While Germany and France struggle with record electricity prices amid low gas supplies from Russia and low French nuclear power production, the Scandinavian countries, which rely mainly on hydropower and wind power, will face a major price drop in the coming days.
Lower demand due to summer holidays, water reservoirs and windy weather led to an 80% drop in day-ahead power prices for the Nordic region on Friday. According to Bloomberg estimates, average electricity prices in Northern Europe fell to just $4.24 (EUR 4.17) per megawatt hour (MWh) on Saturday at the Nord Pool exchange in Oslo.
In comparison, day-ahead prices in France were $338 (333 euros) per MWh and $150 (148 euros) per MWh in Germany.
Day-ahead prices in the Nordic countries reached their lowest level since November 2020, thanks to a combination of several factors. These include increased production of wind energy, people going on summer vacations and sufficient water for hydropower generation.
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Electricity prices in the Scandinavian countries for 2023 are also much lower than, for example, in Germany. The Scandinavian price contract for next year was $112 (€110) per MWh on Thursday, compared to a record high of $377 (Euro 371) per MWh in Germany, according to Bloomberg.
However, Norway’s water reservoirs were 59.2 percent full at the end of last week, below the 20-year average, according to data from the Norwegian Directorate of Water Resources and Energy (NVE). Hydropower producers have been discouraged in recent weeks from tapping more water for hydropower generation and saving water for the winter. Operators were also asked not to export too much electricity to the rest of Europe, as the reservoirs are not as full as in previous years, and not to rely on imports from Europe, which are struggling with energy supplies.
By Michael Kern for Oilprice.com
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