Home Business What’s Behind Europe’s Skyrocketing Power Prices: QuickTake

What’s Behind Europe’s Skyrocketing Power Prices: QuickTake

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While short-term trading is increasing, utilities and big companies also buy and sell power years in advance. In those trades, views on the economy and long-term fuel cost forecasts play a bigger role. But the broader European power market has traditionally been focused on the price for the following day, with auctions supplying a day-ahead price functioning as the benchmark. Traders submit bids and offers for each hour based on their calculations of supply and demand, and then an average price is calculated by the exchange handling that market. U.S. markets are more regional. Most of the power is also sold a day in advance, with similar arrangements for trading for the same day as in Europe. Consumer prices are set by state regulators after utilities request rate changes based on how much they’ve paid for wholesale power, transmission investments and overall upkeep of their grids.

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