"Alexela Latvia" publishes electricity and natural gas forecast report for the first quarter of the year
23. November 2023
Experts from "Alexela Latvia" in electricity and natural gas released today an "Energy and Natural Gas Market Overview," summarizing the events and trends in the electricity and natural gas markets for the last quarter of the previous year and providing forecasts for the first quarter of this year. In the closing quarter of the previous year, average monthly prices remained at a similar level to the previous period, but significant fluctuations were observed on a weekly basis.
During this period, the average weekly electricity prices fluctuated around ~100 EUR/MWh. In November, a price increase of up to 20% was recorded, mainly associated with an increase in consumption and a rapid temperature drop in the NordPool region, as well as unplanned outages of Finland's Olkiluoto 3 nuclear power plant. Experts predict that hydrological conditions in Scandinavia and Latvia will influence prices in the first quarter of 2024. The rapid drop in water reservoir levels in Scandinavia, already experiencing a deficit, will impact future prices.
The stable operation of nuclear power plants will be crucial, and during periods of high demand, interruptions in their operation can cause price jumps. Weather forecasts, including wind energy and the operation of fossil fuels, will continue to significantly impact the overall dynamics of energy prices. "The current hydrological situation in Scandinavia and Latvia is crucial as it may create challenges in the energy market. The importance of hydroelectric power to the stability of the overall energy system will only increase in the coming months. Meanwhile, the operation of nuclear power plants will be a factor determining price stability, especially during periods of high demand," said Edgars Legzdiņš, an energy expert and Corporate Customer Relations Manager at "Alexela Latvia."
Analyzing natural gas trends, one of the most significant elements is the relationship between supply and demand, which has changed dynamics, especially compared to the third quarter of the previous year. Geopolitical aspects were overshadowed this time by other stronger factors—Norway's pipeline gas exports reached record highs in December, and the United States continued massive exports to Europe due to weak Asian demand and restrictions on the Panama Canal preventing the U.S. from sending gas to Asia. A warm start to the winter in Europe in 2023 reduced natural gas consumption.
"The growing volumes of wind generation in electricity production helped reduce natural gas consumption. Overall, in determining the price for the fourth quarter, the decisive factor was European natural gas inventories, which, although decreased after reaching record highs in November, are still very high, providing a convincing guarantee of sufficient natural gas for Europe this winter," said Legzdiņš.
"The macroeconomic situation currently does not put pressure on natural gas demand, and industry experts give optimistic forecasts for European natural gas inventories at the end of the heating season.
You can get acquainted with the current "Energy Market Review" on the company's official YouTube platform.
