There has been enough electricity in Finland even in the very lowest winter temperatures, although the water situation is unusually bad in Scandinavian countries after a dry summer and an autumn of low rainfall. The transmission and supply of electricity has also proceeded without problems apart from some local interruptions. The market price of electricity reached an all-time high.

In addition to Scandinavian countries' own production, electricity has been brought to their market area from Russia, Germany and Poland by transmission lines working at full capacity during the low temperatures. Furthermore, inside the Scandinavian countries Denmark with its plentiful coal capacity has produced more than enough electricity to meet the needs of its northern neighbours.

The most significant change on the Scandinavian electricity market during the past year is the very real reduction in the water supply. During the middle of the winter it was at some 40 per cent capacity. A year ago the figure was 64 per cent, and the long-term average is about 62 per cent.

A reduction of almost a quarter in the Scandinavian countries' hydroelectric power is equivalent to a reduction of just under 30 billion kilowatt-hours. The reduction is more than a third of Finland's annual electricity consumption or 1.4 times the annual production of Finland's nuclear power.

Market prices quadruple at year end

The general rise in the market prices of electricity became apparent in the summer of 2002. The long spell of freezing temperatures raised the spot prices for electricity to record levels. At their highest, market prices had quadrupled compared with a year previously. During the lowest temperatures the high prices forced some electricity-intensive plants off the Scandinavian market, for a short time at least, as was expected.

The market acted in line with expectations and gave the major industrial customers cause to check their consumption and at times even sell their unused electricity to the market at a good price. Rationing was not needed anywhere in Scandinavia, although recommendations were made about savings.

The market prices of electricity are expected to remain higher than previously until the summer. The amount of melting water from the snow and the rainfall in the summer will have an effect on prices in the future. Two dry years in succession would lead to a serious imbalance on the Scandinavian electricity market, according to Nordel, the organization for cooperation between transmission operators in Scandinavia. Only a small part of the rise in market prices has been passed on to retail prices so far.

It is important for the functioning of the Scandinavian electricity market that besides hydroelectric power, which is dependent on the weather, there are other forms of production that will even out fluctuations in production. According to the obligations in the Kyoto Accord, it is advisable for the Scandinavian countries to increase energy solutions that do not cause greenhouse emissions. In recent years only a limited amount of new power plant capacity has been built in Scandinavia compared with the growth in electricity consumption. The biggest projects have been the new CHP power plants in Finland, which use biofuels, and wind power in Denmark. In Finland the construction of more nuclear power is coming.

New nuclear power plant in production in 2009

In October 2002 the Finnish Parliament made a decision in principle to build an additional nuclear power plant. Teollisuuden Voima Oy (TVO) will be allowed to build a 1,000 - 1,600 megawatt nuclear power plant at Eurajoki or Loviisa. Replies to calls for tenders will be received in the spring of 2003. At the end of the year TVO will decide the type and size of the plant. Then TVO will decide on the location. The project has proceeded according to plan.

The new plant will come into production around 2009. Before then, however, there may be more dry and summers and cold winters in Scandinavia, so the production capacity of electricity would be put to the test again. In 2002 TVO's Olkiluoto nuclear power plant produced more than 14 billion kilowatt-hours of electricity for Finnish society, a fifth of the electricity consumed in Finland.

An increase in imports of electricity from Russia, Germany and Poland, where most of the production is based on fossilized fuels, will not be a lasting decision as far as carbon dioxide emissions in Scandinavia or the rest of the world are concerned. Emission-free production predominates in Scandinavia; more than a half is hydroelectric power and just under a quarter nuclear power. Only a fifth is thermal power produced with fossilized fuels, and a major part of that comes from the combined production of electricity and heating (CHP). One or two per cent of the electricity in Scandinavia is produced using wind and other renewable sources.

And yet Finland is not in a position to reduce its coal-fired power. The freezing temperatures of the winter have shown that Scandinavia has had recourse to old thermal power which has lain idle for a long time. The third and fourth units at the coal-fired plant at Inkoo in Finland, which have lain dormant for years, had to be used when the consumption of electricity was at its greatest.

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