Scenario based fundamental forecast for the Nordic power market - available from March 26th

Massive subsidised investments in renewables combined with low consumption growth will strengthen the Nordic power balance considerably towards 2020, with major impact on area price development. The very strong power balance creates a strong incentive to build internal and external transmission capacity to avoid a price collapse.

Relatively low power prices create incentives for stronger industrial growth in the Nordic area, however this is currently curbed by the looming euro crisis and we expect a low consumption growth in the medium term.

We will experience higher electricity prices from 2025 onwards due to limited new investments in renewables and decommissioning of nuclear reactors as they reach the end of their expected lifetime. We expect commissioning of two new nuclear reactors in Finland in 2025 and 2030 respectively. Without commissioning of these reactors the balance would be very weak leading to periods with potentially high prices.

The Base scenario is reliant on strong growth in subsidised renewable energy. Currently the electricity certificate price is not high enough to reach the goal of 26.4 TWh of new renewable energy production in the Swedish/Norwegian electricity certificate market. With a continuation of today’s low price level through the coming years, investments will be shelved leading to a weaker power balance and higher prices. Hence, the strong power balance is dependent on a significant increase in electricity certificate prices. The two governments have an opportunity to make changes to the certificate system at the “control station” in 2015. We expect the certificate price to increase to a level making on-shore wind power profitable.

The strong increase in new renewable generation in the Nordic region and in Germany will increase the expected difference between Nordic peak and off peak prices and between summer and winter prices. The strong power balance implies the System price will become more sensitive to the downside in wet years and slightly less sensitive to the upside in dry years, on top of increased general price volatility.

The publication is delivered witin an Excel-file with key data.

For more information, contact:

Arve Dahl Nielsen, tel: +47 22 31 41 11

Øyvind Søvik, tel: +47 22 31 41 18

post@nena.no