The price of spot electricity in Finland has been exceptionally low in June and July, according to an electricity price review by Lumme Energia.
Since Midsummer, the spot price of Finnish electricity has been the lowest in the Nordic countries for five weeks, and it continued to be nearly the cheapest since, according to the review.
As a result, the average monthly price in July was just 1.7 cents per kilowatt hour before tax, and 2.1 cents per kilowatt hour including VAT.
"In July, electricity was on average cheaper in Finland than anywhere else in Europe. This is the first time this has happened," said Jukka Leskelä, CEO of trade association Finnish Energy.
This information is also available on a map of regional electricity prices compiled by Energy-Charts, a platform that compiles and visualises regional electricity market data across Europe.
Typically, the lowest electricity prices in Europe are found in Sweden and Norway, with Finland gradually joining the ranks. In Norway and Sweden, the cheapest electricity is in the north, where production exceeds consumption due to hydroelectric plants.
Sweden is divided into four pricing zones and Norway into five. Finland, with its efficient internal transmission, has just one pricing area — the spot price of electricity remains the same from Hanko to Utsjoki.
Prices in Finland haven't been this low in a decade.
"Even when adjusted for inflation, such a low monthly average price can only be found as far back as July 2012, and it hasn't been lower since the early 2000s. This is indeed a remarkably cheap month," Leskelä said.
Spot electricity or exchange electricity refers to the price of electricity bought and sold for immediate delivery on the spot market. With a spot electricity contract, consumers pay the hourly price plus the electricity company's margin and the transmission fee.
Earlier this year, electricity prices in Finland reached record-highs in January, topping out at 2.35 euros per kWh.
Transmission constraints lower prices
The low electricity prices noted all through summer are due to strong nuclear power production following the completion of maintenance on Olkiluoto nuclear reactor units, lower-than-average demand during the holiday and summer season, increased solar and wind power capacity, and the absence of price spikes.
Significant transmission constraints within Finland have also reduced electricity prices because, during windy periods, excess electricity that could not be exported had to be sold cheaply domestically.
Maintenance work continues on transmission lines between Sweden and Finland, and repairs on the Estlink 2 cable between Finland and Estonia, which broke last winter, are expected to last until at least the end of August.
Spot prices turn negative
On Friday, spot electricity prices in Finland are at their lowest, dipping into negative values. From 2 to 6pm, the price including VAT will drop to -0.08 cents per kilowatt hour.
Overall, spot electricity is significantly cheaper than average in Finland on Friday, with an average hourly price of 0.54 cents per kilowatt hour.
Short-lived trend
Lumme Energia's chief analyst, Marko Pikkarainen, is sceptical that the summer prices can be repeated again.
"Several factors contributed to the creation of that low average price. It’s hard to imagine that all these same conditions will align again in the future. However, one lesson from the electricity markets is "never say never," he said.
Experts note that the return of the Estlink 2 cable between Finland and Estonia in September could lead to higher Finnish prices, as excess electricity on windy days will be more easily exported to Estonia.
August has started with relatively low prices, but it's unlikely to match July's average due to the end of the holiday season and increasing industrial demand, according to Pikkarainen.
Additionally, maintenance at Fortum's Loviisa nuclear plant, which will last into September, and potential transmission constraints or weather-related issues could lead to price spikes similar to last August.
Experts note that forecasts for electricity prices predict that Finland’s prices will remain higher than those in neighbouring Nordic countries in the future.
With an increase in VAT from the beginning of September, the average price forecast for the winter months is above 10 cents per kilowatt-hour.
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