Lower than expected demand growth puts European power prices under pressure

In the Fall edition of THEMAs Power Market Outlook we see a more moderate short-term demand growth than previously expected. The near-term demand growth expectations are lower due to the European industry struggling and many electrolyser projects being delayed or shelved. The lower demand growth puts power prices under pressure.

At the same time as power demand puts average prices under pressure, we see that the increasing share of intermittent renewable energy sources (RES), particularly the rapid expansion of solar PV across Europe, is increasing market volatility and exerting pressure on solar PV capture prices.

Within the Nordics we still expect large price differences in the coming years. There are substantial grid bottlenecks that result in low prices in the North, where there is a large generation surplus, and higher prices in the South, where price developments in Continental Europe play a more important role. The northern zones are not significantly affected by changes in fuel prices for the next few years, as prices are decoupled from continental Europe.

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