2023 wholesale market price: EPEX SPOT Electricity – Stock Exchange

Suppliers residents of future contracts must optimize their coverage strategy. It consists in covering its electricity consumption with the products available on the market. However, it is complicated to cover consumption on a hourly basis and with standardized products on the market. Often, the supplier must complete consumption at a time step with term storage products.

Presentation of the wholesale electricity market

The wholesale market designates the market where electricity is negotiated (purchased and sold) before being delivered to final customers (individuals or companies) via the network.

A central place in the operation of the French electrical system

The balance between supply and demand

In terms of physical assessment, the wholesale electricity market holds a central place in the operation of the French electrical system: it makes it possible to ensure the balance between supply (upstream part) and demand (downstream part ) electricity.

Upstream, The electricity injected on the network comes from:

• approximately 95 % of production plants (nuclear historic park and others);
• imports from other European countries.

Downstream, Electricity is supported by the network:

• for more than 75 % for final consumption;
• For exports.

A part is lost when transporting electricity or used for pumping.

Part of the electricity injected on the network is not negotiated on the markets: it is directly delivered to end customers by integrated companies, that is to say both producer and supplier.

The rest of the production or supply is negotiated on the wholesale markets, giving rise to several transactions which can result in physical appointments.

Market players

The actors who intervene on the wholesale market are:

• electricity producers who negotiate and sell the production of their power plants;
• Electricity suppliers who negotiate and obtain electricity and then sell it to end customers for their consumption;
• traders who buy to resell (or vice versa) and thus promote market liquidity;
• erasure operators who value the avowed consumption of their customers.

Exchanges

Exchanges can be done:

• on scholarships;
• of an intermediated overwhelming (that is to say via a broker);
• directly by will (pure bilateral).

Transactions can be purely financial (if the product only induces a financial exchange) or lead to physical delivery on the French network.

Spot or term: wholesale market products

We can distinguish, on the one hand, spot or cash products, relating in particular to the pan-European mechanisms of coupling of the daily and infra-day markets (with products purchased for delivery the next day or the same day) and, on the other hand , term products (purchased for delivery over a more distant period fixed).

Spot products

Depending on the markets, spot products are:

• For the daily deadline, hourly products with delivery the next day. These can be connected to each other by means of complex products called “blocks” in particular to better represent the constraints of the production park.
• For the infra-day deadline, half-winner products, hours or by blocks of several hours, with delivery the same day.

Reference prices for the French electricity market are those of the daily deadline, that is to say the time products calculated by the designated operators of the electricity market (NEMO) operating in France, within the framework of the daily markets. They are fixed every day before 1:00 p.m. by a joint auction mechanism. Negotiated the day before for delivery the next day, they reflect the balance of offering to this deadline.

The daily deadline is supplemented by a platform at the infrared deadline called “XBID”, which allows you to exchange energy between countries until an hour before the start of the time of delivery. Then, RTE, the manager of the French transport network, ensures the management of the balance of real-time offer in real time. In addition, the French infrared market allows exchanges in France up to five minutes before the start of delivery.

These short -term prices are volatile. Indeed, electricity cannot be stored on a large scale and factors influencing the balance-demanding balance may vary considerably, such as climatic conditions (cold increasing consumption, etc.) or events provided for or not on the electric park (power center, broken down, capacity forinterconnedemandwe reduced, etc.)).

Tower products

Electricity market players can sign electricity sales/purchase contracts for supply in days, weeks, months, quarters or years to come, at a price negotiated on the date of Conclusion of the contract.

Future contracts are term contracts which relate to standardized products in order to facilitate their exchange, for example, the delivery of 1 MW of electricity in the base (during all hours of a period), or in a point (8h at 8 p.m. Monday to Friday). Forwards contracts are term contracts concluded between two parties, directly or through an intermediary, with greater flexibility over the delivery period, etc.

Having a more distant horizon, and a priori corresponding to the average prices of early spots for a period considered, the prices of long -term products are less volatile than the prices spot. In particular, they allow risk coverage for suppliers and producers, and generally serve for the definition of prices for end customers: indeed, when a supplier signs a contract with a customer, it is generally covered for most of the deliveries that he will have to carry out, taking into account his production assets and by buying the necessary term products.

The encrypted data published by the CRE

The CRE regularly publishes its analyzes on the evolution of the wholesale markets of electricity, gas and CO2 in:

• its annual report on the operation of wholesale markets;
• its quarterly observatories of electricity and gas markets.

The capacity guarantee market

The energy code establishes, in its articles L. 335-1 and following, an obligation to abilities. Each supplier is thus required to obtain capacity guarantees to cover the consumption of all of its customers in cutting -edge national consumption periods. This mechanism encourages, in the medium term, production or erasure capacities.

