It is recalled that the ceiling was set at 180 euros/MWh and will apply from February 15
Belying estimates made even by EU institutions that the imposition of a fuel price cap would lead to a rise in prices, the drop in the international price of natural gas by 80% in early 2023 compared to the record high that occurred in August 2022.
In particular, the price of natural gas on the Dutch stock exchange (TTF) fell at the beginning of 2023 to the level of 75 euros per megawatt hour (last week it fell below 65 euros) lower than the period before the Russian invasion of Ukraine, while last August it had exceeded 340 euros. The drop is also significant since December 19, the day on which it was decided to impose a ceiling, when the price fluctuated at 110 euros per megawatt hour.
The cap, if it did not contribute to the fall, certainly did not lead to a rise in prices as some had predicted, while a favorable environment for holding prices down was created by a number of factors, including:
-The seasonally high temperatures in Europe that led to a decrease in demand for heating.
– Ensuring alternative sources of natural gas supply, mainly with the rapid development of new Liquefied Natural Gas stations.
-The reduction in demand resulting from the implementation of energy saving programs in EU countries.
– The development of RES that replaces electricity generation from natural gas which is the most expensive source of electricity generation.
-The increased reserves of natural gas in the underground storages of Europe. According to relevant data, warehouses on January 1 were 83.5% full, which is significantly higher than in previous years.
Concern on the part of the market is now shifting to possible implications of the European TTF cap on meeting needs for next winter (2023/2024), if forecasts of an increase in Liquefied Natural Gas (LNG) demand from China are confirmed.
According to data presented recently, on the occasion of the agreement on the ceiling, by Nikos Tsafos, adviser on energy issues to the Prime Minister Mr. Kyriakos Mitsotakis, the supply of LNG from European countries is made at significantly lower prices (up to 77 euros per megawatt hour) relative to the TTF, which means that Europe can attract LNG cargoes at prices well below the TTF. Moreover, even after the TTF fell from the August all-time high and the price spread from Liquefied Gas narrowed the supply of LNG to European countries not only continued but reached an all-time high.
It is recalled that the ceiling was set at 180 euros/MWh and will be valid from February 15. It will be activated when the price of natural gas exceeds 180 euros/MWh for three consecutive days and at the same time exceeds by 35 euros/MWh the international reference price for Liquefied Natural Gas.
RES-EMP
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