Contact information

SKM Market Predictor Tel: +47 73 80 58 00
Fax: +47 73 80 58 01

Viktor Balyberdin СЕО
Mobile: +47 99 59 59 09

Kurt Sveggen Deputy CEO
Mobile: +47 90 95 30 44

Long-Term Power Outlook

SKM Market Predictor has published the February 2018 update of our annual Long-Term Power Market Outlook report in week 7. These updates are published quarterly, and the original, annual Long-Term Power Outlook 2017 report was published in May. In this work we have updated the Base scenario of the May report. The main changes introduced in the update compared to the May report are:

•   Updated market prices for fuels and carbon for the next several years 
•   Updated Nordic hydro reservoir levels
•   Increased speed for Norwegian wind power investments for the next years due to recent decisions and
     the schedule of Norwegian exit from elcertificate system

•   The effect of increasing the available transmission capacity between DK1 and Germany after the
     official agreement in the summer

•   Desynchronization of the Baltic power grid from the Russian grid by late 2020's
•   Dutch price floor for carbon as planned by the incoming Dutch government. The carbon price floor is
     part of the package to phase out coal power by 2030

•   France has decided to postpone the target to cut the share of nuclear power to 50 per cent by 2025
     which supports our earlier assumptions

•   Increase of German wind power capacity reflecting aims of the coalition negotiators to organize
     additional renewable power tenders during the next couple of years

In our annual report, it is more visible than ever that technological development has improved the competitiveness of wind power as we expect a lot of wind power investments even with low subsidies or no financial support at all. Solar power is also getting closer to grid parity and we have increased our assumption of solar power growth, but in the Nordic countries its low production potential during the winter will continue to limit its total market share. However, we can already notice that the increase of intermittent power production demands a lot of investment to the European power grid, as it should be able to handle large variations in power output. At the same time, an adequate supply of security should be provided. We have also noted that the cannibalization of wind and solar power production increases the break-even level for intermittent renewable production, especially closer to the end of the modelling period.

The recent market changes are elaborated, and the analyses provide insights into the Nordic and Baltic longterm development. As the Nordic countries have been closer interconnected with Europe recently, we have also increased the focus on Central Europe. The impact of the growth of renewables, power demand, and generation and transmission capacity changes is taken into account. We have also assessed the effect of the decreasing capture rate for wind and solar power.

Key insights:

•   Base scenario, describing our view of development of the Nordic power markets.
•   Two sensitivity scenarios, the high and the low scenarios to describe a possible variability
     of the power prices.

•   Phase out of the Swedish nuclear capacity tax by 2019 and close down of three Swedish
     nuclear power plants by 2020.

•   Expansion and extension of the Swedish electricity certificate system by 18 TWh until 2030.
•   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 both
     central and local power plants.

•   From 2030 onwards, the rest of the existing nuclear capacity will be decommissioned due to
     reaching the end of technical lifetime.

•   Consumption growth comes mainly from data centres and transport sector.
•   Longer-term cannibalization of wind and solar power increases break-even level for
     intermittent renewable production.

The annual report includes the following content:

Base Scenario:
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 of renewable capacity and close down of additional thermal capacity are expected in this scenario in comparison to other scenarios.

Long-Term Power Outlook 2017 covers:

•   Overview of 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
•   Assessment of the longer-term capture rate 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 modelling of the Nordic, European, Baltic and Russian power markets
•   Coverage period 2017-2056

Long-Term Power Outlook 2017 package includes:

•   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

For order or questions please contact

Kurt Sveggen
Deputy Managing Director
Tel: +47 90 95 30 44

Juha Turkki
Senior Advisor
Tel: +358 45 346 1925

If you have any questions about this product please contact us using contact information in the right column.