The energy price has collapsed. Unprecedented situation in Romania: the producer pays the customer

Market quotations for electricity and gas are plummeting due to several factors, including warming weather, increased availability of renewable resources, ample underground gas reserves, and historically low industrial consumption.

At the Romanian Commodities Exchange, the gas price has dropped below 100 lei/MWh, down from 130 lei just a week ago. What happened in the meantime? Heating has been largely suspended across the country, individuals have switched off their wall heaters, and the industrial sector remains inactive.

The largest individual consumer, the chemical industry, is virtually nonexistent, except for the Azomureș factory, which is also not operating at full capacity. Additionally, we exited winter with our reserves still half full, amounting to over 1.5 billion cubic meters, according to data from the Ministry of Energy. An abundance of gas in the market coupled with lack of consumption leads to price collapse, in accordance with basic economic principles.

A similar trend is observed in the electricity market. The gas price has decreased threefold from winter to the present, now averaging 35 euros. However, for several days now, we have seen zero prices for energy and even negative prices, where the producer pays a customer to consume the electricity produced, phenomena unprecedented in our country. Currently, several factors are at play: a significant contribution from solar, wind, and hydro energy (automatically integrated into the system), low internal consumption (especially industrial), driving the current price of electricity downward.

Under normal circumstances, a consistent downward trend in energy prices would fuel industrial consumption. However, we see that this has yet to materialize. At present, the surplus energy produced, particularly electricity, is exported. Wind and solar energy producers excel in this, being the cheapest, subsidized by us all through the “green certificates” system. There is no consumption domestically; the energy is exported to neighboring countries such as Hungary and Bulgaria, occasionally to Ukraine as well, where there is a pressing need for electricity due to Russian bombardments putting pressure on their energy system.