Electricity Tariffs: What Futures Contracts Indicate for Summer Prices This Year

The rise in electricity prices observed in June has an explanation, despite the drop in base prices in May in our country. According to suppliers, we are entering a period where electricity prices in Europe, the Balkans, and Greece are expected to increase, with corresponding effects on tariffs. To some extent, this is a natural evolution when considering the increased demand during summer, the drought reducing the operation of cheaper hydropower plants, and the fact that Northern Europe remains relatively isolated compared to the rest of the continent. A look at futures contracts reveals current estimates. On the European Energy Exchange (EEX), the Greek future contract for the third quarter of the year strengthened over the past fortnight from €112 to €126 per megawatt-hour. Similarly, the contract for delivery in July surged from €106 to €132. Of course, the prices of these futures do not necessarily mean that these exact rates will prevail when the respective months arrive. Instead, their volatility reflects a reality in the market, which is currently unfavorable for consumers. Additionally, last summer saw a mini energy crisis across the wider Balkan region, with very high prices in July and August. Despite discussions since then between governments and Brussels, no structural changes have occurred in the overall market, which remains at the mercy of weather conditions and potential emergencies. Suppliers state they must protect themselves against the possibility of sharp spikes in base prices. There is also an effort to spread the expected July and August increases across June as well.