Drought Causes Scandinavian Electricity Squeeze
Electricity prices across the integrated Nordic grid have surged to all-time highs this autumn as reservoir water levels in a region heavily dependent on hydroelectric power have sunk to 10-year lows.
So far power suppliers have shifted only some of the wholesale price rise to consumers in the deregulated Nordic market, as retail prices lag spot market trends, Reuters reported.
Retail electricity prices in Finland have risen by around 10 percent this year, after a similar rise last year, and more rises are planned, said Tapio Silvennoinen, an official at the Finnish Energy Market Authority.
Retail prices are also up in the other Nordic countries.
"Prices have been rising for about two months, and some are at the highest levels they have ever been," said Hanne Sterten, at the Norwegian Competition Authority.
"Norwegian consumers are not happy," she added.
Compounding the threat is a shortage of capacity which is set to clash with peak winter demand. Denmark alone in the region, with its coal-fired power plants, is currently able to export power.
Scandinavia is highly power-intensive, with domestic heating usually run on electricity.
"Very little new (generating) capacity has been built (in recent years), and consumption has grown continuously, so one can say with fairly high certainty that prices will stay very high throughout the winter," said Pertti Salminen, an energy expert at Finland's main industry lobby TT.
"The capacity issue is getting more and more relevant because peak demand is growing and the availability of peak capacity is being reduced," said Lars Bergman, an expert on the energy market at the Stockholm School of Economics.
"So if there is a very cold winter, we could end up in capacity problems for short periods," he said.