Czech electricity price for the following year surpasses €35/MWh, up 10% in a month

The price of base-load electricity for the following calendar year has risen by around 10% over the past month. The main reasons for the price increase in recent weeks have been rising coal and emissions allowance prices, as well as persistent uncertainty over the operation of French nuclear reactors.

As recently as mid-May, the price of electricity for the following calendar year stood just above EUR 29/MWh. Yesterday, it closed at EUR 35.6/MWh. It recorded its largest increase over the past month, gaining around EUR 3/MWh.

The electricity price on the Prague Energy Exchange (PXE) is typically strongly correlated with the price on the European Energy Exchange (EEX) in Leipzig.

Reasons for the increase in electricity prices

The main drivers of electricity prices for the following calendar year in recent weeks have been rising coal prices, rising emissions allowance prices and uncertainty surrounding the operation of nuclear reactors in France.

Coal prices for delivery in the following calendar year are at their highest levels so far this year. The price of thermal coal from the Australian port of Newcastle has risen from USD 70/t to USD 85/t over the past 2 months. Similarly, the price of coal for 2018 from the port of Rotterdam has exceeded USD 80/t.

European emissions allowances (EUAs) for the following year have also recorded a significant increase. Their price has risen by more than EUR 1/t since the beginning of last week and exceeded EUR 7/t.

Traders remain optimistic about the continuation of the overall bullish trend in electricity prices. They expect further upward support from rising gas, coal and emissions allowance prices.

Until this year, the price had fallen steeply since 2012

The price of base-load electricity for the following calendar year had declined every year since 2012. The annual average of daily values in 2012 for calendar year 2013 reached EUR 48/MWh; last year, the price for calendar year 2017 was almost EUR 20/MWh lower, with the annual average of daily values reaching EUR 27/MWh. This year is highly likely to reverse the downward trend. By the end of July 2017, the average of daily base-load electricity prices for calendar year 2018 was EUR 30.4/MWh, and the futures price has continued to rise since then.