Report: Nordic power industry to face implications of low prices

5 May 2016 (Last Updated May 5th, 2016 18:30)

Existing low-power tariffs in the Nordic region are unlikely to have much benefit for its power sector, according to a report by GlobalData

Existing low-power tariffs in the Nordic region are unlikely to have much benefit for its power sector, according to a report by GlobalData

It also said continuous slide in energy prices will have major repercussions on the renewable sector and registered investments have already witnessed a 76% decline in the last three years.

Titled 'Impact of Low-Energy Prices on the Nordic Power Generation Mix', the report outlines how many large-scale windpower developments were dismissed in 2015, including Statkraft's 1GW project.

Facing a similar fate was Fosen and Snillfjord, which was planned for Central Norway. Approximately 10GW of the country's plans for windpower in the last two years have been cancelled.

"Registered investments have already witnessed a 76% decline in the last three years."

Nordic countries have the lowest energy tariffs in Europe, with current prices being the lowest in the last 12 years.

While average European household tariffs increased from €0.188 per kWh in 2012 to €0.2078 per kWh in 2015, Nordic countries experienced a decrease from €0.1913 per kWh in 2012 to €0.1856 per kWh in 2015, analyses the report.

The Nordic industrial sector also witnessed average tariffs drop from €0.0727 per kWh in 2012 to €0.0619 per kWh in 2015, while the European average increased.

A warmer climate and low demand have contributed to the decline in coal prices over the years.

The report further analyses that the impact of cheap power on the renewable energy sources will be short-lived and improvements will be seen in the medium-term.

Its recovery can be attributed to growth in technology, which has led to a decline in per-unit generation cost, as well as the near-future possibility of these sources achieving grid parity.

A positive growth is expected for the industry, aided by government policies and regulations related to renewable energy targets for 2020.

Led by wind and bio-power, renewable energy is targeted to achieve a share of 24.3% in total electricity generation by 2020. This is an increase from 19.7% in 2015, indicating its dominance in the power generation mix.