Summer 2024 Energy Price Forecast: Renewables and Weather Shape the Market 

Volt Power Analytics has conducted a comparison between our forecasted prices for the coming summer and last year’s summer prices. The substantial development of renewables, particularly solar and wind power in the Nordics and the continent, is expected to impact prices. 

Southern Norway’s Price Expectations

We observed a significant price difference between NO2 and NO1/NO5 last summer, primarily due to hydrological conditions. A summer storm, Hans, unexpectedly hit NO5 and NO1, coinciding with above-normal snow levels and a delayed melting season. This led to rapidly filled reservoirs and flooding, resulting in several hours of prices close to nil. This summer, the risk of such hydrological pressure seems lower as the recent heat wave has melted most of the snow, especially in lower regions. 

Comparing the duration curves below for NO1 and NO2 (this summer in blue and last year in black), we expect a more coupled region with fewer hours priced towards nil. Generally, prices will remain well below last summer’s levels in NO2, while NO1 and NO5 are expected to rise towards NO2 prices. In addition to better hydrological control, household consumption has increased significantly. Weather forecasts suggest a shift towards more low-pressure systems and above-normal precipitation this weekend. If this persists for several weeks, the number of low-priced hours will increase significantly as reservoirs fill rapidly. 

Finland’s Energy Market 

Finland has shifted from a power deficit to a surplus area since last summer, following the activation of Olkiluoto 3 and substantial wind power development in recent years. As we previously reported, Finland experienced the most negative prices in Europe in 2023. Finland is also frequently coupled with the Baltics, making it a very volatile and interesting area in terms of prices. The past 12 months have seen continued development in wind and solar power in Finland, which should further pressure prices this summer. Increased residential and tertiary sector consumption, likely due to lower power prices, is also notable. Overall, we expect somewhat fewer hours close to nil, but a significant reduction in higher-priced hours as the increased surplus excludes more expensive thermal power plants. Additionally, the massive buildout of renewables in Lithuania will increase the number of low-priced hours in the region. 

Northern Norway’s Energy Market 

In the northern region of Norway, it has been very dry for some time, and the hydrological balance deficit is expected to outweigh the fundamental oversupply of power production in northern Scandinavia. We anticipate NO4 to remain below its surrounding areas, as usual, but it should couple more frequently with higher-priced hours as well as prices close to nil. Interestingly, we expect the same number of prices close to nil as in Finland, though more of these hours will be below zero in Finland compared to our forecast for NO4. 

Sweden’s Energy Market

In general we expect little deviations between the Swedish price areas this summer. The hydrological situation is currently close to normal, maybe a minor snow deficit. Due to significant less pressure in the Norwegian system, this lifts also the Swedish prices in our model compared to last summer. In the South there is a higher risk of single ours above 100€, but significantly lower than last year.

From experience, we have previously observed that the summer weather can change this rather quickly as SE2 is vulnerable for a wet summer, due to the fundamental oversupply of power production in this area.