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Nordic Elcerts could plunge to EUR 5 in 6 months – analyst

(Montel) The price of Nordic Elcerts could plunge from close to SEK 200 (EUR 19) to SEK 50 (EUR 5) within the next six months due to several new projects in the pipeline, StormGeo analyst Sigbjørn Seland said on Thursday.

“The [Norwegian-Swedish] target of 46.4 TWh by 2030 has been reached. If Sweden does not rapidly adopt a stop rule [that limits the issuance of certificates when the target is reached] prices will go to zero,” Seland told an energy seminar in Oslo.

The spot contract in the Elcert market traded at SEK 193/MWh on Thursday evening, but the market has priced in a sharp drop from 2021, when several new wind farms are expected to come online.

The futures contract for 2020 traded last at SEK 180/MWh at brokerage SKM, while the 2021 contract traded at SEK 46/MWh.

Seland said short-term prices were supported by fears of a temporary deficit next year.

Possible deficit

“If we have a very low production of elcertificates over the next six months, then we could see a deficit – but this is unlikely. It is therefore only a question of time before prices start plunging,” he said.

Sweden’s energy authority will present its proposal of a “stop rule” in December, which also requires the approval of its parliament next year. Norway has decided to stop allocating new certificates by 2022, while Sweden’s scheme runs until 2030.

Under the support scheme, renewables producers are eligible for one tradable certificate for each MWh of electricity they produce. Certificates are sold to consumers who are required to cover a certain amount of their power use from plants supported by the scheme.

But recent cost reductions have made onshore wind projects attractive even without subsidies in the Nordic region, with several developers recently deciding to build wind power plants without financial support in Finland.

Seland said he expected a sharp rise in wind power capacity across the region in the 2020s and 30s. Last year Sweden produced 17 TWh of wind power and Norway 2.9 TWh. An additional 17 TWh are either under construction or decided to be built in the two countries, said Seland.

Reporting by:
Gert Ove Mollestad
08:51, Friday, 26 October 2018