Transition towards a low carbon European power system is ongoing with accelerating rate. The change is visible on EU level since EU commission presented late 2018 its updated long term energy strategy with enhanced focus on climate neutrality by 2050. It is visible also on country level as the governments are tightening their long term emission targets and organizing competitive tenders to increase renewable power production. The change is also visible on corporate level as the corporates have started to use innovative financing, like PPAs, for renewable energy projects as the previous feed-in-tariffs are being scaled down.
Due to steep cost reductions of renewable energy significant amount of onshore wind power is entering the Nordic markets during the next several years. The target of the common Swedish and Norwegian certificate scheme for the year 2021 in nearly reached and the additional 18 TWh target for 2030 is expected to be fulfilled during 2020, before the extended scheme period has even started. Also offshore wind is expected to have an important role in Europe’s power mix during the next decades due to rapid reduction of the costs. However, decreasing capture rate for wind and solar power will increase the break even level for intermittent wind and solar power production above their levelized costs and thus decelerate deployment of intermittent power production in the coming decades.
Along with the higher share of intermittent production and phase out of coal and nuclear capacity, volatility in the European power system will increase in the coming decades. Closer integration of the European power system, but also energy storage and demand side management is needed to balance the variation of increasing intermittent production in different countries.
In this year Long Term Power Outlook report we will discuss these topics in more detail. Compared to our last year report we have included an overview of PPAs as an instrument for project financing and take a look on the role and outlook of energy storage in the future.
- Base scenario, describing our view of development of the Nordic power markets.
- Two fundamental sensitivity scenarios, the high and the low scenarios to describe a possible variability of the power prices.
- Updated assessment of the renewable capacity under the Swedish-Norwegian electricity certificate scheme.
- Significant growth of the Finnish electricity production coming from nuclear power.
- Denmark continues to build renewable wind and solar capacity, and swap from coal to bio for thermal power plants.
- From 2030 onwards, decommissioning of the rest of the existing nuclear capacity due to reaching the end of technical lifetime.
- Consumption growth comes mainly from data centres, transport sector and electrification of industrial processes.
- Longer-term cannibalization of wind and solar power increases break-even level for intermittent renewable production.
Most likely development of the Nordic and Baltic power markets from our point of view.
High Sensitivity Scenario:
Higher thermal fuel and carbon prices. The High Sensitivity scenario has a higher growth in renewable capacity towards the end of the period due to improved competitiveness.
Low Sensitivity Scenario:
Lower thermal fuel and carbon prices. Lower growth in renewable capacity and close down of additional thermal capacity are expected in this scenario in comparison to other scenarios.
- Overview of the recent changes and uncertainty in commodity prices and hydrology
- Estimation of renewable capacity development for each price area
- Assessment of nuclear power plant closures and additions in line with recent statements
- Estimation of the development of volatility in the Nordic power market
- Assessment of the historical capture rates for Nordic wind power
- Updated plans for new interconnector capacity based on the current information
- Assessment of scenarios for future electricity demand development
- Assessment of scenarios for future EUA development
- Complete modeling of the Nordic, European, Baltic and Russian power markets
- Coverage period 2019-2058
- 40 years fundamental forecast of the Nordic, Baltic and Central European power markets for each price area
- Three different scenarios for the market development analysing the impact of fuel and EUA prices, growth in demand, development of renewable and thermal production
- Report with background information, summary of assumptions and analysis of the results
- Detailed results with weekly prices for each price area, distribution of different hydrological years and scenario specific energy balances delivered electronically in Excel-sheets
- Presentation with the summary of the analysis and main conclusions
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