The increase in the wholesale cost of electricity over the year was lower than official consumer inflation

The increase in wholesale electricity prices at the end of 2023 was again lower than official consumer inflation, amounting to 6%. Generating companies complain that prices lag behind the dynamics of real costs of operating thermal power plants. And the industry warns that in the next two to three years the cost of electricity on the market will begin to rise rapidly due to the indexation of gas prices and the launch of new expensive power plants.

The single-rate wholesale price for electricity (for commercial consumers) at the end of 2023 increased by 6% year-on-year cumulatively across the entire energy market, the Market Council (the energy market regulator) reported. The growth of the indicator turned out to be lower than inflation (7.42%, according to Rosstat), they emphasized. The single-rate price of the energy market consists of two components: the cost of electricity (increased by 9.6% at the end of 2023) and the cost of capacity (increased by 2.1%).

The one-part price in the first price zone (the European part of the Russian Federation and the Urals) increased by 5.6%, exceeding 2.78 thousand rubles. for 1 MW•h. In the second price zone (Siberia), the figure increased by 7.9%, exceeding 2.32 thousand rubles. for 1 MW•h. Price dynamics “indicate the stability of the operation” of the wholesale energy market, noted in a statement by the head of the Market Council, Maxim Bystrov.

The average price on the day-ahead market (DAM, electricity trading sector) in the first price zone at the end of 2023 was approximately 1.59 thousand rubles. for 1 MWh, and in the second – about 1.25 thousand rubles. The Market Council explained to Kommersant that DAM prices in the first price zone were influenced by increased demand, decreased output from nuclear power plants and hydroelectric power plants, as well as rising fuel prices. In Siberia, the largest increase in prices was noted in the eastern regions against the backdrop of growing demand, a decrease in hydroelectric power generation in the Irkutsk region and rising coal prices.

The Council of Energy Producers (which unites the largest generating companies) notes that in 2020–2023, the cumulative growth of the single-rate price amounted to 21.1%, with inflation at 36.7%. At the same time, in the sector of competitive power selection (KOM, which covers the costs of operating the paid-off stations), the accumulated gap from inflation in the context of rising actual costs indicates underfunding of the capacity market (the increase in the price of KOM in 2023 is 2.1%).

The Community of Energy Consumers (unites industrial consumers) called the results of the year “the calm before the storm.” They believe that the pressure on the single-rate price was minimal in the absence of indexation of gas prices and a shift to the right of more than a third of modernization projects for old thermal power plants, all facilities in Taman, expensive waste incineration thermal power plants and some renewable energy sources: “The single-rate calm of 2023 will have to be forgotten in the coming two to three years, when the gas price indexation cycle begins and deferred projects enter the market, as well as the Kursk NPP-2 unit (1.2 GW, commissioning in 2026.— “Kommersant”)”.

According to the forecasts of the Market Council, the single-rate price in 2024 in the first price zone may slightly exceed 3 thousand rubles, in 2025 it may be about 3.1 thousand rubles, and by 2029 it will exceed 4 thousand rubles. In the second price zone, the figure in 2024 could be about 2.5 thousand rubles, in 2025 – about 2.6 thousand rubles, and by 2029 – about 3.5 thousand rubles.

In the next two years, the rise in DAM prices in the European part of the Russian Federation and the Urals will be influenced by the rise in gas prices (by 11.2% in July 2024 and by 8.2% in July 2025). In Siberia, the dynamics of the DAM indices will depend on coal prices (growth by 7.2% in 2024 and 4.7% in 2025, according to the forecast of the Ministry of Economy). The regulator expects electricity consumption in the whole wholesale energy market to grow by 1.8% in 2024.

The average price for power, according to the Market Council’s expectations, in 2024 in the first price zone will be 944.6 thousand rubles. for 1 MW per month, and in the second – 884.8 thousand rubles. In 2025, the figure will decrease slightly, but then return to growth. The largest increase in price is expected in 2029 – by 20% in the first price zone and by 18% in the second, which is associated with a large number of commissioning of new power plants.

Polina Smertina