The future of the electricity markets

Switching to a clean electricity system must take place cost-effectively and without endangering the security of supply.

The electricity system is currently undergoing a major transformation. The driving force behind it is climate change and the efforts to combat it. Emissions trade and the targets of renewable energy and energy efficiency have accelerated the rapid transformation of the entire energy and electricity system.

This transformation has had a major impact on the electricity market. The strong growth in weather-dependent electricity generation, built with the support of society, has increased the supply of electricity at the same time as the economic recession has reduced electricity consumption. The consequence has been a decline in the price of electricity, which has also been affected by the decrease in the prices of fuels and emission rights.

Electricity must be generated and consumed in precisely equal amounts at every moment. The traditional thinking has been that electricity production matches electricity consumption at any given time. The increase in weather-dependent electricity generation has led to a greater need for flexibility in the system. At the same time, flexible and adjustable electricity generation, which for us in Finland was essentially thermal power plants, is exiting the market, due to falling electricity prices. This equation has, in terms of the electricity markets, become challenging. The market has to change.