Convergence of Power Exchange Prices in Estonia and Finland Continues in May

According to data from the Nordic power exchange Nord Pool Spot (NPS), power exchange prices in Estonia and Finland were the same on the day-ahead market for 97.8 per cent of the period in question, and no shortage in the transmission capacity was detected during these hours. The same indicator in April showed equivalence for 96.8 per cent of the month.

The average price in the Estonian price area in May was EUR 36.85/MWh, which is 16 per cent higher than April’s average price. The Estonian price was 23 cents higher than the price of the Finnish bidding area, but was also EUR 14.64 lower in comparison with the average price of Latvia and Lithuania, which went up to EUR 51.49.

The NPS system price as a whole rose by 3 per cent last month to EUR 26.30/MWh. Price increases were highest in the Swedish bidding areas. Prices dropped only in Norwegian areas with hydroelectric production capacity. The Norwegian hydro reservoir content at the end of May fell below 2013 levels for the same period by 2 percentage points. The electricity balance surplus for the Nordic countries in the past month was 576 GWh.

The end of springtime high waters reduced production in Latvia, which is why the power system of our neighbouring country could cover 73% of their power consumption in May. In Latvia, the respective indicator reached only 17%. The Baltic region as a whole is still in deficit and had to import electricity in the amount of 565 GWh to meet demand. Half of the Baltic deficit was covered by imports from third countries, and half through imports from Finland.

The CO2 emission quota prices in May averaged between EUR 4.69-5.41/tonne, which is approximately the same level as the April prices. The monthly average price of natural gas imported to Estonia was EUR 30.34/MWh according to Elering’s estimates. The price of natural gas influences the production cost of electricity in Latvia and Lithuania and the price of natural gas imports also has an indirect influence on the determination of electricity prices in Estonia.

Forecasts predict that, on the basis of the financial transactions on the Nasdaq OMX Commodities market, the July 2014 electricity price in the NPS Estonian price area will be EUR 37.50 and the average price of Q3 is estimated to be EUR 40.06/MWh. On the basis of day-ahead transactions, the estimated NPS system price of Q3 will be EUR 26.86/MWh.

The price of limited PTRs at the Estonian-Latvian transmission capacity auction held in May was EUR 9.56/MWh. Seven market participants took part in the auction. The actual price difference between the NPS Estonia and NPS Latvia price areas in May was higher than the auction price, at EUR 14.64/MWh.

The complete market overview for May is available here (in Estonian).