Back in 2017, the price of electricity on the NordPool exchange was largely even for the whole region. The annual average came to €33.2 per MWh in Estonia and was only 1 cent less in Finland. The price was between €31-35 per MWh in Latvia, Lithuania and Sweden.

Major gaps between prices in different countries started appearing after 2019. The price range for the region was €38.51-46.12 per MWh that year and while the price themselves came down in 2020, regional differences continued to grow.

Looking at NordPool prices on a year-on-year basis reveals that a more significant gap in prices began to appear from 2019. At that time, the price of electricity in the reference countries stood at between €38.51 and €46.12 per MWh, and while prices fell by 2020, the price differentials between the various countries were already substantial.

Specifically, market exchange electricity cost just over €9 per MWh in Norway, nearly €19 per MWh in Sweden, €28 per MWh in Finland and €30 per MWh in Germany. 

The prices were still higher in the Baltic countries, slightly over €34 in Lithuania and Latvia and only slightly lower, at €33.69 per MWh, in Estonia.

From 2020, prices started to rise further. By 2021, the average level in Estonia was €86.73 per MWh, in Latvia almost €89 and in Lithuania over €90 per MWh.

Only in Germany was the level higher, at €97 per MWh at that time.

In the Scandinavian countries, electricity was yet much cheaper on the exchange at that time, close to €58 in Sweden and €57 per MWh in Norway. 

In Finland, electricity cost an average of €72.34 per MWh on the NordPool exchange at that time.

The graph below shows electricity prices and their rise from 2017 to the present, in € per MWh (Key: Dark blue – Estonia; royal blue – Lithuania; light blue – Latvia; mauve – Germany (from 2020); dark red – Sweden; orange – Norway; yellow – Finland).

Energy expert Einari Kisel told ERR that in 2020 the main factor behind the change was Covid, and in addition, conditions were good for hydroelectric plants, which further reduced prices.

"Another factor in 2020 was that the wind turbines capacity also rose quite significantly in Finland. Since the market was lower and consumption was lower, they lowered the prices to enter the market. Then the differences started to show." Kisel said.

Another expert, Marko Allikson, partner at Baltic Energy Partners, said price differences across the Nordic countries arise primarily when bottlenecks occur in the connection capacities of these countries, i.e. electricity cannot move freely from one price area to another.

These bottlenecks can be called by, for instance, surplus hydro or wind-generated electricity, failures in or repairs to connections, the entry on the market of the Olkiluoto 3 nuclear power plant in Finland.

In 2022, the differential in prices widened further: Of the countries in view above, electricity was the cheapest in Sweden this time, with an annual average price of €100.58 per MWh; in Norway electricity cost a little over €117, and in Finland, €154 per MWh .

Meanwhile in Poland, whose price statistics from previous years had not been included in NordPool's price information environment, electricity cost €166.72 per MWh in 2022.

At the same time, the average price of electricity in Latvia was as high as €226.91 per MWh; in Lithuania even higher, at €230.23, with Estonia not far behind at €192.82 per MWh.

Germany, too, continued to experience soaring prices, over the €235 per MWh-mark.

High natural gas prices were a major influence on electricity prices in the Baltic states, Allikson said, while Kisel also cited the virtual disappearance of Russian-generated electricity in the aftermath of the invasion of Ukraine.

Kisel added that price differences between the Baltic states and Norway, Sweden and Finland also depend, in terms of their size, on the weather – both in winter, when temperatures influence demand which in turn influences price, and year round, when rainfall levels impact hyrdoelectric output in Scandinavia.

Prices in the Baltic states could fall in summer if and when more wind and solar power is generated – also weather dependent.

Several large wind farms are being constructed in both Estonia and Lithuania, and when these are ready, prices might reach close to zero at very windy times, Kisel said – with Allikson noting that these can reach Nordic levels at such times.

A rise in connection capacity between Latvia and Estonia will also lead to an equaliztion in prices across all three Baltic countries, he added, though convergence with Finnish prices is unlikely until the planned Estlink 3 cable is complete, Allikson said.

Companies in the Nordic countries, since they often invest in power stations and energy themselves, get electricity at very favorable prices, and certainly below exchange rate prices.

Lacking hydroelectric power of any significant proportion is also a factor in cheaper electricity prices in the Nordic countries; Estonia currently has no nuclear power station unlike, for instance Finland, which has several reactors across two functioning power plants and one under construction, and this also drives prices down for Estonia's northern neighbor.

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