Stock market prices have risen to a record level: What can you do to keep your bills lower?
The stock exchange price of electricity has jumped to unprecedented heights in recent weeks. We are going to explain you why the high prices occur, who is affected, and how you can protect yourself against higher stock exchange prices.
The price of electricity is formed in the common electricity market of the Nordic and Baltic countries, and it does not depend too much on which power plants operate in Estonia. If wind, solar and hydroelectric power plants cannot operate to a sufficient extent due to the weather, gas and coal-fired power plants will have to be started up, the net cost of which is higher due to environmental taxes and fuel prices.
Why is the price of electricity so high?
There is no single reason but a combination of factors. This year, the demand for electricity has been high both in winter, when it was frosty, and in summer, when electricity was used for cooling purposes. The economic environment is also active – consumption is 8% higher than last year.
All electricity consumed by customers is purchased from the joint Nordic-Baltic electricity market. This means that the price of electricity is formed not only by which power plants operate in Estonia but in the region as a whole.
This year, there has been less wind and less rainfall for hydropower in our market area. Higher production loads have fallen on gas and coal-fired power plants whose net costs are higher. This is due both to the higher price of CO2 and to the multiple increase in the price of gas. To put it simply – if cheap power plants can't work, more expensive ones will have to do it.
Who is affected by the high stock exchange price?
High stock exchange prices affect those consumers who have chosen the Variable Package, because in this case the formation of electricity bills is linked to the stock exchange price. If you have a Variable package, you should be aware of stock prices so that you can reap the benefits of lower prices and reduce your consumption at higher prices.
If you have chosen a fixed price package, such as the Fix or Fix Plus, you are not affected by price fluctuations on the stock exchange and the price risk is borne by your electricity seller.
What can I do as a customer?
As a private customer, it is worth carefully considering whether to prefer a fixed-price package or to take the risk of price fluctuations and decide in favour of a package that depends on the stock exchange price.
If you have opted for a stock exchange package, you can reduce your bill by shifting your consumption from higher priced hours to lower priced ones.
Eesti Energia’s customers can see current electricity exchange prices on the Eesti Energia Mobile App. Many customers who have chosen the stock exchange package use this information to schedule their household appliances (washing machine, water heater, electric sauna heater) to work during the best hourly prices and thus save.
However, there are more and more those people who want long-term security against price fluctuations, and a good solution for this is to start generating your own electricity by means of solar panels.
By consuming locally generated electricity, expensive network electricity, which includes network charges, excise duties and taxes, is left unpurchased. Installing solar panels is one of the easiest ways to start producing your own green electricity. In general, it is possible to halve your electricity bill with solar panels.
Will the price remain high?
Forecasting is a thankless job. A lot depends on the weather. In autumn, we can expect stronger winds and more of cheap renewable energy to enter the market. As the weather cools, heat-generating power plants will start up to a greater extent, alleviating demand and bringing prices down.
At the same time, we can see that the price of electricity traded in advance is at a higher level than usual, i.e. the price level will definitely be higher compared to last year.
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