Energy “I calculated that I could get an electricity bill of more than a thousand euros” – Tapio Mehtonen decided to change the electricity contract only when prices rise, and there is no end to records

When Tapio Mehtonen saw on Monday what heights the stock market price of electricity would rise on Tuesday, it was enough for him.

“I called the electricity company on Tuesday morning at exactly eight o’clock and took a two-year fixed-term contract. I calculated that I could get an electricity bill of more than a thousand euros at these prices from December. ”

Many other buyers of exchange-traded electricity have made the same decision in recent weeks.

The price of electricity on the power exchange Nord Pool was already in clear pain in the autumn, but on Tuesday the all-time highs in the price of electricity on the exchange were rushed.

Electric was more expensive in Finland on Tuesday than anywhere else in Europe.

The previous peak price was only seen a good week ago. Since then, prices have always been many times higher than at the same time last year.

The taxable price paid by the consumer was over 1.20 euros per kilowatt hour and was tax-free exactly one euro on Tuesday at 8 o’clock in the afternoon. A year ago, in early December, electricity cost the consumer about five cents per kilowatt hour.

Ten years ago, in a very exceptional consumption situation, electricity was even more expensive than on Tuesday, but then the price spike lasted only a moment. Now there is no quick end to high prices.

Mehtonen has been purchasing electricity for its holiday home at a price tied to the stock exchange for more than two years.

In the long run, at least in theory, the hourly exchange price is cheaper than fixed-price contracts.

Mehtonen has been able to schedule electricity consumption with a flexible heating system and planning the use of household appliances to the cheapest hours of the day. In the early hours of the morning, electricity was often almost free until this fall.

“I have been following the development of the price of electricity quite closely and I used the machines according to the prices,” says Mehtonen.

Energy Agency about 300,000 consumer customers bought electricity a year ago, but the number is likely to have fallen sharply. Most consumers pay a fixed price for electricity.

The price of electricity has been raised since the autumn by the energy shortages in Central Europe and the sharp rise in the price of natural gas. It has meant that Europe’s electricity and heat are now produced in large quantities by coal and lignite.

Burning them, in turn, requires a lot of CO2 emissions, the price of which has also risen to record levels.

When there is a general shortage of electricity, and price fluctuations are sharp.

“When the price of electricity is generally at such a high level, price movements increase. This is due to the fact that the market is moving on the threshold of using very expensive power plants. The price steps are then steeper, ”says the strategy manager Vesa Ahoniemi Fortum.

On Tuesday, Finland’s price was raised by a special situation, when electricity was exported from Finland to Estonia at high capacity throughout the day.

“Estonia has been exceptionally cold and consumption is at its peak. At the same time, several gas-fired power plants in the Baltics are malfunctioning, ”says the director Pekka Salomaa About the energy industry.

Wild there are other worrying phenomena behind prices.

First, according to Ahoniemi, a total of an estimated 90,000 megawatts of flexible electricity generation capacity has been shut down in Europe in ten years. This is about six times the total power plant capacity in Finland.

It has been replaced by wind and solar power, the production of which varies greatly. It contributes to increasing price volatility.

Secondly, there have been serious disruptions in the Nordic electricity market this autumn.

Electricity market In the Nordic countries, operations have been based on electricity exchange trading and the free movement of electricity between the countries for twenty years.

This autumn, Sweden began to restrict the movement of electricity at its borders, contrary to market rules.

Read more: The stock exchange price of electricity rose to a record high again in the morning – due to the struggle launched by Sweden over the Nordic transmission connections

President of the Finnish grid company Fingrid Jukka Ruusunen According to Sweden, the operation is due to problems with domestic transmission connections.

“Due to the poor condition of the grid, there have been problems in the Swedish electricity system. There have traditionally been problems with transmission connections between the northern and southern parts of the country, but in the autumn they also occurred in the east-west direction. ”

To balance situation Sweden restricted electricity imports from Finland and Norway.

“We had discussions about the situation and tried to help them with the situation, but it quickly got a nasty tone. In recent weeks, the Norwegians decided to give the pots as pots and imposed transmission restrictions on electricity exported from Norway to Sweden, ”says Ruusunen.

In Norway, the grid company has also been politically pressured to restrict electricity exports, according to Ruusunen.

When Norway restricts the export of electricity to Sweden, Finland also suffers, because Norwegian electricity flows to Finland in practice through Sweden.

Electricity market the balance is also based on the fact that when the price rises enough, large electricity users should relocate or even shut down their processes.

For example, large industrial plants or, for example, grocery chains can shut down machines that consume a lot of electricity during consumption spikes. During the most expensive hours, they may prefer to sell electricity to the market.

However, according to Fingrid, industrial consumption seems to have been surprisingly flexible on Tuesday, for example. Electricity was used at about 13,800 megawatts in the evening, even though it is far from record frosts.

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“Yes, we have consistently made consumption elastic at the factories, the price level is so exceptional.”

UPM: n Energy Director of the Finnish paper business Petri Hyyryläinen At least at UPM’s mills, operations are constantly regulated according to the price of electricity.

According to Hyyryläinen, one large paper mill can consume as much electricity as a medium-sized city, so the importance of flexibility for the system is considerable.

“Yes, we have been constantly making consumption elastic at the factories, the price level is so exceptional. However, I cannot open the details. ”

UPM is not only a major user of electricity but also one of Finland’s largest electricity producers.

If the situation is so bad in the weather at the beginning of december, is Finland already threatened by a real electricity shortage with real fires?

According to an estimate given by Fingrid a week ago, Finland’s peak consumption power may increase to a maximum of about 15,100 megawatts this winter. In that situation, electricity would have to be imported at a capacity of about 3,800 megawatts.

According to Fingrid, only about 11,300 megawatts of own production will be in use in Finland in that situation, when the power reserves have been launched.

Strict then it is. However, there is no need to fear that the electricity system would collapse uncontrollably and the lights and heating would go out for days, as happened in Texas, USA, last February.

“It was about the fact that the power plants did not technically operate in frost. This is hardly happening in Finland, ”says the director responsible for the use of the electricity system Reima Päivinen About Fingrid.

If consumption does not automatically become sufficiently flexible, the transmission system operator has plans for how regional power outages could be recycled regionally.

“It has not been necessary to resort to such in Finland for at least 50 years,” says Päivinen.

Now Tapio Mehtonen is satisfied. He got a two-year fixed-term electricity contract for about six cents a kilowatt-hour on Tuesday morning. However, it will take two weeks for the new agreement to enter into force.

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“I have to ask where the state is directing this country with its energy policy decisions.”

The relative cheapness indicates that in the electricity market, electricity is expected to fall close to the level of recent years after the winter. Fixed-term contracts are based on electricity market futures prices.

Mehtonen is still concerned about the development of the energy market. He does not believe that prices will fall in the long run.

“Vice versa. I have to ask where the state is directing this country with its energy policy decisions. For example, how do people living in remote areas get along when petrol and electricity are rising at this rate? ”