Less than two years ago, Nordic spot power prices soared above
EUR 50/MWh, buoyed by one of the driest and warmest summers on
record. Those prices filled up coffers of utilities that had seen their
values decrease significantly since 2010 when prices reached a record
Now, the situation couldn’t be much more different. Average
spot prices fell to EUR 5.26/MWh in April, the lowest for any month
since the turn of the century. Expectations for power prices one year
ahead have dropped by almost 40% to EUR 22/MWh just in the last
“We will surely see some water
spillage this summer and spot
prices close to zero”
“We are talking about a new reality with a strong financial impact
in both 2020 and 2021,” says Magnus Hall, the CEO of Sweden’s
Vattenfall, the largest power producer in the region.
His company is losing about SEK 700m (EUR 66m) in earnings for
every euro wholesale power prices drop. For example, a EUR 20 decline
will hit earnings by about SEK 14bn.
Other companies share Hall’s concerns, as the value of the region’s
400 TWh/year of power production is set to decline by a third from
2019 to 2020.
The chief reason for the drop is the weather. The Nordic region
has seen one of the mildest winters on record and heavy precipitation
levels created a snow cushion in the mountains close to a record high,
which will melt into power reservoirs this summer.
Estimated snow and hydropower reservoir levels rose from normal
at the turn of the year to a surplus of 38 TWh by mid-April. That means