How is power bought and sold?
Trading on the Nord Pool power exchange is based on the estimated consumption (demand) and the scheduled production (supply) from the power suppliers. Both parties submit their price offers by noon and tomorrow's price is calculated from the offers made by the buyer and the seller.
The physical delivery of power is from midnight the same day and onwards.
What determines the price?
In the Nordic countries there is one price for the entire Nordic area as well as prices for several regional price areas. One reason why prices vary between the different areas is that the supply and demand for power is not equal everywhere and because there are no transmission possibilities available in the grid between different areas. Wind and rain are typical factors that can affect the supply side of energy, while temperature is one that can affect the demand side.
Wind and weather have an impact
Since power production is so dependent on the weather, it can be difficult to predict changes in production. For example, more wind than expected will increase wind power production. Or the temperature can drop more than forecast, which increase power consumption. Purchases and sales as a result of unplanned production or demand usually occur continuously throughout the day.
Balance between production and consumption
In the core hours for the purchase and sale of electricity, the system operator Statnett is responsible for balancing the relationship between production and consumption.
Many consumers and producers need to have a more predictable electricity price for the future. On the Nasdaq OMX exchange, power is traded for the coming weeks, months and years. The price from Nord Pool is often used as a reference for future prices.
At the same time, many other factors play a role. As mentioned, changing weather conditions, power transmission between areas have an effect, in addition to other factors, such as the price of fuel for thermal-fired power plants. All this influence the price that is agreed by the buyers and sellers of electricity.