Prices of electricity
and related products

In 2015 wholesale energy prices in Poland were lower than in 2014

The average price on the Day-Ahead Market on the Polish Energy Exchange (TGE) in 2015 was PLN 156.95/MWh (versus PLN 179.86/MWh in 2014), while the CRO price on the Balancing Market was PLN 157.25/MWh (compared to PLN 184.82/MWh a year earlier). The main reason for lower prices compared to 2014 was linked to the ongoing slump in hard coal prices – the average value of the Polish Index of Steam Coal Market (PSCMI_1) in 2015 was PLN 9.76/GJ versus PLN 10.55/GJ in 2014. In addition, the volume of electricity from wind farms contributed to falling prices – in 2015 they produced a total of 10 TWh compared to 7.2 TWh produced in 2014.

The significant decline in the prices of steam coal (CIF ARA index), crude oil and natural gas on global markets accompanied by the growing supply of energy from renewable sources contributed to the steady decline in electricity prices in other European countries as evidenced by spot market prices and the forward market in Germany. The average price in Germany in 2015 was EUR 31.63/MWh versus EUR 32.76/MWh in 2014.

This downward movement on the commodity markets was one of the results of OPEC’s decision to discontinue control over the volume of oil extracted. Moreover, this trend was also a consequence of the US shale revolution leading to an oil glut. Accordingly, in 2015 the price decline started in 2014 continued. Brent oil on the London ICE exchange was quoted at USD 58.02/bbl in January 2015, while in May its price topped USD 67/bbl. At the end of 2015, a barrel of Brent oil was quoted at a mere USD 37.28/bbl. This means that the oil price plummeted by 36% from the beginning of the year and by 45% from its peak. In December 2015, the US waived its 40-year ban on oil exports. Moreover, Iranian sanctions were lifted enabling a major producer to return to the oil market. These factors will contribute to the oil glut persisting in 2016.

Falling prices were also observable in the steam coal market. Coal demand has slackened significantly, mainly from its major consumer, that being China. At the end of December 2015, annual CIF ARA Y-16 contracts plunged to USD 44.15/Mg from the beginning of 2015 when prices were USD 67.28/Mg.