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The EU Agency for the Cooperation of Energy Regulators (ACER) publishes today an overview of the main Electricity and Gas Wholesale Markets trends in 2021, as an early publication of its annual Market Monitoring Report (MMR).
The MMR presents the main results of monitoring the European internal electricity and gas markets and recommends further actions to foster their integration, as well as providing guidance and evidence on how energy markets can perform more efficiently.
The MMR normally comprises three volumes, analysing respectively: the Electricity Wholesale Market, the Gas Wholesale Market, and the Energy Retail Market and Consumer Protection. In 2022, unlike previous years, ACER will not publish a single report gathering all monitored aspects of the Wholesale Electricity Markets in 2021 but a series of brief overviews.
What were the main market trends in 2021?
- In 2021, the economic recovery drove an increase in electricity and gas demand. However, price competitive supply for gas proved to be limited. Despite installed renewable electricity capacity reaching record levels in 2021, an increase in fossil powered electricity generation was needed to keep up with the rising demand. Gas supply did not keep pace with the increase in demand given global competition for liquefied natural gas (LNG), low gas storage stocks in Europe and significantly lower gas flows from Russia.
- Increased demand and limited gas supply resulted in gas wholesale prices rising sharply with a knock on effect on electricity prices. Both commodities reached record high prices by the end of the year. The emission intensity of electricity generation in the EU also increased, as the high gas prices drove a strong shift from fossil gas to coal electricity generation in 2021.
- Although the EU electricity and gas wholesale markets faced a price shock in 2021, the market integration achieved was not overturned. In fact, electricity day-ahead price convergence increased within almost all regions, while gas day-ahead price convergence also increased within some regions.
The overview of Electricity and Gas Wholesale Markets developments also looks at the occurrence of negative electricity prices, the evolution of the electricity generation mix, gas storage and liquefied natural gas developments in the context of the high energy prices in 2021.
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