There was a clear change in the electricity market, which can be reflected in the autumn electricity bill

A sure sign of the approaching autumn is that the price of electricity in the coming winter will become interesting. Based on the futures prices on the electricity exchange, it now seems that rising prices are on the way.

On Wednesday, electricity futures prices including value added tax had risen to around 10 cents per kilowatt hour in September and to more than 11 cents for the rest of the year. Last fall, electricity on the exchange cost an average of 5–6 cents per kilowatt hour, so the increase is already noticeable.

The futures prices indicate the prices at which electricity sellers and producers are committed to buying and selling electricity on the derivatives market. The realized price on the electricity exchange may be another one, but the price level of the futures trade is already visible in fixed-price electricity contracts.

The price level of electricity is raised by the weak situation of hydropower, especially in Norway and Sweden. Analysis house according to Montel the snow situation in Norway, which produces a lot of hydropower, was the weakest in 20 years after last winter, and there has not been enough rain in the summer season to correct the level of water reservoirs.

Future prices also reflect the annual maintenance of Finland’s nuclear power plants. Finland’s largest nuclear reactor, Olkiluoto 3, is out of action from September to the end of October. During the same time period, both of Loviisa’s reactors are in turn undergoing maintenance.

Electricity prices in Central Europe are also reflected in Finland, which are raised by the price of natural gas, which has become more expensive due to the Iran war. On the other hand, there is a demand for natural gas there, as drought and heat have limited the use of nuclear power plants in both France and Hungary.

A clear change has already been seen in the electricity market during the beginning of the year. Exchange electricity has been more expensive on average in Finland so far this year than last year, and the number of hours falling close to or below zero has decreased significantly.

Fortum’s the electricity market review by August 5, there had been a total of 43 hours of negative prices, while last year the balance was around 360 hours at the same time. An almost equally significant decrease has been seen in hours costing less than five euros per megawatt hour, i.e. 0.63 cents per kilowatt hour with VAT.

This also shows that last year we and the neighboring countries had enough hydropower, but not now. At the same time, flexibility in electricity production and consumption has also increased.

In addition, according to the statistics of the Energy industry, Finland’s rolling 12-month electricity consumption had risen to 87 terawatt hours in June. Similar readings have been seen the last time at the end of 2021, before Russia’s attack on Ukraine. The increase can be explained, among other things, by the production of district heat with electric boilers.

Now there is no talk of price spikes or electricity shortages like in 2022, but the calculations can be repeated if the electricity consumption in both homes and businesses has been calculated based on the cheapest hours of electricity on the exchange.

More broadly, the situation reminds us that Finland is becoming electrified, and for that we need enough electricity at a reasonable price. Work has to be done for this, and it requires a long-term energy policy.