“There is a stable, long-term trend for increase of the electricity prices on the Day-ahead market (DAM) on IBEX. The situation this year is more unusual – if we compare the first days of January 2019 to the first days of January 2018 – the prices on the exchange have increased more than two times and if we compare December 2018 and December 2017 the prices are 50% higher.” This remark was made by Martin Georgiev, Chairman of the Association of traders with electricity in Bulgaria in an interview for the Bulgarian national radio (BNR).
According to Kaloyan Staykov from the Institute for Market Economics the situation is very concerning for businesses with high electricity consumption. On the national radio he clarified that such a trend is observed in the whole European Union.
“When an increase of the prices is discussed, two things should be differentiated – external factors valid for almost all of the EU and internal factors – specific for our power market, which by itself is very unique. That is why future measures should take into consideration this differentiation”.
“The proposition for offering additional volumes by the generators to the free market is a measure that potentially will reduce the pressure on the market”, said Martin Georgiev and added:
“One of the main problems on the Day-ahead market is the fact that a significant amount of electricity is traded there, because electricity bought through long-term contracts covers 40% of the consumption, hence more than half of the energy is purchased on DAM. In every country is different, but normally between 10% and 20% is traded on the DAM, the remaining volumes are purchased by long-term contracts and long-term fixed prices, which guarantee stability and predictability for generators and consumers”.
Georgiev is positive that traders cannot offer stable electricity price, if they don’t have the opportunity to purchase it through long-term contracts.
Martin Georgiev said that during the last years 17 energy traders, have withdrawn from the market due to the specifics of the Bulgarian power market. That is 10-15% of the licensed traders in the country. In 2017 the leading energy traders have accumulated losses of around 50 million leva.
“The main sellers on the Bulgarian market are the state owned power plants, hence if there is a measure to ensure liquidity it should be executed by them. The peak energy is important, this is the energy consumed during the day and used by 90% of the consumers on the free market. Even one megawatt hour of peak energy wasn’t sold on long-term basis, despite the need for that. This is what we have requested in many of our statements – to ensure offering of peak energy, which is very important for the market and its availability will prevent the volatile prices which are observed on the Day-ahead market”, clarified Martin Goergiev.
According to Kaloyan Staykov the volumes are important, but the problem of our market is the high concentration – “the three state companies in Bulgarian energy holding created that problem, because when they decide to reduce volumes, the prices rise and when the supply is limited the demand is high and there is high volatility in the day ahead or month ahead. In such conditions the regulator must have more active role, because when there is a monopoly on the market, it must be regulated.
The whole interview is available at: Цялото интервю може да изслушате на: http://bnr.bg/play/post/101068143/specifikata-na-svobodnia-pazar-na-tok-v-balgaria-predpostavka-za-problemi
Source: Bulgarian national radio