As the price of electricity fluctuates on the exchange, an expert advises consumers on how to reduce their electricity bill

Homein 2024 April 25 12:06 p.m

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Etaplius.ltSource: Press release

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In April, with the activation of electricity generation from renewable sources, record low electricity prices were recorded in Lithuania. However, the expert draws attention to the huge hourly price spikes that contribute to higher electricity bills.

According to Mantas Kavaliauskas, product development manager of Elektrum Lietuva company, although fluctuations in electricity prices are likely in the near future, there are ways to maneuver electricity costs. It also reveals what price changes consumers can expect when they opt for an exchange-linked electricity plan.

Huge price swings

According to the data of the Lithuanian Energy Agency (LEA), the average monthly price of electricity on the Nord Pool exchange in the first half of April reached 0.042 euros per kilowatt hour (Eur/kWh) without VAT and was 38 percent. lower than the average price of March of this year, which reached 0.068 Eur/kWh.

April 14 a fixed price record – on that day, the daily price of electricity on the exchange was the lowest since 2018. June and reached 0.002 Eur/kWh.

M. Kavaliauskas points out that although the average price of electricity in the stock exchange in recent weeks is one of the lowest during this year, it is characterized by constant variability, which has not been lacking in recent weeks. For example, on Monday of last week, from 15:00 to 17:00, the price of electricity on the exchange was negative and reached -0.01 EUR/kWh, while the following day, from 9 to 10:00, it rose to 0.149 EUR/kWh.

“Thus, despite the fixed cases of record low prices, the general trend of recent months on the Nord Pool exchange is large hourly price fluctuations.” Such cases, when prices are negative at night and reach several hundred euros per megawatt-hour in the morning and evening, may occur even more, since the wholesale price of electricity on the stock exchange is affected by many factors,” he says.

There is a higher probability of price increases than decreases

Consumption habits, fluctuations in the price of natural gas, weather conditions, electrical network repair work – these and other factors lead to large fluctuations in the price of the electricity exchange. According to M. Kavaliauskas, for residents who have chosen a plan linked to the exchange, the price of electricity changes every hour, but there is also a certain seasonal or annual rhythm.

“It is easiest to understand through the law of supply and demand. Usually, the lowest electricity demand is at night and on weekends, so the price on the exchange is also lower than on weekdays. Seasonal changes are also important, for example, the price of electricity usually goes down in the spring after the heating season ends. The increased production of green electricity from the sun, wind and water, which is more passive in winter, contributes to this,” says the expert.

Although it is difficult to predict the fluctuations of electricity prices in the Nord Pool exchange in the coming months due to the complexity of the factors that determine them, there are currently more and more signals of increasing consumption in the market.

“At the moment, with the complete withdrawal of Russian gas, its price is starting to rise in the market, and we also see a gradual recovery of industry and consumption, which means that the demand for electricity may increase. Summer, which starts in more than a month, can also lead to price fluctuations, as the demand for electricity increases during the heat. It is also worth noting the instability in geopolitics – military conflicts pose a risk to supply chains, and their disruption or interruption would immediately increase electricity prices significantly”, says the expert.

There are solutions to save money

Despite the dynamics of electricity prices on the stock exchange, there are ways to reduce electricity costs. The main one is to monitor the market situation and adjust your consumption habits accordingly.

For example, with a high hourly price on the stock exchange, it is recommended not to leave household appliances in standby mode. Users are also encouraged to turn off the lights in the rooms when they are not in them, to responsibly use the air conditioner for home cooling and other electricity-consuming appliances in the house.

“When comparing fixed-price plans with exchange-linked plans, consumers who choose the latter can save in some cases, but there is a risk of spending significantly more.” In order to effectively manage these risks, a quick reaction to changes in the electricity exchange is necessary. We offer all electricity users to use the Elektrum app, which allows you to monitor changes in the price of electricity on the Nord Pool exchange and make decisions about its use at a certain time based on that,” says the expert.

At that time, residents who do not want to adjust their consumption to the changing prices in the market are recommended to fix the price, leaving all the risks of its change to the supplier. According to M. Kavaliauskas, it is currently a favorable time for this, because seasonally in spring, compared to other times of the year, electricity prices are one of the cheapest in the year. This is due to the increasing generation of electricity from renewable energy sources and the usual decrease in electricity consumption.

“If prices are fixed at the right time, you can feel safe about electricity prices and not be afraid of their fluctuations on the stock exchange. From practice, we notice that the decision to fix the price of electricity works best for those residents who do it after the end of winter. Over time, the risk increases due to rising prices on the stock exchange and, accordingly, the price of electricity plans offered by suppliers,” says the head of product development.

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