Capacity guarantees can be obtained by investing in means of production or erasure or with capacity operators. The latter are assigned by RTE guarantees for the effective availability (controlled by RTE) of their capacities during the voltage periods of the electrical system.

Respecting the commitments and obligations of the various players is ensured by an incentive financial regulations after the delivery year. A secondary market for capacity guarantees is organized by EPEX SPOT. The first auction of this type took place in December 2016.

In application of the provisions of articles R. 335-57 of the energy code, CRE publishes, for each delivery year, the administered price and the reference price used for financial regulations relating to capacity rebalancing:

• The price administered for the years 2017 to 2020 was published by the CRE in its deliberation of December 1, 2016 on the rule of calculation of the reference price at the price administered provided by the rules of the capacity mechanism;
• The price administered for the years 2021 to 2022 was published by CRE in its deliberation of December 18 approving the ceiling used within the framework of the financial regulation of the differences in the capacity mechanism for the 1920s and 2022;

• The reference price for capacity deviations, known as “Pre -C”, is determined in application of the methodology defined by the CRE in its deliberation of February 28, 2019 on the procedures for calculating the price reference for the calculation of differences in the framework of the capacity mechanism.

For the years of deliveries (“al”) 2017 to 2020, the CRE publishes, for information, a price reference similar to the market reference price “PRM”, defined as the simple arithmetic average of the prices revealed by the auctions made on exchange platforms organized between January 1.

Delivery year	“PRM” market reference price (€/MW)
2017	9999.8
2018	9342.7
2019	17365.3
2020	19458.3

For the operating methods of the capacity mechanism, consult:

2023 wholesale market price: EPEX SPOT Electricity – Stock Exchange

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The price of MWh of electricity in France on the Spot market is today to 87 € the MWh while tomorrow, it will be €. A month ago, on 08/25/2023, the price of electricity spot was € 111.08 while a year earlier, it was € 272.84.

Find below the evolution of electricity spot prices for France. Electricity prices on the wholesale market are updated from 2 p.m. for the next day.

Evolution of the price of Spot electricity (Day-Ahead)

Spot price of tomorrow 09/26/2023	Daytime price of the day 09/25/2023	Spot price a month ago 08/25/2023	Spot price a year ago 09/25/2022
Price in €/mWh	Posted around 1:30 p.m €/mWh	87 €/mWh	98.37 €/mWh	399.15 €/mWh
Evolution in €	–	–	-11.37 €	-312.15 €
Evolution in %	–	–	-11.56%	-78.2%

Source: North Pool Group – Updated manually on 09/25/2023

Source: EPEX SPOT

Some key dates concerning the evolution of the price of electricity on the Spot market:

• Fall 2021 : The end of the health crisis linked to the COVID-19 and the arrival of winter in the northern hemisphere caused an increase in demand from raw materials such as gas, oil and coal. Monopolized by Chinese recovery, the availability of gas in Europe is less, which contributes to mechanically increase the price of available electricity. Also added an increase in the price of CO₂ emission quotas decided by the European Commission in order to green electricity production.
• December 2021 : Following the postponement of the maintenance operations of the reactors linked to the COVVI-19, EDF announces the closure of the two reactors of the Chooz power plant due to corrosion problems. Other reactors will have to be arrested in the months following this same corrosion problem.
• February 2022 : After a period of lull, Russia invades Ukraine and the European Union begins to put in place economic sanctions towards Russia including a threat of embargo on Russian oil. The inauguration of the North Stream 2 gas pipeline remains unanswered.
• Summer 2022 : Russia announces the reduction of gas deliveries via Nord Stream 1 to Europe due to technical problems. The European Union deplores political pressure from Russia to push Europe to lift economic sanctions against it. At the same time, Europe is starting to constitute its gas reserves for next winter, which generates an increase in demand while the available supply decreases. On the other hand, corrosion problems oblige EDF to have to stop almost half of its nuclear fleet.
• Fall 2022 : EDF unveils its reopening calendar of its power stations. The vast majority should be available again for January 2023. In addition, relatively mild temperatures limit energy demand in Europe, which helps to calm markets.

What is the wholesale electricity market ?

The wholesale market represents the market on which electricity and gas are purchased and sold before energy is delivered to the network for end customers, whether they are private or professional.

Variation depending on supply and demand

Like most markets, the wholesale electricity market evolves given the supply (upstream) and demand (downstream).

