Freeze hits electricity markets as Greece halts exports

Bloomberg

The unusually cold weather and heavy snowfall that sowed panic in southeastern European power trading this week continued to pressure prices as Greece stopped exporting electricity and neighboring Bulgaria plans to follow suit.
While day-ahead power prices from Hungary to Bulgaria fell for a second day from Tuesday’s records, they remained above usual levels as the cold weather boosted demand while reducing output from the region’s hydroelectric plants. Greece halted electricity outflows on Wednesday and Bulgaria plans to stop all power exports from Friday.
“Consumption went to extremes, and the whole region is generally in deficit in winter time,” said Dejan Stojcevski, chief operating officer of Serbia’s Seepex power exchange. “Everybody is looking to import.”
Electricity for next-day delivery sold at 77.70 euros ($83) a megawatt-hour on the Seepex exchange, about half Tuesday’s levels but still almost double the price in Germany, the European benchmark. Prices on Bulgaria’s Ibex exchange fell 27 percent to 70.67 euros.
Hydroelectric production plummeted in the Balkans as temperatures fell as low as minus 20 degrees Celsius (minus 4 Fahrenheit) and parts of the Danube river were almost entirely covered with ice. Precipitation in the Transylvanian and Balkan regions will be down to as little as 50 percent of normal levels for the rest of the week, according to The Weather Co. data.
Officials expect consumption to slowly decline as temperatures begin to rise. Bulgaria’s electricity system operator forecasts a peak load of 6,900 megawatts on Saturday, down from about 7,700 megawatts on Jan. 10, spokeswoman Svilena Dimitrova said by phone. Still, temperatures in southeastern Europe will remain well below average over the next two weeks, according to MDA Weather Services.
The prolonged cold snap exposed the weakness of southeast Europe’s power markets, which should in theory have unrestricted flows. When consumption spikes and generation goes down at the same time, neighboring countries have trouble picking up the slack, Seepex’s Stojcevski said.
“The cheapest electricity is now in Germany, but that output cannot be easily shifted to this part of Europe,” he said. “The further south or southeast your go, the prices go up.”