Operating environment

Operating environment in Q2 2026

European power markets

In the second quarter of 2026, Nordic spot prices increased significantly, more than doubling year-on-year, driven by notably lower hydro reservoir levels, low spring floods, low nuclear availability in Sweden and strong Continental power prices. Nordic power demand was marginally above the five-year average and broadly in line with the second quarter of 2025. Low inflows, caused by a large snow deficit, reduced the small Nordic reservoir surplus at the start of the quarter (+2 TWh) to a moderate deficit (-5 TWh) by the end of the quarter. In June, Nordic weather-driven fundamentals softened as wind conditions improved and precipitation was high. This led to a clear decline in the Nordic spot prices, especially in the northernmost areas, as well as in near-term futures prices. Towards the end of June, power prices rebounded, supported by stronger Continental European power prices, which reflected the extreme Continental heat wave and higher gas prices.

During the second quarter, the average Nordic system price in Nord Pool was 68.2 (26.5) EUR/MWh. The average area price in Finland was 49.3 (28.0) EUR/MWh. In Sweden, the average price in SE3 (Stockholm) was 64.7 (31.6) EUR/MWh, while SE2 (Sundsvall) averaged 38.0 (10.5) EUR/MWh. In Germany, the average spot price in the second quarter was 95.2 (69.7) EUR/MWh.

In January–June, the average system spot price in Nord Pool was 79.1 (36.0) EUR/MWh. The average area price in Finland was 70.8 (38.6) EUR/MWh. In Sweden, the average area price in the SE3 area (Stockholm) was 75.3 (43.8) EUR/MWh, and the price in the SE2 area (Sundsvall) was 51.9 (12.6) EUR/MWh. In Germany, the average spot price in January–June 2026 was 98.7 (90.7) EUR/MWh. In the beginning of the year, prices in Finland and the SE3 area in Sweden were above the German price but softened in March relative to Germany due to milder Nordic conditions. In the second quarter, the same happened as Nordic weather patterns normalised.

According to preliminary statistics, Nordic power consumption in the second quarter amounted to 89 (89) TWh. Both industrial and non-industrial power demand across the Nordics was broadly flat: Norwegian industrial demand increased marginally, Finnish industrial demand remained low and stable, while Swedish industrial demand showed minor progress. During the first half of the year, power consumption in the Nordics was 212 (205) TWh. In Central Western Europe (Germany, France, Austria, Switzerland, Belgium and the Netherlands), power consumption in the second quarter totalled 304 (298) TWh. Demand remained marginally below the five‑year average, with the post‑energy‑crisis recovery still stalling, but in June demand was very strong on the back of the extreme heatwave. Overall power consumption continued to lag pre‑crisis levels by approximately 50 TWh. During January–June, power consumption in Central Western Europe was 666 (658) TWh.

At the start of the second quarter, Nordic hydro reservoir levels stood at approximately 43 TWh, around 2 TWh above the long‑term average and 19 TWh below the level a year earlier. During the quarter, hydro inflows were below normal, while hydro generation was marginally below the long-term average. By the end of the quarter, reservoir levels had increased to around 79 TWh, corresponding to a deficit of 5 TWh relative to the long‑term average and 10 TWh below the level one year ago.

In mid-July, the Nordic system forward price on Euronext for the remainder of 2026 was around 74 EUR/MWh and for 2027 around 52 EUR/MWh. Nordic hydro reservoirs stood at approximately 81 TWh, around 10 TWh below the long‑term average and 12 TWh below year‑ago levels. The German electricity forward price for the remainder of 2026 was around 127 EUR/MWh and for 2027 around 103 EUR/MWh.

European commodity markets

In the second quarter, natural gas prices remained elevated following the sharp increase in February–March triggered by the outbreak of war in the Middle East. While immediate concerns around LNG flows through the Strait of Hormuz eased somewhat during April–May, the market continued to price in a persistent geopolitical risk premium, keeping the forward curve supported. Oil prices remained elevated until early June, after which prices fell sharply as anticipated severe supply disruptions did not materialise.

Gas consumption in Central Western Europe totalled 302 TWh during the second quarter. Over the same period, regional gas storage levels increased but remained low for the season. Gas storage volumes rose from 122 TWh at the start of the quarter to 257 TWh by quarter‑end. This was 92 TWh lower than in the same period last year and 123 TWh below the five‑year average (2021–2025).

The average TTF front‑month gas price in the second quarter was 45.6 EUR/MWh and 42.9 EUR/MWh during the first six months of the year. The 2027 gas forward price decreased from 39.1 EUR/MWh at the start of the quarter to 34.9 EUR/MWh at quarter‑end, remaining 5.3 EUR/MWh above the level observed one year earlier.

EU Allowance (EUA) prices increased during the quarter, rising from 74.6 EUR/tonne at the start of the quarter to 80.2 EUR/tonne at the end of the period, which was 11.2 EUR/tonne higher than one year earlier.

Coal prices declined over the quarter. The ICE Rotterdam 2027 forward contract fell from 125.0 USD/tonne at the start of the quarter to 110.7 USD/tonne by quarter‑end, 3.2 USD/tonne lower year‑on‑year.

