As winter approaches, spikes in the price of spot-priced electricity may become more pronounced if there are disruptions in Finland’s nuclear power production or if wind levels are low. According to experts, these price spikes are typically short-lived, and they are balanced by several low-cost hours throughout the same day.
In recent days, the price of spot-priced electricity and interest in switching to a fixed-term electricity contract have come up in new orders and customer service calls at Vihreä Älyenergia. Some customers have been quite concerned about price spikes and the possibility of electricity costs rising beyond their comfort zone. One such price spike is occurring today (September 12, 2024), with spot-priced electricity reaching as high as 49.4 cents per kWh between 8 PM and 9 PM. However, the experts we consult advise staying calm, as they believe these price spikes are likely to be short-lived.
Don't panic. Keep calm and optimize, say the experts
Vihreä Älyenergia relies on experts who continuously monitor the electricity market, as we aim to remain competitive on pricing while offering our customers an emission-free electricity option without extra charges. As a seller of electricity, we are inherently tied to the market and its fluctuations—price spikes directly impact our business as well.
The assessments and forecasts from our experts are currently aligned—price spikes are expected, but they are temporary. Consumers who can shift their electricity usage away from peak hours are benefiting even now. These types of price spikes are not new; they have occurred for several years, not just in the fall and winter but sometimes in the spring and summer as well. Price fluctuations are a typical feature of spot-priced electricity contracts, and despite potential spikes, the average price of a spot-priced contract is always lower than that of a fixed-term contract. This is because electricity sellers must always account for price changes in fixed-term contracts, purchasing electricity in blocks and ensuring their business remains profitable. The mental burden shifts from the consumer to the business, and that has its own value and cost.
So what should I do now?
As our experts advise, we also recommend that our customers approach the situation calmly. It is always possible to switch to a fixed-term electricity contract with a fixed kWh price— we offer competitive fixed-term contract options as well. However, if you’ve previously found a spot-priced electricity contract to be a suitable and cost-effective option for you and your household, it is very likely to remain so this fall and winter. When looking at the electricity market over a longer period, the average prices of spot-priced electricity remain highly competitive compared to fixed prices.
If you’re a spot-priced electricity customer, able to optimize your electricity usage, and brief price spikes don’t cause you excessive mental stress, you’ll likely thank yourself financially in the spring for sticking with the spot-priced contract. However, if you find the occasional larger price fluctuations difficult to handle, we recommend signing a fixed-term electricity contract with us for 3 or 6 months. This way, you can avoid worrying about price fluctuations, though you also won’t benefit from the cheaper periods.
What does the winter and the near future of the electricity market look like?
Although we will “enjoy” price fluctuations in the coming months, the Finnish electricity market is continually improving. According to TVO, the Olkiluoto 2 plant is expected to return to production by the end of September, and around the same time, the annual maintenance for the Loviisa 1 plant will be completed. This means that 1,397 megawatts (MW) of production capacity will be available again. Additionally, the currently limited transfer capacity from Sweden to Finland, which is restricted to 600 megawatts, will increase back to 1,200 megawatts during September and October. Over the longer term, the situation will improve further with the opening of the new Aurora Line transmission link between Finland and Sweden by the end of 2025. This will add 800 megawatts of transfer capacity from Sweden to Finland, which will help reduce electricity prices and lessen price spikes. The continually increasing wind power and its evolving storage solutions will further decrease electricity prices.
Prepare for price spikes mentally—and with the help of an app
Price spikes can be unpleasant for users of spot-priced electricity, but they are balanced by times when electricity is very cheap. By optimizing your electricity usage—moving consumption (such as for washing machines, saunas, storage heaters, or electric vehicle charging) to cheaper times—you can save a lot. To avoid constantly monitoring prices, we have developed the Smart Energy app. You can set up price alerts within the app to get notifications whenever electricity prices fluctuate to a higher or lower rate. We are continuously improving the price alerts this fall to provide you with better information exactly when you need it. You can download our Smart Energy app, Älyenergia, for free here.