Finland is experiencing an unusual problem: an abundance of clean electricity that has caused its spot energy prices to drop below zero for the first time. While much of Europe is facing an energy crisis, the Nordic country reported its average energy price for Wednesday to be “slightly” below zero, according to Jukka Ruusunen, CEO of Finland’s grid operator Fingrid.Embed from Getty Images
The price plunge was driven by a combination of factors: a new nuclear reactor that came online in April, a surge in wind power production, and excessive meltwater from spring floods that boosted hydroelectric output. At the same time, Finland’s energy demand has declined due to the crisis caused by Russia’s invasion of Ukraine.
“Now there is enough electricity, and it is almost emission-free. So you can feel good about using electricity,” Ruusunen told the Finnish public broadcaster Yle.
The situation marks a stark contrast from last winter, when Finland faced an energy shortage after banning imports from Russia as part of the global sanctions. The country had to rely on costly fossil fuels and imports from neighboring countries to meet its needs.
But the introduction of Olkiluoto 3, the first new nuclear reactor to be opened in Europe in over 15 years, changed the game. The reactor, which can supply up to 15% of Finland’s electricity, brought the price down by 75%, from €245.98 per megawatt-hour in December to €60.55 per MWh in April, per Emirati newspaper The National.
Finland, which aims to reach carbon neutrality by 2035, has also been investing heavily in renewable energy sources, especially wind. The country wants wind to be its primary power source by 2027, Ruusunen told The National. Finland currently has over 1,000 wind turbines, with more under construction.
However, negative energy prices pose challenges for both producers and consumers. Energy operators may struggle to cover their costs and make profits when the price falls below zero. This could affect their ability to invest in future projects and maintain grid stability.
Consumers may benefit from lower or even free electricity bills, but they may also face volatility and uncertainty in the market. Negative prices are usually short-lived and depend on supply and demand fluctuations. They may also discourage energy efficiency and conservation efforts.
Ruusunen said that Finland needs to find ways to balance its power system and integrate it with other European markets. He also suggested that consumers could use smart devices and flexible tariffs to adjust their consumption according to price signals.
“We have gone from one extreme to another,” he said. “We need to find a new normal.”
Finland’s electricity prices turn negative as renewables boom | Reuters | May 25, 2023
Finland’s energy prices go negative as it produces too much clean power | The Independent | May 26, 2023
Finland’s clean energy glut sends power prices into negative territory | Euronews | May 25, 2023