Suède : March 17, 2009

There are a group of persistent crusaders in the Nordic electricity market who swear allegiance to the almighty spot price energy market. By their way of thinking, it is a waste of time trying to predict future movements in the coal or oil markets and people should stop looking at weather charts in an attempt to gauge optimal fixed energy prices. They claim that the only true way to save money lies in the spot price market.

2007 was a real feast for these faithful knights when the CO₂ allowance and CERs under the Kyoto Protocol were not yet affecting energy prices and prices remained low and stable. The party was interrupted when spot electricity prices soared in the Nordic market after a key transmission line between Sweden and Norway was disabled. Norway, with its abundant resources of hydro power, is the engine of the Nordic market and the absent transfer capacity of 2,000 MW sorely tested the nerves of spot price advocates.

In the wake of our current recession and with electricity prices plummeting, the beliefs of the faithful are being tested again. Forward prices are now so low that it makes sense for many to either fix their electricity prices for years ahead or hedge their purchases more extensively.

The common expectation is that the economy will rebound and along with it energy prices. Spot prices are now near pre-recession levels thereby questioning the wisdom of long-term spot price purchasing. Spot price advocates are still holding to their mantra; however, many purchasers are not taking any chance