The price of electricity in Europe is determined on the stock exchange, for the Czech market the one in Leipzig, Germany plays a major role. At the same time, only a small part of the produced electricity passes directly through the exchange, for example the largest Czech producer ČEZ sells most of its production to end customers or Czech distributors, either on the basis of a bilateral contract or via an electronic trading platform. Even in this case, the price depends on the stock exchange.
The current record prices on the Leipzig Stock Exchange (but not only on it) only concern a small part of the electricity currently being supplied, but they also affect future deals, through which producers sell most of their production. An important role in the creation of prices for final consumers is played by the principle according to which the price of all electricity supplied at a certain time depends on the most expensive source currently being used. Currently, they are – due to the prices of the commodity used – gas power plants.
It is currently not possible to store electricity in large quantities in Europe, and the current volume of production and consumption must thus more or less coincide. Operators of the transmission system (in the Czech Republic it is the ČEPS company) therefore need sources that can be switched on and off in a very short time in order to compensate for fluctuations, for example due to the weather, which affects the performance of solar and wind power plants. While nuclear power plants need a number of days and coal-fired power plants at least a few hours for a similar step, it is possible to start up a gas source in a matter of minutes.
Expensive gas, the prices of which have reached record values in recent months as a result of the Russian invasion of Ukraine, thus fundamentally affects electricity prices, although gas-fired power plants make up only part of the production and other sources produce electricity significantly cheaper. For example, in the Czech Republic, gas power plants make up less than ten percent of the energy mix, while in the European Union, according to Eurostat data for 2020, their share reached less than 24 percent.
For end customers, however, the so-called power electricity, the price of which is determined on the stock exchange, is only part of the final price for each kilowatt hour consumed. An important role is also played by the regulated component, established in the Czech Republic by the Energy Regulatory Office, which includes fees for distribution, reserved power, system services or contribution to renewable sources. Depending on the region, the basic tariff is approximately 2.50 to 2.90 crowns including VAT per kWh.