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Since the energy crisis, many of you have been paying much more attention to your bills and your gas and electricity consumption. After the crazy prices we experienced, the situation has stabilized, but not that much.
What are the current prices?
The observation is clear: the price of gas is currently double what it was before 2021. Currently, the megawatt hour on the wholesale market is €48, while it was more or less €15 in 2020 , before the energy crisis. The current geopolitical situation obviously plays a role in the fluctuation of these sums, but for different reasons. “The price of oil remains relatively stable. For gas, on the other hand, we are returning to values similar to those of 1 year ago. We experienced a decrease throughout the year, and now there is a relatively significant increase, we are between 45 and 50€/MWh. We went down to around €30/MWh this summer. You have to be very careful because no one can predict prices. But there is no identified factor for a drastic short-term increase like what we experienced in 2022“, analyzes Adel El Gammal, professor of energy geopolitics at ULB.
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A return? Probably not
We are in an extremely tense geopolitical context, which is becoming more and more tense every day, which inevitably has an impact on prices. “This will create price volatility. Any element can intervene and cause them to rise: such as the resonance of the conflict in the Middle East, if certain straits are blocked or dangerous, etc..”
And the change in source of gas purchase, following the conflict with Russia, changes our market base. “We are linked to the liquid natural gas (LNG) market. It is more expensive than the one we bought in Russia, because we compete with other players, and the price base is higher. I don’t think we will go back down to the level we experienced before, that is to say around 15 to 20€/MWh. We will probably always remain within 30 to 35€/MWh, which means that effectively, there would be an increase of 50 to 70% compared to before. This is more reflective of the state of the LNG market.”
But for the moment, we are in a reassuring balance. “We are in a rather favorable situation. Economic growth is weak, particularly in China, which is a large importer of LNG. The winter is not yet harsh and stocks are well stocked. We are in a situation of supply and demand which are balanced at the moment. But if, for example, in 3 months we have a super harsh winter across Europe and an unexpected economic recovery in China, prices will instantly increase. Demand would increase while supply is not elastic. A whole series of criteria can increase or decrease prices“, analysis Adel El Gammal.
