Energy Market Overview

The cooler weather that arrived last week increased electricity consumption in Estonia and neighbouring countries, and thus the market prices. Good news was announced by NordPool – a second auction round to the electricity exchange will be added in December with the aim of preventing extreme price peaks in the future, similar to the ones we saw in August.

Windy weather helped to lower electricity prices last week, the exchange rate fell close to zero at times, but the increased wind output did not fully get to impact our prices due to maintenance work on the Swedish-Lithuanian submarine cable. Recent weather forecasts promise a milder-than-average winter, however, the threat of power outages in Europe has not disappeared.

Last week’s quite low wind energy output raised electricity prices in Estonia, Latvia and Lithuania. Compared to the universal service provided in Estonia, power exchange rates remain at a higher level, but those who use smart consumption management solutions can enjoy lower rates at night.

The efforts of European countries to cope with the energy crisis, together with a significantly warmer than usual autumn, have led to a situation where gas storage facilities are so full that LNG carriers with expensive cargo have to wait at a roadstead. However, a cold winter can quickly turn the current surplus into a deficit.

The energy crisis forces countries to look for solutions to problems that have already arisen or may arise with the arrival of winter they have not had to face so far. While private consumers are protected by various measures in Estonia and in several other countries, the situation of entrepreneurs can become significantly more complicated as the energy deficit worsens.

Both the European Union as a whole and its individual member states are desperately looking for ways to reduce energy prices before the winter – from price ceilings to floating power plants. Solutions must be chosen wisely, because more affordable prices do not encourage people to consume more wisely, and an increase in consumption increases the risk of worsening the energy crisis.

While last week’s autumn storms caused power failures in thousands of homes for shorter or longer periods of time, even more households could enjoy very cheap electricity due to the raging winds. At the same time, European countries continue to try to figure out how to reduce gas consumption in winter.

The exchange price of electricity in Estonia rose by more than half last week, as the connection with Latvia was restored and cheaper electricity was able to cross the southern border. Like most countries, Finland is anxiously looking towards winter with their transmission network operator Fingrid warning of power outages. Despite the fact that Unit 3 of their Olkiluoto Nuclear Power Plant is going to reach full capacity in the coming weeks.