Having a single area price is good for competition in the electricity market which, in turn, is good for consumers,” says Jukka Ruusunen, Fingrid’s CEO.
The large differences in area prices between Finland and the other Nordic countries were again a source of debate. For a few weeks, the wholesale price of electricity in Finland was as much as double the price in Sweden.
Ruusunen says that the price differences, which have, on occasion, been substantial, are largely due to differences in the structure of electricity generation.
“In Norway, most of the electricity is generated by hydroelectric plants, while Sweden relies on hydroelectric and nuclear power. In both countries, prices are kept down by the very low variable costs associated with the generation methods that they use. The price differences are particularly large when Finland’s neighbouring countries have access to a lot of hydroelectric power in relation to consumption.”
“In Finland, it is often necessary to fall back on more expensive forms of generation. On the other hand, we are already fundamentally more dependent on electricity imports than the other Nordic countries. The regional prices between Finland and Sweden differ when there is not enough electricity transmission capacity between the two countries to meet the demand in Finland,” Ruusunen points out.
Olkiluoto 3 delay causing major repercussions
The situation in Finland is exacerbated by the fact that the commissioning of the third nuclear reactor in Olkiluoto has been delayed by more than a decade. The delay has caused a generation shortfall that could not be taken into account when the transmission capacity was developed, as the plans for and investments in transmission capacity are made over a long time horizon of 10–20 years.
“Due to the delay to the new nuclear plant, it has been necessary to import electricity corresponding to 1,600 megawatts of generation from elsewhere in recent years.”
Finland’s electricity market is also affected by the collapse of electricity imports from Russia. As a result, it has become necessary to import around 1,000 megawatts more from Sweden, which has further increased the price difference between Finland and Sweden.
Ruusunen expects the completion of Olkiluoto 3 to even out the regional differences in electricity prices between Finland and the other Nordic countries. The new reactor will provide an extra 1,600 MW of generation capacity, which is a substantial amount in relation to the transmission capacity between Finland and Sweden, which is currently around 2,700 MW in the import direction.
“The increase in wind power in Finland is also a good thing, as it will increase the supply of electricity and reduce the price difference.”