(Montel) Nordic power prices are unlikely to exceed EUR 30/MWh over the next decade as growing domestic power production would more than compensate for increased demand, Sigbjørn Seland, chief analyst at Nena, told Montel on Tuesday.
“We will continue to see a strong rise in wind and solar generation, with Sweden’s new 18 TWh renewables target by 2030 as a prime driver,” he added.
“But towards 2030 we also believe that the cost of producing wind power onshore will reach a level where it will be profitable even without subsidies, giving renewed growth in areas like northern Norway, where wind conditions are very good. Eventually the cost of wind power production will start to cap power prices,” he added.
Nena’s base-case scenario shows spot prices averaging EUR 25/MWh in 2019 and 2020, before rising gradually to EUR 31/MWh in 2028. They will not reach EUR 40/MWh before 2045.
The prediction was above current futures prices on the Nasdaq Commodities exchange, where the 2020 contract was last seen at EUR 21.10/MWh.
Elcert extension impact
Nena’s price analysis was made prior to last week’s agreement to extend the Norwegian-Swedish Elcert subsidy scheme by another 10 years.
It would have a positive price effect of about EUR 0.50-1/MWh by the mid-2020s, said Seland.
While the Nordic power production surplus would rise from 11 TWh in 2020 to more than 20 TWh later that decade, the increase would eventually be tempered by rising demand from new sectors such as transport and data centres, said Nena.
“There is a significant growth potential in these sectors but it is hard to see growth at a level that will reverse the growth in the Nordic production surplus,” said Seland, who believed power consumption in the region would rise by 26 TWh, or just under 7%, by 2030.
Power production over the same period would rise by 34 TWh to 432 TWh, according to the forecast.
In an alternative scenario – where Nena includes its own long-term analysis of coal, gas and carbon prices – Nordic power would drop to EUR 22/MWh by 2020, before rising to EUR 30/MWh in 2027.
This scenario includes lower price forecasts for gas this decade, due to LNG imports, and a higher price forecast for carbon allowances during the 2020s due to pending reforms of the EU ETS.