SKM Market Predictor has just released quarterly update, January 2017 update, of our annual Long-Term Power Market Outlook report. The original Long-Term Power Outlook 2016 report was published in April. In this work we have updated the Base scenario of the April report. The first quarterly update after the main report was published in August and the main changes introduced in the two updates are:
• The updated market prices for fuels and carbon for the next several years
• The updated Nordic hydro reservoir levels
• The phase out of the coal capacity in Finland by 2030 and in the Netherlands by early 2020’s
• Extension and expansion of the Swedish electricity certificate system by 18 TWh until 2030
• Improved outlook for Swedish nuclear capacity after Sweden agreed to abolish the nuclear capacity tax by 2020
• Recalibration of the Polish power market
• French carbon price floor from 2020 onwards
In our annual long term power outlook report we are focusing on the European energy transition, which is facing significant challenges. A future low-carbon economy has long been put forward as one of the main objectives of the European development towards the middle of this century. However, the current climate and energy policies have large side effects. The consequences and challenges for the energy sector are significant: renewables must replace fossil power generation, the European grid must handle large amounts of variable renewable power generation, new business models have to be developed and adequate security of supply must be provided. On the other hand, European competitiveness should be enhanced simultaneously. Even though the Paris agreement included the ambitious emission reduction targets, the EU Roadmap 2050 will most likely be the guiding reference for the longer-term development of EU ETS. Therefore, we have analysed the power price development with moderate carbon prices in our “Long-Term Power Outlook 2016 Edition”.
The recent changes in the market are elaborated and the analyses provide insights into the Nordic and Baltic long-term development. In addition, the impact of the growth of renewables, power demand, and generation and transmission capacity changes are taken into account. Since the Nordic countries have been recently closer interconnected with Europe, we have put more focus on the Central Europe this time.
Key words:
• Base scenario describing our view of the most likely long term outcome and two sensitivity scenarios describing possible variability of the power prices
• Norway and Sweden realization of 28.4 TWh renewable generation capacity by 2020.
• Significant growth of the Finnish production capacity coming from wind power and nuclear capacity. However, conventional thermal production is going through challenging times.
• Denmark continues to build renewable wind and solar capacity, and swap from coal to bio for both central and local power plants.
• From 2030 onwards, the rest of the existing nuclear capacity will be decommissioned due to reaching technical lifetime.
• Consumption growth comes mainly from data centres and transport sector.
• Overview of recent changes and uncertainty in commodity prices and hydrology
• Estimation of renewable capacity development for each price area
• Assessment of nuclear expansion and decommission in line with recent statements
• Updated plans for new interconnector capacity based on current information
• Assessment of scenarios for future demand development
• Assessment of scenarios for future EUA development
• Complete modelling of the Nordic, European, Scandinavian and Russian power markets
• Coverage period 2016-2056