After starting to fall in late March, the price of electricity in Estonia's area on the Nord Pool power exchange jumped back up to a weekly average of €72.43 per megawatt hour last week. The first few days of this week saw daily average prices remain above €100 per megawatt-hour, with Wednesday's day-ahead average price to reach €124.57.

According to energy expert and Baltic Energy Partners OÜ partner Marko Allikson, recent weeks' price fluctuations throughout Europe have been affected primarily by off and on spring weather conditions, banking sector news affecting the general state of the economy as well as news, primarily from France, about the reliability of nuclear plants and LNG terminals.

"A short-lived cold snap is currently ending that, together with more limited wind production, drove up electricity and natural gas prices," Allikson said.

Olavi Miller, market analysis strategist at the Estonian state-owned energy group Eesti Energia, likewise believes that the price of electricity was increased last week by temporarily colder weather, lower wind energy production as well as increased fuel prices.

"Winds are rather modest right now as well, around 5 meters per second, in which case onshore wind turbines don't achieve maximum protection," Miller explained. "Also having an additional impact is production at Finland's Olkiluoto 3 [OL3, a reactor at Olkiluoto Nuclear Power Plant], which will be reduced by a few hundred megawatts for a few days."

The return of colder weather also saw the market price of natural gas go up, rising to nearly €43 per megawatt-hour last week, and OPEC's decision to cut oil production may also lead to permanently higher crude oil prices, which in turn would increase the price of natural gas as well, he added.

Allikson said that the filling of natural gas containers has not gotten off to a quick start either, as colder weather has made it occasionally necessary to utilize this gas as well.

"Fortunately, spring high waters in Latvia have helped keep electricity prices in our region within the same range as Finland's prices following the continuation of testing at [OL3]," he added.

In the first quarter of 2023, Latvia's hydroelectric power production went up 62 percent on year to total 1.4 terawatt-hours. For comparison, according to Miller, Latvia's five-year average for hydro production at this time of year has been just under one terawatt-hour.

Electricity to fall below €100 on windy days

"Near-term price changes will continue to depend primarily on the same factors — whether the cold will subside and weather conditions favor renewable energy production as well as what the future of the economy is expected to look like," Allikson said.

The cost price of generating electricity from fossil fuels is further being impacted by quota prices increasing in connection with the approach of the redemption deadline for last year's CO2 quotas.

At current natural gas prices, Allikson believes Estonia can expect electricity prices of under €100 per megawatt-hour on windy days and exceeding €100 when it's necessary to operate oil shale- and natural gas-fired power plants.

"Maintenance periods will begin very soon too, when prices may be impacted by periods of limited wind and sun coinciding with the timing of maintenance work on major power plants and electrical connections," he added.

Repairs were completed last week on the damaged unit 4 of Sweden's 1,130-megawatt Ringhals Nuclear Power Plant (NPP). OL3 in Finland, meanwhile, resumed test production on March 15; regular electricity production is scheduled to begin on April 17.

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