Stocks in water reservoirs have been close to normal levels during the spring and summer. Rising fuel costs (coal, oil and gas) and the costs for emission rights have led to increases in electricity market prices. The forward prices of electricity in Nord Pool have increased in 2005, which indicates that players in the market feel that future electricity prices will rise. Electricity price developments for the autumn and winter are, therefore, uncertain. That is the primary conclusion in Fortum’s electricity market comments for the second half of 2005.
The system with emission rights is driving up prices for power generated by fossil fuels in Europe, which in turn will impact the market price on the Nordic power exchange, Nord Pool. Integration between the northern European markets is gradually increasing, primarily due to increased import and export between the countries.
”With normal levels in the snow and water reservoirs or in case of heavy rain during the autumn and winter there are conditions for decreasing electricity market price. On the other hand, the development of fuel and emission rights prices is uncertain. Spot prices at Nord Pool, have not risen at the same rate as the forward prices during 2005,” says Mats Persson, Customer Portfolio Manager at Fortum.
Summary of electricity market comments:
- Levels in the water reservoirs are slightly above the normal compared with the average level at this point in time for the period 1990-2000.
- Higher prices for fuel and emission rights have driven up forward prices in the Nordic power exchange, which indicates that the market is expecting higher future electricity market prices.
- The trend towards increased imports and trade with emission rights clearly indicates that the collective northern European market impacts both the market price and retail price development in the Nordic countries.
- The consumption of electricity continues growing at a moderate rate.
Fortum's next electricity market comment will be published in spring 2006.
For additional information visit: www.fortum.fi, www.fortum.se or contact:
Jukka Ruusunen, Vice President, Business Development and Analysis, Fortum, +358 50 453 6327
Mats Persson, Customer Portfolio Manager, Fortum, + 46 70-553 77 73
Fortum is a leading energy company in the Nordic region and other areas of the Baltic Sea region. Fortum produces, distributes and sells electricity and heat, operates and maintains power plants and other industrial facilities and also offers energy-related services. Fortum is listed on the Helsinki Stock Exchange. The number of employees is circa 9,000.