Covid-19 pandemic has changed the global energy landscape significantly since last year. While long-term consequences on the global economy are still uncertain, unpreceded political changes have been approved and getting implemented by governments across the globe to handle the long-term consequences of the pandemic crisis. These changes will have enormous impact for the future development of power sector in all countries.
Transition towards net-zero carbon European power system has been boosted lately. Approval of the 2030 targets, further commitment for carbon neutrality by 2050 and allocation of additional support for green transfer already have visible impact in 2021. These approved changes will continue to impact power market with reinforced force in the future. Clear ambitions regarding hydrogen introduction changes completely the future path of the power system development. This has also become visible on national level as the governments and TSOs started providing their plans to adapt to the completely new landscape.
While the process is still in the early stage there is an urgent need to understand impact of those changes based on the fundamental modeling of the power systems. Incorporating all proposed and approved decisions into the power modeling enables a clear and early insight into future developments. In this year’s edition of the Long-Term Power Outlook, we have incorporated and simulated on the market model most recent decisions by EU and recently announced long-term development plans from the Nordic TSOs. The simulation is carefully implemented by several control runs on the EMPS market model to arrive at the most optimal solution for power system development. The complexities are further analyzed by providing two fundamental sensitivity scenarios to outline future uncertainty.
Projected unprecedent growth in demand is mainly driven by deployment of hydrogen electrolyzes and industry electrification and EV. The demand growth is supported by tremendous renewable construction which will overperform all earlier expectations. Required and forced phase-out of thermal and nuclear capacity will further contribute to it. Replacement of the conventional thermal generation by the hydrogen as the main source of fuel will change completely the way power system has been operated before.
Steep cost reductions of renewable technologies lead to significant amount of onshore wind to be constructed in the Nordic power market during the next few years. Later, other technologies like offshore wind and solar are getting mature and will be the driving source of renewable production. However, decreasing capture rate for wind and solar will have significant impact on the future location of renewables and which technologies will have the leading role in the future.
Along with the higher share of intermittent production and phase out of coal and nuclear capacity, volatility in the Nordic and European power system will increase in the coming decades. Closer integration with the European power system, along with new storage facilities and flexibility on the demand side are needed to balance the variation of increasing intermittent production in different countries.
Year 2021 has already seen a start of new revolution in the energy market which will completely change the rules of the game. Our in-depth insight is based on careful analysis of quantitative modelling and provides a solid framework for everyone who need to understand the recent exiting developments in the European and Nordic power markets.
- Three scenarios, reflecting different fundamental inputs: base, high and low.
- 40 years fundamental forecast of the Nordic, Baltic and Central European power markets for each area price in Nordics/Baltics, Central Europe, UK, Poland and NW Russia
- Extensive report with background information, review of assumptions and analysis of the results
- Detailed results in Excel format: weekly area prices for Nordics and Baltics, distribution of different hydrological years and scenario specific energy balances
- Presentation with the summary of the analysis and main conclusions
- Analysis of the EU and global policy development and uncertainty in the commodities and EUA
- Review and analysis of the most recent long-term development strategy of Nordic TSOs
- Review of the most recent trends in the market including development of LCOE and capture rates, flexibility and energy storage and hydrogen technology
- Forecasting the power production, consumption and grid development in the Nordic and Baltic countries
- Assertion of the consumption development with focus on EV, datacenters and industry electrification
- Interconnector development needs in Nordics and in main connected areas in Central Europe, UK and Russia
- Includes new meteorological normal and their impact on consumption development and wind distribution
Most likely development of the Nordic and Baltic power markets based on the Nordic TSOs long-term strategy announced in 2021, current commodities prices and recent EU political decisions on 2030 and 2050 targets, renewable development and hydrogen introduction
High Sensitivity Scenario:
Increase in thermal fuel and carbon prices from the current levels due to more stricter environment targets. Higher growth in renewable capacity due to improved competitiveness and profitability of RES and higher hydrolyzer utilization. Impact of the coal and gas phase-out and switch to hydrogen as fuel
Low Sensitivity Scenario:
Lower thermal and commodities prices compared to the current level. Lower demand due to lower level of electrification. Less strict commitment from EU regarding renewable and carbon targets. Low price levels do not trigger sufficient renewable construction to start with, power system continue to stay on the current development track. Insufficient renewable construction due to low price and necessity to replace nuclear decommissioning having significant impact at the end of the period
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