Why did energy prices rise in February 2022?

Energy price developments, in particular electricity and gas prices, were a key focus of attention in February 2022, as both international and domestic markets experienced significant increases. It is important to understand what is behind these price rises and how consumers are affected.

Rising energy prices are not an isolated phenomenon, but the result of a complex combination of factors. Based on the original article, the following main causes can be identified:

• International market trends: prices are heavily influenced by quotes on international commodity and gas exchanges.
• Supply and demand: the balance or imbalance between global supply and demand.
• Regulatory environment: energy market regulations in different countries.

Brief overview of factors affecting prices

Energy prices are influenced by a number of factors, such as geopolitical events, weather, economic growth, and the penetration of renewables and the availability of conventional energy sources.In February 2022, all these factors contributed to the significant price increase.

Electricity prices in February 2022

The evolution of electricity prices in February 2022 showed a slight decrease compared to the previous month, according to the European Power Exchange.

• Trends in Europe (CEE region): average stock prices fell compared to January.
  • 2022. January: 168 EUR/MWh
  • 2022. February: 147 EUR/MWh
• Hungarian electricity prices (HUPX intraday market): the domestic market also followed the European trends.
  • 2022. January: 168.7 EUR/MWh
  • 2022. February: 147 EUR/MWh

Despite this slight decline, electricity prices remained high compared to previous years, showing signs of a global energy crisis.

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Evolution of gas prices in February 2022

 

Gas price developments in February 2022 were also notable, although the trends diverged from electricity.

• Gas exchange prices (TTF gas exchange): based on data from the European gas exchange, gas prices fluctuated.
  • 2022. January: In the first weeks, the price was around 80-90 EUR/MWh.
  • 2022. February: At the beginning of the month, the price was between 80-90 EUR/MWh, but by the middle of the month it had reached the 90-100 EUR/MWh level.
  • Towards the end of the month: the price briefly rose above 120 EUR/MWh at the end of the month.

This rise in gas prices has been influenced by a number of factors, including geopolitical tensions and increased demand due to the winter heating season.

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Consumer prices and the impact of the utility bill cuts in Hungary

It is important to distinguish between stock market prices and consumer prices, especially in Hungary, where the reduction of utility bills plays a significant role.

• Regulated consumer prices in Hungary: electricity and gas prices for Hungarian households remained stable in February 2022 within the regulated market.
  • Electricity: the residential price of electricity in Hungary is 33.8 HUF/kWh (gross, average price, for E.ON network).
  • Gas: the residential price of natural gas is 102 HUF/m3 (gross, average price, for MVM Next).

These prices do not reflect stock market fluctuations, as the reduction in rents protects households from market price rises.

• Competitive market prices: however, for consumers in the competitive market, prices have followed the changes in the stock market, placing a significant burden on businesses and institutions.
  • In February 2022: The average price on the HUPX commodity exchange the next day was 52.4 HUF/kWh, while the monthly average price on the TTF gas exchange was 34.5 HUF/kWh(which is 371 HUF/m3 at 10.75 kWh/m3 calorific value).

This demonstrates the protective role of the regulated market for the public, while companies operating in a competitive market have faced a drastic price increase.

Market trends and the situation of domestic consumers

The energy price developments in February 2022 highlighted the volatility of global energy markets and the complex factors affecting prices. While electricity prices on European exchanges fell slightly, gas prices rose, especially towards the end of the month. In Hungary, household prices remained stable thanks to the reduction of the electricity bill, protecting households from market volatility. However, competitive market players, i.e. companies and institutions, felt the impact of the rise in energy prices significantly, as they were affected by the stock market prices.

If you want to know more about energy prices or need advice on how to optimise your energy consumption, contact us.