The Electricity Users of Finland (ELFi) calls for stability in electricity prices in Finland to enable industrial investments to be carried out in a sustainable manner.
Market participants must be able to manage risks and predict them within a reasonable range. In our view, the current market structures do not sufficiently support the management of price risks. This is problematic, as day-ahead and balancing electricity prices exhibit very substantial volatility.
From the buyer’s perspective, the most critical area for development concerns the minimum and maximum price limits in the day-ahead and balancing markets. The current limits are too high and allow price spikes of several thousand euros. These extreme values do not reflect actual production costs but generate considerable uncertainty in the market. Lowering the price caps is necessary to ensure that electricity remains a controllable cost factor for the economy and for industry even under crisis conditions.
Harmonised and jointly agreed rules would strengthen confidence in the functioning of the market in the Nordic region. At present, the regulatory authorities and TSOs in different Nordic countries interpret balancing market rules differently. This creates uncertainty and increases risks for electricity market participants. In our view, a unified regulatory interpretation for the Nordic balancing market is urgently needed.
From the perspective of future investments requiring electricity, ELFi considers it essential that buyers have the ability to enter long-term fixed-price agreements at reasonable cost. At present, apart from PPA agreements, buyers do not have access to sufficiently liquid exchange-traded products or other cost-efficient contracts to hedge against multi-year price fluctuations.
The settlement of balancing electricity prices should be improved. It should be based on the pay-as-bid principle instead of the current pay-as-clear model. A cost-effective pay-as-clear model would require significantly stronger competition in the balancing market, a substantial improvement in transparency, and trust-building market supervision—also covering special adjustments carried out by the TSO. In our view, a pay-as-bid model would encourage realistic bids, increase transparency, and reduce buyer costs without compromising system balancing.
The Electricity Users of Finland continues to have confidence in the competitiveness of an open electricity market as a cost-effective alternative to a centrally controlled system. Advancing the measures outlined above would provide buyers with a more cost-efficient and predictable operating environment. By developing market rules, the risks associated with electricity procurement would become easier to manage, the market would function more fairly, and the electricity system would be better equipped to meet future challenges.