Power Prices Plunge as Nordics Exceed Renewable Energy Target
Sweden and Norway are on track to exceed their 2020 target for renewable energy generation, with more than 60% of the needed capacity already built and another 200 onshore wind parks in development.
“Production in the Nordic region will exceed demand by as much as 7% by 2020,” Bloomberg reports, citing an analyst with Oslo-based Nena. As a result, “year-ahead power last month traded at its lowest level since 2005.”
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The two countries had set a joint target of 28.4 terawatt-hours (24.8 trillion watt-hours of electricity), and are now projecting a total of 29.4 TWh.
“There is a massive amount of projects that do not need to be built already in the pipeline,” said Nena analyst Joachim Jernaes. “It can quickly become a situation where investment decisions are made for more production than intended.”
Starn explains that the region’s utilities “are obliged to buy permits every year to match sales of electricity,” with each megawatt-hour of approved supply receiving a tradeable certificate. With supplies surging, certificate prices fell to a record low of SEK136 (US$16) per MWh in March. “Without an increase in the quota setting demand, or tighter Swedish supply rules, prices may fall to zero after 2020,” he writes, citing Jernaes.