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Finnish spot power prices to decline sharply – analyst

(Montel) The power balance in Finland will improve from the current deficit of 15 TWh, pushing Finnish spot prices closer to the Nordic system price by 2022, StormGeo analyst Sigbjørn Seland said on Thursday.

The area price in Finland has on average been more than EUR 8 higher than the regional system price over the past three years and the country has been a net importer of power from Sweden. 

However, that would change rapidly in the coming years due to the launch of the Olkiuloto 3 (1.6 GW) reactor and a large increase in wind power output in Finland, Seland said, speaking at Montel’s Finnish Energy Day conference. 

By 2022, he expected the Finnish area price to be delivered at a premium of just EUR 1.40 to the system price and slightly below the spot price in south of Sweden (SE3). As a comparison the Finnish front year Epad contract – which is used to hedge price differences – was last traded at a EUR 7.40 premium to the system price, while the SE3 Epad was seen at a EUR 2.95 premium. 

“Not much will happen to the power balance this year but in 2022 the power deficit in Finland will shrink to 7 TWh and further to 1 TWh in 2023,” he said. 

Finland would continue to be a net importer from northern Sweden (SE1) where spot prices were low, while it would become a net exporter further south to SE3 from 2022, Seland added. 

Swedish restrictions
He also highlighted the large restrictions that the Sweden had introduced on the transmission capacity from Finland due to unfavorable east-west load flows in the Swedish grid, which could lock in power output in Finland and push spot prices there even lower.

The limitation had just been extended to mid-November, the TSO said.

“If these reductions continue the Finnish spot price could drop really low, down to the same level as in the north of Sweden,” he said. 

“I must say that it has surprised me how extensive these restrictions have been during the spring and summer and I do not see a quick fix. This is really a key factor to follow that can have a huge impact on the price development in Finland,” he added.

The SE1 2022 Epad contract was last seen at EUR -7.50/MWh.



Reporting by:
Anton Tigerstedt
07:35, Friday, 11 June 2021