Finland's spot electricity price is soaring to its highest level of the winter today, with the tax-inclusive average price hitting over 38 cents per kilowatt-hour on Monday. The most expensive hourly price, at just under 56 cents, is expected between 12 and 1 pm. The peak quarter-hour price, exceeding 61 cents, was seen even before 8 am. The hourly price will remain above 50 cents throughout the day from 8 am to 5 pm.
Price Peaks at Noon
Foreca meteorologist Joanna Rinne states that two weather phenomena are driving the price spike during the first week of February. Intense cold is increasing heating demand and, consequently, electricity consumption. At the same time, a decline in wind speeds is reducing the availability of wind power. According to weather forecasts, no relief is in sight for the next couple of weeks.
Rinne notes the most significant changes in the weather are expected around the weekend, when temperatures in some areas may briefly reach just 5 to 10 degrees below zero. She emphasized these warmer periods would be short-lived. For most of the time, widespread frosts of 10 to 20 degrees are expected, with nighttime lows of 20 to 35 below zero.
A Perfect Storm of Factors
The current situation presents a classic strain on the Nordic power system. High demand during a prolonged cold snap coincides with low renewable output. Wind power, which has become a significant part of Finland's energy mix, is particularly susceptible to calm, high-pressure systems that often bring clear and cold winter weather. This combination forces greater reliance on other, often more expensive, forms of generation to keep the grid stable.
Consumers with fixed-price contracts are shielded from these immediate swings, but households and businesses on spot-price contracts or with poor hedging face directly higher costs. The price level, sustained for over twelve hours, translates into significantly higher daily electricity bills. This puts pressure on household budgets and operational costs for small businesses during an already expensive time of year.
No Quick Relief in Forecast
Rinne has indicated the calm and cold weather could last longer than just a couple of weeks. This prospect suggests the market may face continued upward pressure on prices. The duration of the price spike is as critical as its peak. A single day of high prices is manageable for many, but a week or more of sustained high costs creates a much more serious financial impact.
The price formation reflects real-time conditions on the power grid. When demand surges and supply tightens, the market mechanism allows prices to rise sharply to balance the system. This signals to consumers to reduce usage if possible and to producers to bring all available generation online, regardless of cost. It is a fundamental feature of the Nord Pool electricity market where Finland trades power.
Understanding the Market Mechanics
Finland's electricity market is closely integrated with its Nordic and Baltic neighbors. High prices in Finland can also draw power imports, but if the cold and calm weather is widespread across the region, import options become limited and expensive. This regional dimension is crucial, a local problem in Finland can be mitigated by imports, but a regional weather pattern affects the entire market area.
The role of weather forecasting has become central to both energy trading and household planning. Forecasts like those from Foreca allow market participants to anticipate conditions days in advance. This leads to pre-emptive price adjustments on the futures market as traders factor in the expected high demand and low wind output. The spot price customers see today was largely anticipated by the market last week.
Historical Context and Consumer Impact
While prices above 60 cents per kilowatt-hour are high for the current winter, they remain below the extreme peaks witnessed during the energy crisis of 2022. That period saw prices spike to unprecedented levels due to a confluence of geopolitical and market factors. The current spike is primarily driven by meteorology rather than global fuel markets, though a backdrop of higher overall energy costs persists.
For the average consumer, the immediate advice during such price spikes is to shift flexible consumption away from the most expensive hours. This could mean delaying running a dishwasher, laundry, or charging an electric vehicle until the late evening or night when prices typically fall. However, for heating, which is non-discretionary during a cold snap, such flexibility is very limited, exposing consumers fully to the market price.
Looking Beyond the Cold Snap
The event underscores the ongoing challenge of managing an energy system with a growing share of weather-dependent renewable sources. The need for flexible power generation, demand-side response, and robust energy storage solutions is highlighted during these periods. As Finland continues its energy transition, balancing security of supply, affordability, and sustainability during extreme weather will remain a key focus for policymakers and grid operators.
Ultimately, the spike is a reminder of the direct link between the weather and the wallet in a market-based electricity system. With the forecast offering little hope for a quick return to milder, windier conditions, Finland is bracing for a costly stretch of winter. The coming days will test both the resilience of the power grid and the financial resilience of those exposed to the raw volatility of the spot market.