In January Electricity Price Drops Four Percent

The average price of electricity in the Estonian price area of the Nord Pool Spot (NPS) power exchange fell by four percent in January compared to December, to 41.77 euros per megawatt-hour.

The system price on the Nordic power exchange also dropped by four percent in January, to 41.39 euros. This was despite the hydro energy output decreasing to median levels, compensated by lower consumption compared to December. Like December, the first month of this year did not see a major deficit of transmission capacity between price areas, and the difference in average prices across the Nordics remained below one euro.

In the NPS ELE price area that spans the Estonian-Latvian border, January’s average electricity price was 43.04 euros, while in the NPS Lithuania price area it was 43.87 euros, showing a small drop compared to December. In Finland, the price fell by 11 percent to 41.59 euros per megawatt-hour.

The Estonian-Finnish interconnection EstLink 1 was used in the direction from Estonia to Finland for 361 hours in January, and from Finland to Estonia for 348 hours. In terms of volumes, 79 gigawatt-hours moved to Finland, and 77 gigawatt-hours of electricity moved from Finland to Estonia. Out of the transmission capacity between the NPS Estonia and NPS ELE price areas that was put on the market, an average of 52 percent was used. For 110 hours, there was a shortage in transmission capacity, mainly caused by the decrease in electricity production in Lithuania due to more affordable import opportunities from both the Nordics and Russia.

The prices of CO2 emissions fell to a record low in January. While at the start of the month, the price was still over six euros per ton, at the end of the month it fell to 3.31 euros.

The price of natural gas imported into Estonia fell to 35.25 euros per megawatt-hour in January, according to Elering’s estimates. This is four percent lower than December’s price level. The price drop was caused by the continued decline in the prices of light heating oil and crude oil, as well as the euro’s increased strength against the dollar.

Based on futures contracts, the NPS system price is expected to be 35.10 euros per megawatt-hour in the second quarter of this year, and 35.65 euros in 2014. The corresponding figures for the NPS Estonia price area are 36.50 and 39.55 euros per megawatt-hour.

The full January report on the electricity market is available here (in Estonian).