Baltic power price rally continues

11 October 2018, Week 40, Issue 931

The Baltic states have recorded further spikes in electricity prices, as a result of both micro and macro factors.

Lithuanian day-ahead market (DAM) rates on the Nord Pool Spot (NPS) continued to climb in September, reaching a five-year record of 59.11 euros (US$68.30) per MWh, up 56.4% year on year. Prices in Estonia and Latvia were also high, averaging 50.93 euros (US$58.80) and 58.99 euros (US$68.10) per MWh respectively.

There have been further gains this month. Power traded at 61.45 euros (US$70.97) per MWh in Lithuania in the seven days ending on October 11, up 4.8% week on week. Rates in Latvia rose by 6.3% to 61.45 euros (US$70.97), while the price in Estonia slipped by 1.8%, landing at 48.20 euros (US$55.66).

The head of independent Lithuanian energy trader Energijos Teikimas, Ainis Kavaliauskas, attributed the bullish prices to a range of factors. He cited repairs at the 700-MW NordBalt cable between Lituania and Sweden, which started in mid-August and are due to wrap up on October 12, as well as reduced output because of weather conditions, maintenance at nuclear power plants (NPPs) in Scandinavia and lower imports from Russia’s Kaliningrad exclave. He also pointed to a rise in power demand in Lithuania.

According to Martynas Giga, CEO of Electrum Lietuva, the Lithuanian arm of Latvia’s Latvenergo, the uptick in prices has not come “out of the blue.”

“We have long awaited it, and now, when all the factors jerking the price up have aligned, the high-end price trajectory is set to persist,” he told NewsBase Intelligence (NBI).

Downplaying the impact of repairs at NordBalt, Giga said higher prices for gas and other commodities, lower hydroelectric reserves in the Baltics and Scandinavia and the increased cost of tradable pollution permits had played a crucial role. Generation firms have to buy EU carbon allowances, or EUAs, to cover their expected emissions in a given year. Their price has more than quadrupled since the middle of 2017, reaching 20 euros (US$23) per tonne.

Giga predicted that prices would continue to climb for some time.

Joseph Murphy

Edited by

Joseph Murphy


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