The electricity price situation in Hungary and Romania

The electricity price situation in Hungary and Romania


Hi, I’m Bartosz Palusinski from E&C Consultants. On this short video I will update you on the
electricity price situation in Hungary and Romania. I will explain why the prices are at current
levels and give you my recommendations. Look at the line trends. In Romania electricity prices year-on-year
went up by nearly 20%. Even at the moment energy suppliers are coming
to their customers asking for 10 to 20% price increase for the contracts signed in 2016. In Hungary, for some end-consumers it could
be a shock as prices y-o-y went up by nearly 30%. What are the reasons for those increases? To explain that, let me start by showing the
generation mix of those countries. Romania prices are driven by coal and hydro
while Hungary is more dependent on coal, nuclear and gas. Coal prices are in constant increase since
March-April 2016 and are rising at the moment. Strong winter at the beginning of 2017 together
with the low levels of water highly impacted the generation of power in the region. Spot prices spiked to more than 100 €/MWh. Because of low levels of water, Romania was
forced to reduce its export capacity to neighbouring countries, also towards Hungary. Hungary as a net importer of electricity had
a problem. So what can you do about it as an energy buyer? In the short, mid and long term. In a short term, for 2017 in Romania, if you’re
currently approached by your current supplier asking for the price increase, think about
negotiating with them. Also benchmark the price with the other suppliers. Also negotiate a clause in the contract which
enables you to keep the price stable and unchanged whatever happens on the market in the future. In the mid term, for 2018, it depends on your
budget situation. If you still have some space in your budget,
think about hedging a quarter for example, a half a year of 2018, wait a little bit and
buy the rest later. Also think about having the multi-click contracts. In Romania, it would be a problem because
the power exchange is not liquid enough and not transparent enough to have that kind of
contracts. In Hungary, there is a different situation. The market is mature enough to have multi-click
contracts so you can spread the risk by choosing different moments and different contracts. In the long term, create a good strategy so
you know exactly how to behave if the prices are low or high. Define in the strategy opportunity moments
and also the risk limits. Thanks for watching. Visit us on LinkedIn and also our website.

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