• L’offer designates the part upstream Before electricity was injected on the public network:
  • About 95% of the production comes from the historic nuclear and other park (power plants in France);
  • The rest of the electricity comes from imports of European origin.
  • About 75% of electricity is intended for consumers in France;
  • The rest of the electricity is intended for export.

  Note that there is a small part of the electricity which is lost at the time of transport or which is consumed for pumping.

  The various players in the wholesale market

  The wholesale electricity market is made up of different actors ::

  1. THE producers electricity that sells their electricity produced from their power plants;
  2. THE suppliers electricity that buy electricity to resell it to end consumers;
  3. THE traders in energy which promotes the liquidity of the market by buying electricity to resell it and vice versa;
  4. THE operators erasure that avoids the consumption of electricity of their customers when there is an imbalance between supply and demand in electricity.

  Two types of electricity suppliers

  Some electricity suppliers are also producers. We call them “Integrated companies”. Concretely, the electricity produced injected on the network is not negotiated on the market. It is directly delivered for end consumers by these producers-forrs.

  Electricity injected into the network that is not produced by integrated companies (electricity suppliers “simple”) therefore come from wholesale markets where negotiations and transactions take place.

  Exchanges and transactions

  THE trades are made :

  • either in stock exchange : EPEX SPOT FRANCE corresponding to SPOT (short -term) and EXE POWER DERIVATIVES FRANCE products for future products (in the long term);
  • either via a broker : overwhelmingly intermediated;
  • either in direct bilateral : over will directly.

  As for transactions, they can be 100% financial or have the purpose of delivery on the French network.

  Spot or short -term products

  THE Spot products – Also called short term – On the markets designate:

  • For the daily deadline : hourly products from the day before with a delivery that takes place the next day.
  • For the infra-day deadline : semi-hourly products, timetables or by several hours, with delivery the same day.

  In general, the reference price of the electricity market in France is established on the daily deadline. This means that time products are calculated for coupling markets day laborers by the nominated electricity market operator (NEMO) in France, that is to say the designated operators of the electricity market. Each day, the reference price for the spot-in other words the price of the day-ahead product on the EPEX Spot stock market-is defined between 12:30 p.m. and 1 p.m. by an auction system (Fixing). To this deadline, the reference prices negotiated the day before for delivery the next day represent the balance between supply and demand.

  The solution infra-day panician Xbid The role of allowing negotiations and exchange between countries up to an hour defined before the beginning of delivery. In France, exchanges are made up to 5 minutes before the beginning of delivery. The manager of the transport network in France RTE then takes over to adjust in real time the balance of supply and demand.

  Short -term spot products are experiencing significant price volatility, especially since electricity cannot be stored:

  • Under climatic conditions: cold waves increasing electricity consumption, lack of wind generating a drop in green electricity production via wind turbines, etc. ;
  • in unpredictable events: breakdown of a power plant;
  • In provided events: reduced interconnection capacity.

  Suppliers using short -term spot products are without coverage strategy, since consumption must be covered at all costs. Please note, if consumption is not 100%covered, the excess electricity consumed can cost more. It is the adjustment system provided by the RTE deletion operator who is responsible for defining the price of the excess electricity consumed (difference between the consumption planned and the consumption observed). If the gap contributes to the balance of the network, the price billed is at the price spot. However, if the gap amplifies network balance, the price billed may be more expensive than the Spot price.

  Future or term products

  THE Future products – Also called products in the long term – allow you to sell its electricity production in advance (weeks, months, quarters or years) at a negotiated price at the time of the date of the contract. Unlike the short -term spot product, future future products are less volatile.

  The supplier can Buy electricity in two ways ::

  • Without overwhelming with the producer : “Over the Counter” (OTC);
  • through a grant : such as EXE for Europe.

  Several formats for purchasing the quantities of electricity exist:

  1. “Base” : quantity of electricity of constant power throughout the year;
  2. “Peak” : quantity of electricity with a constant power from Monday to Friday for the time slot from 8 a.m. to 8 p.m.;
  3. “”Off peak “ : quantity of electricity with constant power from Monday to Friday for the time slot from 8 p.m. to 8 a.m. as well as Saturday and Sunday.

  Suppliers residents of future contracts must optimize their coverage strategy. It consists in covering its electricity consumption with the products available on the market. However, it is complicated to cover consumption on a hourly basis and with standardized products on the market. Often, the supplier must complete consumption at a time step with term storage products.

  

  After a master’s degree in technology management, Claire has evolved in an exclusively digital environment for ten years. In April 2018, she took over the development of Kelwatt.Fr. Today, Claire has become (almost) unbeatable on the actors, the prices, the procedures and the operation of the energy market. It is also doubly certified: specialist in the energy market and expert on energy suppliers.

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