Market development

Following several years of declining power prices long-term low levels were reached in February 2016. After that prices rebounded and the upward trend continued until September 2017. The price of coal (one of the main drivers for European power prices) continued slightly upward throughout 2017. However, the mild and wet weather resulting in higher hydro reservoirs and higher hydro production volumes depressed the Nordic power price for the fourth quarter of 2017.

Prices for CO2 emission allowances (EUA) started at  EUR 6.5 per tonne in the beginning of 2017 and declined to only EUR 4.5 in May. Thereafter CO2-prices increased steadily to EUR 8.2 per tonne at the end of 2017. This added to the price volatility on the Nordic power market.

In 2017, the hydrological situation strengthened due to clearly higher than normal precipitation in the Nordic area. At the beginning of 2017, the Nordic water reservoirs were at 75 TWh, which is 8 TWh below the long-term average and 23 TWh lower than a year earlier. By the end of the year, reservoirs were 3 TWh above the long-term average and 11 TWh higher than at the end of 2016.

The average system spot price in Nord Pool for the year 2017 was EUR 29.4 per MWh, and the average area price in Finland was EUR 33.2 per MWh and EUR 31.2 per MWh in Sweden SE3 (Stockholm). The main driver for the price increase was the clearly higher marginal cost of coal condensing power, which has contributed to stronger continental prices and increased exports from the Nordics.