The recent heavy rains brought by storm Hans have led to a decrease in electricity futures prices on the Nordic electricity exchange. The rainy weather in the Nordics has filled up the reservoirs of hydropower plants in Norway and Sweden, improving the water reserve situation in the region. This has positively impacted the futures prices as hydropower plays a significant role in the Nordic countries.
Lower electricity futures prices indicate that the market expects there to be enough power supply to meet demand during the coming cold season. This is in contrast to the sharp price increases witnessed last year. In August 2022, futures suggested higher prices of nearly 50 cents per kilowatt-hour for the winter season, but the actual prices ended up being lower. Now, the futures forecast that electricity prices will remain well below 10 cents per kilowatt-hour during the coming autumn and winter.
Apart from improved water reservoirs, other supply-side factors are also contributing to the stable electricity supply expectations. The natural gas situation in Europe is looking good, and the Olkiluoto 3 nuclear power plant in Finland is running efficiently. These factors, along with the improved water situation, have increased confidence in the availability of electricity in the Nordic countries.
As a result, the prices of consumer electricity contracts have also come down recently. Electricity providers base their pricing on futures, and the current market conditions have led to more favorable rates for consumers.
Overall, the filling up of reservoirs due to rainy weather and other supply-side factors have created a positive outlook for the Nordic electricity market. The market expects stable electricity supply and lower prices during the upcoming cold season.
Source : Energy Portal