Detractors of predatory prices should remember that no one is forced to buy electricity on the exchange. Based on just one Friday, it is therefore not worth scrapping a system that produces low prices on average, writes financial journalist Anni Lassila.
Discourse leaves the glove so easily.
The electricity market had an undeniably difficult situation a week ago on Friday (January 5). The severe frost had already lasted a week. The electricity consumption of the cold days had quickly exceeded the forecasts of the market players.
That's why the forecasts were raised for Friday. At the same time, several power plants needed on freezing days were out of order. The end result was that in the so-called spot market, the price of electricity went up to almost 2.4 euros per kilowatt-hour during the most expensive hour on Friday.
However, the electrical system held up well without exceptional measures. The peak price finally woke up the consumers, and in the end electricity was used much less than predicted. The electric heater that buys electricity from the stock market still received a really huge bill in one day, at least in the order of a hundred euros.
Already on an expensive Friday, the internet was full of electricity market conspiracy theories and demands for regulation. After the weekend, the discussion also started with official bodies. HS interviewed for Thursday's paper Fortum's manager, who hoped for a so-called capacity market in Finland.
Fingrid's new CEO was on the same lines. Elfi, representing electricity users, dug Economic life on the other hand, the electricity market model discussed (and found to be problematic) about naphthalene a year ago. Demands for a price ceiling also came to life again.
More suggestions have come directly via e-mail and on X, the former Twitter. Friday, January 12 opinion writer presented on HS's website that wind power companies would be required to deliver a minimum amount of electricity, and consumers would only be sold electricity on the exchange.
Common the thing about all the presentations is that they seem like rather or very drastic solutions to the problem that appeared on one frosty Friday. After all, the average price of electricity was a very affordable 6.7 cents per kilowatt hour throughout last year. The price is not completely comparable compared to previous years, as a reduced 10 percent value added tax was paid for electricity in Finland in January–April.
There have been high prices in the stock exchange prices, but also many prices even with minus signs.
In the discussion, it would be worthwhile to at least pay attention to what problem is being solved at any given time and calibrate the proposals accordingly.
If the problem is the fluctuation of the price of electricity for consumers, the solution is very simple: a fixed-term contract. Many speeches seem to start from the idea that it is somehow necessary for the consumer to pay the exchange price. It really isn't.
Even at the moment, numerous companies offer long or short fixed-term contracts at a reasonable price, to which you can add a flexible element. You can fix the price for just one or three months and then enjoy the joys of stock exchange electricity again in the summer.
On Monday, January 15, in the cheapest contract, electric energy cost 8.85 cents per kilowatt hour.
If the problem is the sufficiency of electricity in peak consumption situations, let's solve it. Until now, electricity has always been enough, but the growing fluctuation and low predictability of wind power strain the nerves of those in charge of the system perhaps a little too often.
As a solution, a fairly small amount of fast-starting, weather-proof production suitable for long-term electricity production could be enough. It is possible to acquire it, for example, through a capacity auction. It costs something, but the price won't be massive at the system level.
Such a purchase would lower electricity price peaks and therefore eat into the profitability of other so-called flexible investments, so the sizing must be considered very carefully.
For example, batteries help with the problem of peak power for a short moment, but they are no joy for a power deficit lasting several days or even one day. For that, more traditional electricity production may be needed, which cannot be created now without some kind of support mechanism.
If we think that the problem is how to get enough stable electricity production in Finland in the long term, i.e. more than wind and solar power, you should forget the prices and hype of Friday January 5th.
Time must be set aside for thinking about long-term solutions, because the effects can be huge on the price of energy and on the entire economic structure. The questions are difficult: Which predictions can be trusted, what are we aiming for?
Solutions are inevitably more or less political, as always in the big strategic questions of society. And when the debate is political, the arguments are often ideological.
Some basic Finns seem to have a principled antipathy towards wind power and sympathy for fossil fuels. There are still supporters of peat in the center area.
For the Greens, nuclear power used to be a red garment, it is not anymore. Again, within the coalition, you sometimes find a bit of blind faith in the market – on the other hand, there is also support for strange market models.
When goals and means are set, the effects extend decades into the future in any case. That's why the discussion should also cross party and government boundaries.
When HS interviewed different parties in the market last week, everyone agreed on one thing: the long-term development of Finland's electricity system should probably not be left purely at the mercy of market forces, but a common direction and vi
sion is needed.
Even if that electricity market in itself would work just fine.
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