In mid-July, the TTF gas forward price for the remainder of 2026 was approximately 55 EUR/MWh. The corresponding EUA forward price for 2026 traded around 79 EUR/tonne, while the ICE Rotterdam coal forward price for the remainder of 2026 stood at approximately 119 USD/tonne.

Regulatory environment

Commission launches proposal to revise the EU ETS

On 17 July, the Commission published a proposal for the revision of the Emissions Trading System (ETS) Directive for the period 2031–2040. The proposal is aligned with the EU 2040 climate target and net‑zero trajectory to 2050. The revision applies to the existing ETS1, the new ETS2 is excluded.

The Commission proposes to loosen up the ETS target (linear reduction factor) from the existing 4.4% per year to 3.7% during 2031-2035 and to 1.7% in 2036-2040. The market stability reserve will be redesigned by setting more dynamic thresholds that would decline by 4% annually and by reducing the intake rate from 24% to 12% from 2028 onwards. The Commission has taken note of the industrial cost concerns and suggests continuing the free allocation until 2038 and giving extended support for industrial decarbonisation, for example through the Industrial Decarbonisation Bank. Rules regarding use of auctioning revenues will be tightened for the member states.

The ETS scope will be enlarged to include permanent domestic carbon removals into ETS. International carbon credits will be allowed in ETS from 2036 onwards, accounting for up to 2% of the ETS emissions in 1990.

Fortum regrets the lowered ambition but welcomes the proposal as a proper starting point for negotiations. We highlight the need for a stable and credible ETS that supports investments and strengthens European competitiveness.

The Commission proposes EU Electrification Action Plan

On 17 July, the Commission published its Electrification Action Plan, setting out a non-binding strategy to accelerate the electrification of the EU economy as part of the Clean Industrial Deal agenda.

The Plan proposes an indicative EU electrification target of 46% by 2040, measured as the share of electricity in final energy consumption. The Commission identifies five main barriers to electrification: high electricity prices compared with fossil fuels, high upfront investment costs, grid constraints, slow innovation uptake, and the need to strengthen supply chains, manufacturing and skills. The focus is on sectors still heavily dependent on fossil fuels, notably industry, transport and buildings.

Key measures include a legislative proposal on network charges, work on electricity-to-gas price ratios, faster deployment of clean electricity, and stronger support for flexibility and storage.

The Plan sets a KPI of 200 GW of storage capacity by 2030, up from around 55 GW in 2026, and announces further work on long-duration flexibility needs for 2030, 2040 and 2050. It also gives specific attention to data centres, district heating and cooling, waste heat recovery, and industrial electrification.

The Commission also supports cross-border cooperation to accelerate nuclear reactor licensing and recognises lifetime extensions of existing reactors where safe, economic and compatible with high safety standards.

For Fortum, the Plan is relevant as it explicitly recognises the role of clean electricity, including renewables and nuclear, as well as flexibility, storage, district heating and waste heat recovery in enabling electrification.

Data centres face headwinds and tailwinds in Nordics

The Nordics are Europe’s fastest-growing data centre region with Finland alone having a project pipeline corresponding to approximately EUR 13 billion. Public discussion has recently been particularly intense and largely critical, with the debate increasingly polarised between the economic and digital benefits on one side and concerns over electricity demand, grid capacity, and broader societal value on the other.

Finland removed the reduced electricity tax rate for data centres effective from the beginning of July. In Sweden, the corresponding electricity tax change was implemented already in 2023. In Norway, the government recently supported the development of Nscale's new data centre project by providing a loan guarantee through Eksfin, the country's export credit agency.

In March, the European Commission published a draft proposal for an EU sustainability labelling scheme for data centres, aimed at assessing and benchmarking their environmental performance. Fortum supports efforts to improve transparency around the environmental footprint of data centres. However, the proposed framework is not technology-neutral, as it excludes electricity generated from nuclear and hydropower sources. The scheme is expected to reinforce the Nordic region’s competitive advantage as a location for energy-efficient, low-carbon data centre investments, while also raising requirements for project design, site selection, and integration with the wider energy system, including waste heat recovery and grid utilisation.

Fortum’s view is that data centres play a vital role in supporting digitalisation and economic growth. We are ready to develop new generation capacity in response to increasing electricity demand and our customers’ evolving needs. New capacity, however, requires higher power prices and/or customer PPAs.

Finland prepares a new support scheme to solve electricity capacity adequacy

Finland is currently preparing a new “Winter Energy Support Scheme” to strengthen electricity adequacy and security of supply. The scheme represents the latest step in efforts to address emerging capacity adequacy challenges in an increasingly weather-dependent power system. Earlier approaches included the proposed non-fossil flexibility support mechanism, but its preparation failed.

The Winter Energy Support Scheme is intended to support investments in new dispatchable bioenergy-based generation capacity as well as upgrades and lifetime extensions of existing combined heat and power (CHP) plants. Details remain under preparation, and legislation is expected before the end of the current government term.