Spring (42nd) edition (2024 to 2050). Scenario-based analysis with updated price prognosis for all Nordic price areas and neighbouring countries.
Spring (42nd) edition (2024 to 2050).
Scenario-based analysis with updated price prognosis for all Nordic price areas and neighbouring countries.
The Nordic + Northern Europe Outlook key topics cover:
The Renewable Outlook contains:
RELEASE DATE: APRIL 11, 2024
Offshore Wind Power Investments
In Norway, the first tender round for Sørlige Nordsjø II was completed on 20th March for 99 €/MWh. The high price shows that offshore wind power is very far from profitability without subsidies. The biggest uncertainty going forward is the extent to which government subsidies for offshore wind will remain sufficiently large to make offshore wind profitable, with significant implications for long-term power prices.
Onshore wind power investments
Onshore wind power investments in the Nordic region are declining. A high level of conflict in many areas, with numerous vetoes from local authorities, as well as failing profitability in several price areas, stops many projects.
Slow Development of Solar Power
Solar power investments, particularly in Norway, are progressing slowly. While the potential profitability of these projects is promising, conflicts related to land use and other factors are impeding or delaying investments.
Long-Term Profitability of New Production
Investments in new production must ensure satisfactory profitability for investors in the long term. Although offshore wind power is likely to see growth due to government subsidies, we assume that offshore wind, as all other power generation will need to operate without subsidies in the long run.
Consequently, rising costs for new production are contributing to higher long-term power price expectations.
Impact on Demand-Side Projects
The increased costs for new production are negatively impacting the profitability of projects on the demand side. Long-term consumption growth will be dampened by rising power prices, which must eventually be high enough for investments in new power generation to achieve satisfactory profitability.
Flexibility in Consumption Growth
A large part of the consumption growth will come as flexible consumption in the periods with low power prices. Technologies such as
hydrogen and other Power-to-X will play an increasingly significant role in the power markets.
Achieving Carbon Neutrality
To achieve carbon neutrality, higher EUA (Emission Unit Allowance) prices are necessary. We provide our perspective on the EUA market and propose an alternative CO2 price that is better aligned with Europe's goal of becoming climate-neutral by 2050.
Cost Elements for the Power System until 2050
Our report offers a comprehensive analysis of the various cost elements within the power system, projecting developments until 2050. We focus on Long Run Marginal Costs associated with renewable power production, energy storage, hydrogen production, and hydrogen-fired power plants.
The underlying drivers in renewable energy are as strong as before. Nevertheless, we see an evident decline in investments. Increased costs challenge profitability more than before, and local opposition stops or delays many wind and solar power projects.
In the long term, investors in green projects must have relatively predictable prospects for profitability and an acceptable return on capital. Therefore, the long-term price forecasts have increased quite significantly in our latest analysis.Sigbjørn Seland
Chief Analyst at StormGeo Nena Analysis
With access to high-quality analyses of future energy prices, we can confidently advise our clients on good investment decisions for energy solutions in our building projects.Dib Abdul-Hadi
Statsbygg
Nena Analysis is one of the few analyses we use on a weekly basis and is definitely highly important. We rate all these companies every year and pick the ones to continue with, and we've been with Nena for a long time. We're always shown very good analysis and very good insights.Nicholas Martin
Head of Sourcing Europe, Norsk Hydro
Myself, as an employee in Bane NOR, have had a two decade history as customers of Nena and that’s due to the need to have a necessary tool to make good decisions on a daily basis.Jonny Glærum
Company
Key discussions for the Spring 2024 edition of our Power Market Outlook include:
Onshore wind power investments in the Nordic region are currently experiencing a decline. This decline can be attributed to a high level of conflict in many areas, with numerous vetoes from local authorities. Additionally, the rising cost of onshore wind power is posing profitability challenges for several projects.
Solar power investments, particularly in Norway, are progressing slowly. While the potential profitability of these projects is promising, conflicts related to land use and other factors are impeding or delaying investments more than previously anticipated.
Several offshore wind projects are facing delays due to cost increases. In Norway, the first tender round is more than a year behind schedule.
It is imperative that investments in new production ensure satisfactory profitability for investors in the long term. Although offshore wind power is likely to see growth due to subsidies, there is an expectation that it will need to operate without subsidies in the long run. Consequently, rising costs for new production are contributing to higher long-term power price expectations.
The increased costs for new production are also impacting the profitability of projects on the demand side. As a result, consumption growth is expected to be hindered by the higher costs associated with new production.
Much of the growth in consumption will depend on its flexibility, allowing consumers to use power when prices are low. Technologies such as hydrogen and Power-to-X will play an increasingly significant role in the power markets.
To achieve carbon neutrality, it is imperative that higher EUA (Emission Unit Allowance) prices are implemented. We provide our perspective on the EUA market and propose an alternative CO2 price that is better aligned with Europe's goal of becoming climate-neutral by 2050.
Our report offers a comprehensive analysis of the various cost elements within the power system, projecting developments until 2050. We focus on Long Run Marginal Costs associated with renewable power production, energy storage, hydrogen production, and hydrogen-fired power plants.