Market analysis is an important foundation for further analyses and decisions

The analysis looks at main trends and key uncertainties in terms of market development, documents Statnett’s assumptions, and includes forecasts for expected power prices as well as relevant sample spaces for price developments.

“Our market analysis enables us to see future operational challenges in advance and serves as an important basis for our investment decisions. In 2016, we started publishing this work in a separate report. This is part of our goal of greater transparency surrounding our assessments, and a more qualified dialogue concerning our decisions,” said Anders Kringstad, Head of Market Analysis in Statnett.

Developments in the power market towards 2040

Statnett’s long-term market analysis extends to 2040 and confirms the long-term picture that we have already seen for a while. The power sector will be central in the conversion to an energy system with ever lower CO2 emissions, and there will be major changes to the European power system along the way, with an increasing share of renewables, the phasing-out of coal power and the electrification of transport.

We expect power prices to increase towards 2030, with average annual prices of 40–50 €/MWh throughout Northwest Europe. This increase will be mainly driven by higher prices for gas and CO2. In addition, gas power will increasingly determine the prices on the continent. Combined with more renewable production, the price increase will also gradually lead to more short-term price variations on the continent, in the Nordic region, and in the UK. At the same time, there is considerable uncertainty related to future market developments. We therefore have a sample space for average annual power prices of 30–60 €/MWh from 2030.

In addition to forecasting power prices, the report addresses developments and future challenges in the European and Nordic power systems.