What to expect from electricity and gas prices in Czechia in 2025? Centropol's view

Three years have passed since the collapse of Bohemia Energy, one of the largest energy suppliers. For hundreds of thousands of customers who chose three-year fixed-price contracts at the time, a key decision point is now approaching. A longer period has also passed since the 2021 energy crisis, but the market still bears its after-effects. Added to this is growing pressure on the regulated component of electricity prices due to the necessary investment in infrastructure, which affects costs for households and businesses.

How will the energy commodities market develop in 2025 and what will it bring customers? We put these questions to several electricity and gas suppliers.

This is the first part of an interview with Jiří Matoušek, board member and marketing director of Centropol. 

What factors do you think will have the greatest impact on electricity and gas prices in 2025?

From January and over the course of the year, energy prices for a large share of customers will gradually fall as fixed-price contracts expire. This is due to gradual purchases at favourable prices in 2024. As for this year's wholesale market prices, which will affect suppliers' price lists for 2026 and 2027, in the best-case scenario I expect stability rather than a further decline. High volatility will persist in both the day-ahead and forward markets, and I do not expect positive price developments until the end of the winter period.

Depending on the worsening outlook for European economies, overall electricity and natural gas consumption may decline. Decarbonising the energy sector and the corresponding rebuilding of infrastructure will require enormous investment costs, and we are certainly facing long-term growth in regulated prices.

The geopolitical situation is crucial, although Europe is trying to diversify its energy sources, especially natural gas. The price of natural gas rose by almost a quarter in the short term amid the escalation of the dispute between Gazprom and OMV. As a reminder, following a successful arbitration case over a debt owed by Russia's Gazprom, Austria's OMV decided to reduce payments for gas supplies in order to gradually recover the debt, and the Russian side responded in mid-November last year by halting supplies to Austria. However, the volume of exports from Russia did not change, as traders in other countries took them over.

As of 1 January 2025, natural gas transit from Russia via Ukraine ended (editor's note: transit ended on 1 January 2025), meaning Russian gas now reaches Europe by pipeline only via Turkey through TurkStream. Negotiations are under way on using the pipeline on Ukrainian territory to transport gas from Azerbaijan, but it remains unclear what volumes that country can supply to Europe.

On the other hand, the expected increase in oil production and natural gas production following the arrival of the new US administration will probably have a positive impact on prices.

Prices will also be affected by advancing regulation. From 2027, the EU ETS II emissions allowance system will affect natural gas prices, particularly for households. It will also apply to petrol and diesel. Currently, one tonne of emissions is “priced” at EUR 45, which would mean a 12–17 percent increase in the price of natural gas. However, it is currently impossible to predict how the emissions allowance market will behave. It is essentially an investment commodity.

How do you see the long-term development of electricity and gas prices? Do you expect a return to pre-crisis levels, or rather lasting changes in the price structure?

The beginning of 2021 can be considered the pre-crisis period, although the impacts of decarbonisation were already fully apparent and energy prices were rising. Reaching 2021 price levels would require a restart of the European economy, so in practical terms it is impossible. Electricity distribution prices alone have risen by 30 percent since 2021 for standard distribution tariffs and by as much as 50 percent for heating tariffs. Capacity payments, commonly referred to as circuit-breaker charges, have risen by 35–75 percent since 2021.

As late as the summer of 2021, we were selling electricity with a two-year fixed price of CZK 1,869 excluding VAT/MWh; by the end of 2021, it was already CZK 3,250 excluding VAT/MWh. From this perspective, wholesale electricity prices have begun to approach end-2021 levels. However, in combination with rising regulated prices and fixed charges, Czech consumers' total electricity bills have increased by at least 60 percent compared with 2021.

Regulated prices for 2025 are relatively favourable, and the good news for consumers is the ongoing decline in wholesale electricity prices, which will bring year-on-year savings to the majority of households this year. Households that use electricity for heating will save the most. At annual consumption of 12.5 MWh, savings will amount to approximately CZK 11,000.

However, the current modest increase in the regulated component of electricity and gas prices is probably the last one for a long time, and growth will be more pronounced in the coming years.

Would you currently recommend that customers fix their energy prices?

Yes, I would recommend fixing electricity prices conservatively for two years. The potential loss of savings in the event of a slight price decline is of little significance compared with the risk of price increases. I would also recommend agreeing a fixed price for natural gas. With stable suppliers such as Centropol, it is not a mistake to remain on standard open-ended products, which behave more like a one-year price.

However, prices are not fixed under open-ended price lists. I would only not discourage very active customers willing to react immediately from choosing products with dynamic prices linked to the day-ahead market or monthly fixed-price contracts. Centropol provides both spot products and products with monthly price fixing, yet the most popular are two-year, 1.5-year and one-year fixed-price contracts, and of course standard open-ended contracts.

How do you ensure sufficient gas and electricity supplies? Can you outline your procurement process?

Thanks to our conservative procurement strategy, in 2021 and the subsequent crisis years we were able to take on thousands of customers from suppliers that were closing down or from traders that had no choice but to move their customers to products with dynamic prices. We consistently follow safe, gradual procurement practices several years ahead; forecasting consumption is a key discipline, and we actively trade on both the day-ahead and intraday markets.

We make maximum use of gas storage facilities, where we store natural gas. The ability to maintain a conservative procurement strategy, together with strong financial backing, will gradually separate successful suppliers from unsuccessful ones, or again from those that will cease operations. The energy market will continue to be challenging, and personally I would not recommend that any of my relatives experiment with switching to unknown suppliers.

How do you differ from other suppliers on the market? Do you offer customers any additional benefits that could increase their satisfaction or deliver savings?

For Centropol customers, we have arranged a number of significant price benefits focused primarily, though not exclusively, on energy savings. The most popular and most sought-after by customers is the permanent price benefit on Samsung products. The largest discounts are offered on energy-efficient washing machines, refrigerators and other household appliances, and customers can access them through our online self-service portal.

Other benefits include price advantages arranged with vetted partners for the installation of home electricity generation systems or heat pumps, as well as smart-home equipment. We aim to explain energy matters to our customers in understandable language, publish the Céčko magazine for them, and are available online, by telephone and in person through ten customer centres across the country.

Above all, however, we ensure secure supplies of electricity and natural gas for them, and thanks to our procurement strategy we can repeatedly reduce prices and deliver attractive prices over the long term. We are helped in this by a low level of bureaucracy and a decent degree of flexibility. Humanity is a value that we would like our customers to associate with us and one that distinguishes us from ordinary competitors.