Stable in the first positions of the most expensive wholesale markets current Europe remained Greek, and in 2022, when the average price of electricity increased by 141% compared to 2021. In the same year, the value of imports natural gas has more than doubled since 2021 and nearly quintupled since 2018. In particular, according to the IENE Annual Energy Analysis Report, the average wholesale electricity price in Greece was 279.39 EUR/MWh, compared to 116.02 EUR/MWh in 2021.

Greece, according to data processed by “K” in 2022 it was the third most expensive market in Europe after Italy at €304.17/MWh and Switzerland at €282.43/MWh. The average price per megawatt-hour differs significantly in Greece even from the wholesale market of united Bulgaria (253.83 euros) and much more from the German market (236.11 euros) and far from the markets of Northern Europe, which also show the lowest prices. , while the price in Sweden is at an extremely low level – 59.21 euros, and in Norway – 192 euros.

Role of natural gas

Government subsidies prevented high wholesale prices from showing up on energy bills and burdening households.

The significant increase in wholesale electricity prices may not have been fully accepted by consumers due to high subsidies, but it reflects the general uncompetitiveness of the Greek electricity market, which is being passed on to businesses and the entire Greek economy. The main reason for this Greek lead in wholesale electricity prices is the high share of natural gas in electricity generation, as also indicated by a recent OECD report. According to IENE data, the fuel mix in electricity generation for 2022 was mainly based on natural gas, which accounted for 38%. RES participated in the structure of electricity generation with a share of 35% and together with hydropower (6%) with a share of 41%, while the share of brown coal was 12%. In 2022, net electricity imports into the Greek system also increased by 5.22%. The 141% increase in the wholesale price of electricity also contributed to the impressive rise in pollutant prices, which exceeded 98 euros per tonne in 2022.

Decrease in demand

Also of interest is data on demand for electricity, which, despite high prices and saving campaigns, fell in 2022 by only 1.25% compared to the previous year. Specifically, electricity demand was set at 51,860,588 MWh in 2022, compared to 52,517,448 MWh in 2021. Similarly, the average system load was 71,055 MW in 2022, down 1.18% from last year.

For natural gas, according to DESFA data, total demand in the domestic market decreased by 19.04% in 2022 compared to 2021, although total demand through exports increased by 11.11%, reaching 86.18 TWh from 77.56 TWh in 2021. Of interest is the IENE data on the formation of the weighted average price of natural gas imports in the Greek market, which rose to 116.3/MWh, recording a significant increase of 148% compared to 46.9 euros/MWh in 2021, while it grew by almost five times compared to before 2018 levels.

“Weight” for residential natural gas installations, emergency fee

The turmoil in the wholesale market and the increase in the cost of natural gas installations by 20 euros per megawatt-hour are caused by the emergency levy introduced by law from the beginning of November 2022 in the amount of 10 euros per megawatt-hour. The measure artificially makes the Greek market more expensive than its neighbors, according to ESAH (Association of Independent Electricity Producers) in a letter to Environment and Energy Minister Kostas Skrekas, causing a significant increase in imports at the expense of domestic production units.

He even cites data showing that over the past five weeks and in contrast to the annual average, electricity imports have increased from 24% to 38% against an average of 8% in 2022. Accordingly, in the same period, the percentage participation of the share of domestic units in the wholesale market gradually decreased from 28% to 9% from 38% on average in 2022.

The effect of regulation on the trade balance is obvious and unfavorable for the country, while, in addition, the shift in favor of imports caused by it also reduces the income of TEM, since imports do not participate in the temporary mechanism for returning part of the income. At the same time, it increases the country’s energy dependence and threatens the security of supply. In addition, according to ESAH, this greatly affects the competitiveness of domestic natural gas power units, as it makes it 20 euros per MWh more expensive than comparable counterparts in the rest of Europe. He also points out that in relation to the period when the measure was announced, the emergency levy on natural gas prices in the TTF has tripled.

Another issue noted by ESAH is that the sudden imposition of the emergency levy disrupted companies’ plans for LNG cargoes that were chartered and contained take-or-pay clauses, forcing plants to operate at a loss. This also led to the cancellation of cargoes, resulting in financial losses and serious difficulties in managing regular cargoes.