In September Prices in the Nordic Power Exchange Were Particularly Affected by Increased Hydro-energy Production in Norway

Last month the biggest impact on trading in the Estonian price area of Nord Pool Spot (NPS) came from the shortages in Latvia and cheap Norwegian hydro-energy, which pushed down prices in both the Finland and Estonia price areas.

As the price in the Estonia price area remained slightly higher than that in the Finland area, electricity mostly flowed in September from Finland to Estonia. This caused a major drop in exports to Finland in comparison with the previous month to 21 GWh. Exports to Lithuania grew threefold to 35 GWh, and exports to Latvia remained high at 264.8 GWh.

Overall the NPS Estonia price fell by around 14% in September, and averaged 40.86 EUR/MWh. Prices in the Nordic price areas fell due to the high proportion of hydro-energy there, accounting for up to 39%. However, the low electricity prices in the Nordic countries did not impact the Estonia price area strongly because demand from Latvian and Lithuanian market participants was greater than the ability of the EstLink 1 undersea cable to supply it with imports of electricity from the Finland price area. There was also a bottleneck between Finland and Sweden where transmission capacity was insufficient to carry the flows of Norwegian hydro-energy to Finland from where it can flow on to Estonia.

The amounts of electricity bought from the NPS Estonia price area were the same as in August at 502 GWh, with Estonian market participants buying 42%, Latvians 51% and Lithuanian market participants 7%. The amounts bought by Estonian market participants in September were enough to cover 37% of Estonian domestic consumption, and were 9% lower than in August.
The amounts of electricity sold in the NPS Estonia price area fell by a quarter to 410 GWh, in connection with the fall in prices of around 7 EUR/MWh. As the price in Baltpool was higher than that in Estonia 70% of the time, the amounts sold by Lithuanian market participants fell by almost two-thirds. The proportion of sales offers coming from Latvian market participants was very low, and they sold a total of 1 GWh. Estonian market participants made 97% of the sales in September.

In September the reservoirs for the Nordic hydro-power stations were fuller than last year, and this pushed the system price down to its lowest level of 2011 at 28.94 EUR/MWh. In contrast the average system price for the last 12 months has been 54.08 EUR/MWh, but electricity prices have fallen in all NPS price areas from their 2010 levels. The average price for September in the NPS Finland price area of 38.86 EUR/MWh was 20% lower than the price in August.

The complete report of NPS Estonia in September can be found here (only in Estonian).