Rain in Norway could bring down electricity prices in Finland

Technical problems prevent Finland from taking full advantage of plentiful hydroelectric power

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Recent heavy rainfall in Norway at the end of last year and early this year has almost completely reversed the direction of electricity flow in the Nordic Countries.
      In November Finland was a net exporter of electricity to Sweden, and Sweden sold power to Norway. Today the direction is reversed, with Norwegian electricity flowing first to Sweden and from there to Finland.
      Finland is currently a net importer of electric power from both the west and east; imports from Russia are based on long-term agreements, and are unaffected by the market situation in the Nordic Countries.
     
The new situation is attributed to recent heavy rains which have replenished reservoirs in Southern Norway, which is the key production area in the Nordpool Nordic energy market system. The hydroelectric plants in the area have been busy churning out power for Sweden and Finland, allowing utilities in those countries to shut down coal-fired plants which are more expensive to use.
      In addition to Sweden and Finland, Norwegian electricity is also being sold to Denmark and from there to Germany.
      The surge in relatively cheap hydroelectric power has also led to pressures to reduce the market price of electricity in the region, a saving which should eventually be passed on to the consumer.
     
Esko Kytömäki, an expert at the energy market service company Energiameklarit, says that the market price of electricity might be even cheaper than it is now, if damage suffered by the Nordic electricity transmission grid had not prevented optimum transfers of electricity from Norway to Sweden and Finland.
      Damage to the grid has forced Finland to maintain more expensive domestic production, which could otherwise have been replaced by cheaper imports from the Nordic region. This has kept the market prices of electricity higher in Finland than in Norway or Sweden.
      The worst situation is in transmission from Southern Norway to Sweden, which normally has a transfer capacity of 2,000 megawatts.
      Another problem is with an undersea cable between Finland and Sweden, which has a capacity for 550 megawatts, and which is expected to be out of service nearly all of February.
      Maintenance work scheduled to begin next week on transmission cables between Northern Finland and Northern Sweden could also affect regional prices of electricity in Finland.


Previously in HS International Edition:
  Kyoto Treaty emissions trade could raise Finnish electricity prices significantly (8.10.2004)

Links:
  Nord Pool web site
  Energiameklarit web site

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