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Power prices in Finland jumped to record-high levels as a deep freeze in Europe began in the Arctic parts of the Nordic countries and is set to move south to northwest Europe in the weekend and next week, creating additional energy demand and leading to higher electricity and natural gas prices.
In Finland and Sweden, heavy snow and freezing temperatures have prompted cancelations of some train services on Friday and during the weekend.
Day-ahead power prices in Finland hit a record-high and grid operator Fingrid warned on Friday that “The prolonged period of very severe frost across Finland continues to challenge the adequacy of electricity output.”
Fingrid called on consumers to save electricity in the morning and evening peak hours by scheduling their electricity use away from those periods.
Gasgrid Finland, the gas transport system operator, said today it had invoked its right to order extra LNG import volumes to ensure “sufficient market-based and cost-efficient system balancing and mitigating the risk of inadequacy of gas in the extraordinarily cold period.”
Finland’s gas demand reached 130 GWh/day on Thursday—the highest daily consumption since December 2021.
“Due to cold weather and extremely high electricity prices, it is foreseen that gas demand will be, at least, on the same level also today,” Gasgrid Finland said.
The cold weather is also resulting in low wind speeds, which limits wind power generation across northwest Europe.
Day ahead power prices across Northern Europe spiked due to a combination of falling temperatures and calm weather reducing output from renewables, thereby raising demand for the more expensive natural gas and coal, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Friday.
Following a warm autumn and a milder start to the winter, the expected prolonged cold snap will grip most of northwestern Europe to last for most of January and to test Europe’s natural gas supply and energy infrastructure.
The February Dutch TTF Natural Gas Futures, the benchmark for Europe’s gas trading, had jumped by 3.6% at $37.80 (34.62 euros) per megawatt-hour (MWh) as of 12:02 p.m. in Amsterdam on Friday, rising for the third day in a row.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com