Electricity Market Forecast: Price Will Triple By Winter, But Collapse Next Spring | New

Olkiluoto 3 and new wind turbines are expected to bring Finland self-sufficiency in electricity for the first time in decades.

Electricity prices are expected to triple in the last months of the year, but collapse next spring. Image: Ilkka Kemppinen / Yle

Electricity price forecasts for the coming winter are beginning to take shape.

Prices will peak in the final months of the year. By then, even the three-month average price will be close to 50 cents per kilowatt hour. The most expensive price periods are likely to be much more expensive than average.

The price of electricity is difficult to predict, but the best and only public information about future prices can be found in power exchange futures.

Futures contracts are the prices at which the main sellers and buyers of electricity have agreed to trade in advance. This gives the market the current vision of what the “fair price” of electricity will be in the future.

Much of the electricity produced is sold in advance, said Restaurant Kuusisenior expert of the network operating company Fingrid.

“We had never seen this kind of pricing in the electricity market before, but we haven’t had a war like this in Europe for a long time,” Kuusi said.

Cross-border price fluctuations

There are many reasons for the rising prices, but Kuusi said gas was the most important.

“I would say the most important factor is how the very high price of natural gas has affected the overall electricity price in Europe,” Kuusi added.

For example, in Germany, the price of electricity doubled in October, justified by a 450% increase in the purchase price of natural gas.

As Finland and the large Nordic electricity market are increasingly connected and linked to the European market, price fluctuations are felt across borders.

The price of electricity will increase in Finland, especially before the commissioning of the Olkiluoto 3 nuclear reactor and the wind turbines which should be completed by the end of the year.

“As long as we are a net importer of electricity, the price level of neighboring countries will also be reflected on us. When fossil fuels are needed in Finland for domestic electricity generation or as part of imported electricity, the increase in the price of fossil fuels is also reflected in the price of electricity for us”, explained Kuusi.

Energy autonomy

While the last months of this year will see the price rise dramatically, it is expected to fall in the same way in the spring.

Over the past 54 years, Finland has imported more electricity than it produces, but Kuusi stressed that this could change in the coming year.

Thanks to Olkiluoto 3 and new wind turbines, Finland’s domestic electricity production is increasing so much that next year is expected to be Finland’s first year of self-sufficiency since the 1960s.

“Russian imports were quite large. It was a tenth of consumption on a cold winter day,” Kuusi said.

Kuusi summarized the electricity market by saying that various factors will impact prices this winter.

“Ultimately, prices will be affected by how cold it will be in the winter, how much wind there will be, whether power plants fail, whether transmission connections work, what will be the balance between supply and demand in neighboring countries,” Kuusi said.