Electricity is a commodity, Natural gas is a commodity too. The product itselves is highly standardized, there is practically no differentiation form a MWh in Prague or in Leipzig.
Price of Commodities
Products are highly Standard, the variable part is the Price of the commodity. The Price is never constant and will change over the year, over the month and over the day. The volume and conditions between Sell and buy on the Exchange is Setting the fair Price Level for all participants:
- in time of bad conditions for hydro Energy (draught), the availability of hydro bases products is declining and the prices will raise
- in time of a strong winter, the demand for Natural Gas for heating and Industry will raise significantly – the fair market price of Natural Gas will raise too.
A market price in an open and liquid market is the result between “offer” and “demand” between all market participants.
Prices of Commodities are settled by the merit order principles. The Merit order is for each Point of time the ranking of all available Sources of Energy – from the cheapest to the expensive power plant. The cost are calculated by their short-run marginal costs of production per MWh (€/MWh).
- power plants with lowest cost will be the first to run and produce
- power plants with the ascending ranking will start running and produce electricity
- demand of electricity power (MW) has to be produced by power plants
The lastest power plant in production ranking with highest marginal cost are defining the cost of Energy production at this point of time.
In fundamental Analysis, Kinect Energy is forcasting the basic indicators for merit-order principle in various market regionas:
- available power plant units
- non-availablility of power plants (maintenance)
- variable marginal cost of power plant units
- import and export of Energy
- forcast of demand by different statistical indicators
- impacts from climate, temperature, rain, snow, wind, sun, …
A Energy pricing tool can Simulation the expected merit-order-Prices can bring an Outlook of the future of Energy markets in various regions.
Nuclear power plants with lowest marginal cost (€/MWh) will be first online, Heizöl will be the last to start running. Depending on the amout of Energy demand, the marginal cost of electricity will Change.
Volatility of Commodity Prices
Commodity Prices are highly volatile. This may be caused by reasonable Facts, by seasonal effects, by shortening of production and by many other factors too. Single market participants can not influence the behavior of the commodity Prices, therefore the total trading volume is to huge.
Market participants can adapt to the volatility of the commodity Prices and try to find the appropriate strategy for the Energy Procurement.
Price vs. Conditions
Energy Price has been an important result for a Energy procurement. For industrial Clients with a production site, the demand for Energy is also volatile and can Change from plan to reality.
"DELTA EXERGY is helping our Clients to find the perfect setup for Energy procurement in volatile markets."
More than the Price, there are much more important conditions in an Energy Supply Contract. We Help Clients to come Closer to this optimized Setup.