The prices of electricity contracts make you smile – There is a surprising reason in the background

Fixed-price electricity contracts are now expensive.

Energy prices for a 12-month fixed-price electricity contract currently hover between about 10 and 11 cents per kilowatt hour on average.

For example, in December of last year Talouselämä told, that the cheapest fixed-price one-year contract was obtained for 7.09 cents per kilowatt hour.

“Compared to history, prices are now high,” says the director of Energiateollisuus ry Pekka Salomaa.

The prices of electricity contracts can be compared on the website sahkonhinta.fi maintained by the Energy Agency.

The cheapest price for a 12-month fixed-price contract is currently available From Korpelan Energia At 9.75 cents per kilowatt hour.

However, the comparison is not clear-cut, because the price of electricity is also affected by the fixed monthly fee. In addition, some companies offer months without monthly fees as a discount.

Drought increases prices

Salomaa points out that two-year electricity contracts are now cheaper than one-year contracts. It tells you that price concerns are especially focused on next winter.

For example Fortum’s In a 24-month fixed-price contract, the price of electricity is 9.99 cents per kilowatt hour. Fortum does not offer a fully fixed-price 12-month contract, but the electricity price of the hybrid-priced contract is 10.99 cents per kilowatt-hour before the consumption effect.

Expectations of higher than usual electricity prices are increased by the weaker than usual water reserve situation in the Nordic countries heading into winter.

“It has been relatively dry in the North in the summer. Now there is doubt as to how cheap electricity is available during the winter. There is no need to worry about running out of electricity, but we may have to use more expensive resources for production,” says Salomaa.

A weak water reserve situation can make it difficult to get electricity produced by hydropower. The importance of hydropower in the electricity production of the Nordic countries is great.

Another factor behind the higher-than-usual prices is the war in the Middle East, which increases natural gas prices. According to Salomaa, the state of natural gas reserves in Europe has already been quite tight, but now the military measures especially endanger Qatar’s production.

Qatar has never delivered a significant share of Europe’s natural gas before, but the difficulties in its production are raising world market prices.

“The price has risen in the world, and it can raise the European price level very much,” says Salomaa.

Swinging to stock exchange electricity

Weaker water reserves can also promise more unstable times for those who rely on stock exchange electricity. Hydropower has generally smoothed out instabilities in electricity production.

“The price fluctuation can be quite large. Sometimes it is still relatively cheap, but then there are times when electricity can be more expensive than usual. Especially when there is no wind, you can expect slightly longer periods when the price of electricity on the exchange is several tens of cents”, says Salomaa.

Winter prices are greatly influenced by weather conditions, which are still difficult to predict. A cold winter could mean higher prices. On the other hand, the situation can change quickly, says Salomaa.

“If it were to happen that there would now be a brisk porting in Norway and Sweden in particular, price expectations could drop quickly.”

The calming down of the situation in the Middle East could also lower price expectations.

Different price for the night

Comparing the prices of fixed-price contracts is complicated by the fact that some companies offer contracts with separate night and day electricity prices.

For example Vaasa Sähkö offers a 12-month fixed-term contract where you can get electricity at night at a price of 9.46 cents per kilowatt-hour, while during the day electricity costs 11.16 cents per kilowatt-hour.

According to Salomaa, contracts defining separate prices for night and day use used to be more common in Finland. In recent years, similar agreements have been quite rare. Hydropower can even out the differences between times.

“When Finland was integrated into hydropower-rich countries, the prices leveled off between night and day,” says Salomaa.

“Now that other factors alongside hydropower have grown in importance, I wouldn’t be surprised if separate prices became more common in fixed-price contracts,” he continues.