Electricity market

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Arguments method is increasingly affected also by international agreements, such as the eU’s environmental and climate targets and by emissions trading. a diverse production portfolio is in use in the nordic countries, and that is a significant advantage. It is important to be aware of the pieces of the electricity puzzle: what the implications of the different solutions are and the things that affect the electricity markets. Read here how the different parties – representatives of the producer, the regulator and the consumer – see the current situation and the future of the electricity markets. aSiaNtuNtijat VaStaaVat ElECtriCity PriCE FormatioN iN FiNlaNd: jukka leskelä Director responsible for power generation at Finnish Electricity Industries Retail price of electricity Taxes Electricity distribution 41% 30% 29% The wholesale market price is based on supply and demand in the power exchange. Electricity retail price is based on the wholesale market price. Electricity distribution price is regulated by authorities. Taxes are set by the state. ”The Nordic electricity wholesale market functions well: the volume is sufficient, and the market directs production so that the most efficient and lowest cost power plants are responsible for the production. However, more electricity transmission is needed where inadequate capacity occasionally limits competition. Virtually all European countries are moving towards a situation where some production forms are strongly subsidised and others are discriminated against through taxation or even prohibitions. The mission of regulators and politicians should be just the opposite, i.e. to unlock opportunities for competition and create prerequisites for investments. Achieving integrated European energy markets by 2014 is very challenging. However, the goal is being realised at a fast pace in northern part of Europe because, in practice, we are already a single market along with Germany, France and the Benelux countries. Above all, common markets bring stability, which benefits producers and consumers alike. Increasing the share of renewable energy is a huge challenge for Europe. A lot of investments are needed, and the most important prerequisite for them is stable policy-making. Among other things, this means a smooth permit process for power plant and electricity transmission projects. It is also clear that some renewable energy production forms must be subsidised.” 6 Fortum forAgendA

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