Czechia: Analysts warn of uncertain energy market, advise fixing prices

The period of significant energy price reductions appears to have ended, with future market developments clouded in uncertainty. Analysts surveyed by the Czech Press Agency believe that energy suppliers are unlikely to reduce prices next year at the same pace as in 2024. They cite geopolitical risks and the potential for a harsh winter as key concerns, recommending that consumers consider fixing their energy tariffs to guard against potential price hikes.

Jiří Tyleček, an analyst at XTB, noted that the lowest energy offers have remained relatively stable in recent months. However, according to Ušetřeno.cz energy analyst Tomáš Vrňák, there remains a significant disparity between standard supplier rates and special promotions. He highlighted that consumers could save over CZK 4,500 annually on electricity and almost CZK 7,000 on gas by switching providers.

The outlook for energy prices remains uncertain, with recent increases on energy exchanges suggesting a stabilization or even a potential rise. Vrňák pointed to several factors likely to push prices higher, including the gradual transition away from coal, uncertainty surrounding gas supplies, and increasing costs of emissions allowances.

Radim Dohnal, an analyst at Capitalinked.com, expressed similar views, suggesting that the exhaustion of factors driving previous price reductions could lead to stable or slightly higher energy prices. While geopolitical tensions could exert upward pressure, a slowdown in German industry might ease costs. However, Dohnal warned that a particularly severe winter could drive demand and prices higher.

Given these dynamics, analysts widely recommend that households lock in current energy rates. Fixed-rate tariffs are now up to 20% cheaper than standard pricing, providing a buffer against potential market fluctuations. Tyleček suggested that fixing rates near current levels is a prudent move, noting that while there could be minor price declines in spring, risks such as extreme winter weather or disruptions in Russian gas supplies could lead to sharp increases. Dohnal echoed this, advising fixed rates for the next two years at approximately CZK 1,000 to 1,100 per megawatt-hour (MWh) for gas and CZK 2,400 to 2,600 per MWh for electricity.

In recent weeks, many domestic energy suppliers have announced price reductions effective from early next year. However, they caution that future developments will hinge on broader market conditions. The regulated portion of energy pricing, determined by the Energy Regulatory Office, will also play a crucial role in shaping costs. The office’s announcement of the 2025 pricing structure, expected this Thursday, is anticipated to provide greater clarity.

As the market faces an unpredictable combination of geopolitical, environmental, and regulatory challenges, fixing energy prices now may offer consumers a measure of stability amid the uncertainty.

Source: CTK