|7 December 2010|
Higher electricity prices predicted for 2011
The Danish newspaper Jyllands-Posten says: "Electricity customers to pay billions". The reason is supposed to be shortage of water for Norwegian and Swedish hydro power plants combined with an increasing consumption of electricity during the cold of winter.
Between 5 and 7 pm today the Nord Pool spot price for East Denmark reaches 2000 Euro/MWh which is the highest level ever.
Some possible reasons for this development will be discussed below. The energy balance in Norway has a major influence on the Nordic electricity market. Therefore the system price in the Nordic spot market for electricity will be compared with the water level in the Norwegian hydro storages for the last two years:
The chart presents 2009 as a quite exemplary year with a stable spot price throughout the year and a storage level increasing from 30% before the spring season to 90% right before the winter.
2010 is different. The spot price is very high at the end of February. The minimum storage level is slightly above 20% before the spring season and the maximum level does not exceed 70% in October.
Unusual growth of Norwegian electricity consumption
The chart shows a surplus of energy in Norway in 2009. The export of electricity was 9 TWh and the hydro storages were filled up.
In 2010 the electricity consumption increases about 9% compared to 2009. So far the growth has been about 11 TWh. Besides the inflow of water during the last 12 months has been about 20 TWh below the level a year ago. Thus the overall Norwegian energy balance has been deteriorated by more than 30 TWh in a year.
In comparison the total Danish electricity consumption was 34 TWh in 2009.
It is felt in the neighbouring countries. The 9 TWh exported in 2009 were changed into 6.5 TWh imported so far in 2010. The hydro storages have provided for another 15 TWh.
Insufficient transmission capacity
The Konti-Skan interconnector between Sweden and West Denmark has been reduced from 700 MW to 150 MW for technical reasons.
Based on a Danish complaint the Swedish procedure has been dealt with by the European Court. See the settlement here.
Independently of cause and responsibility it can be concluded that transmission capacities are insufficient for an appropriate service to the international power markets. This is valid for both national grids and interconnections.
The supporters of a European supergrid should pay more attention to the availability problem.
Will the future electricity market become more volatile?