the new climate targets on 15 October, saying they wanted to reach an agreement at the December summit.

Spot prices and the situation in Czechia

News outlet Montel further reported that spot prices in Germany this week approached their highest level in the past two years. The baseload price (0:00–24:00) on the day-ahead market reached as high as 75.03 EUR/MWh on Wednesday, while peak hours (8:00–20:00) reached their highest value in almost four years – 103.79 EUR/MWh – as a result of coupling with France.

“The wind power generation forecast for Wednesday averaged 5.5 GW, which is 14.5 GW below the normal level, with 3.5 GW around noon,” a trader explained as the reason for the high prices.

The baseload electricity price on the Czech day-ahead market for Wednesday delivery reached 80.63 EUR/MWh. The value for peak hours rose to 108.72 EUR/MWh. The price of next year's contract on the domestic PXE exchange has already reached almost 46 EUR/MWh.

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