Power market continues to be impacted by cleaner energy targets

The market for renewable energy among corporations has been sparked by corporate social responsibility objectives, better economics for renewable technologies and stable and supportive Nordic energy policies. The wind power-based Power Purchase Agreements are nowadays the favored tool for bringing new renewable energy onto the grid, and they can help companies hedge against power price swings. Corporations are setting clean energy targets and entering the PPA market, while others are looking at ways to decarbonize their supply chains.

Wet and warm winter in the Nordics this year led the power prices to extremely low levels and created an unattractive short-term PPA outlook and thus curbed the demand for Power Purchase Agreements in the region.

Also, the COVID-19 had an impact to the projects as bottlenecks across the wind value chain shrunk the pool of eligible projects. This was very likely only a temporary situation as our recent study showed. The study that was commissioned by Finnish Wind Power Association showed that Finnish power system could easily take annual wind power production of up to 25-30 TWh. This finding supports the growth of wind power production in Nordics as one of the most important paths toward achieving cleaner energy targets. Gasum is a major actor in the wind power segment and strives to increase procurement of renewable wind power in the Nordic countries.

Power prices will continue to be impacted by weather also in the future years to come. Record levels of hydro balance, increasing winds coupled with mild winters can keep the power prices at low levels for an extended period.  On the other hand, there can also be occasional cold spells that change the picture rapidly. It’s impossible to predict how next season will turn out to be? This raises the importance of risk management of power prices.

“Gasum wants to help companies to succeed in their clean energy targets.”
- Jouni Liimatta, Head of Trading, Gasum

More and more companies are changing the uncertainty into predictability. This is not true only regarding power prices. We have started to offer our customers hedging services also related to natural gas and LNG prices.

Gasum is driven to provide cleaner energy solutions and value adding services to our customers. We want to help them to succeed in their important clean energy targets. Together towards cleaner tomorrow.

The writer is Head of Trading at Gasum.

30.11.2020