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 Fossil power plants in Finland and Denmark act as swing-producers,
helping to meet demand when hydropower production in Norway and
Sweden falls due to dry weather.
The arrival of wind power on a large scale has made this role less
relevant and has pushed electricity prices down, eroding
profitability of fossil power stations.
"Demand for coal condensing power in the Nordic power market has
decreased as a result of the economic recession and the drop in the
wholesale price for electricity," state-controlled Finnish utility
Fortum said, booking an impairment loss of about 25 million
euros($31.67 million).
Nordic wholesale forward power prices have almost halved since 2010
to little over 30 euros per megawatt-hour (MWh) as capacity
increases while demand stalls on the back of stagnant populations,
low economic growth and lower energy use due to improved efficiency.
Short-run marginal costs (SRMC) of coal generation were 28.70 euros
per megawatt-hour (MWh), the Nordic power regulators said, while
costs of gas-fired power generation were much higher, at 53 euros/MWh
in 2013.
"The Nordic system price will likely more often clear well below the
production cost for coal fired power production," said Marius Holm
Rennesund Oslo-based consultancy THEMA.
"This will, in our view, result in mothballing of 2,000 MW of coal
condensing capacity in Denmark and Finland towards 2030," he added.
Adding further wind power capacity at current market conditions
could lead to power prices dropping towards as low as 20 euros per
MWh, the marginal cost for nuclear reactors, Rennesund said.
PART OF A PLAN
Denmark and Finland have about 11,000 MW of coal, gas and oil-fired
generating capacities, Reuters estimate shows.
Pushing fossil-fueled power stations out of the Nordic generation
park is part of government plans across the region.
Denmark wants to phase all coal use in power generation by 2030 and
to generate all power and heat from renewables by 2035.
Wind power is expected to meet half consumption in Denmark by 2020,
up from 33.4 percent in 2013.
In neighboring Sweden, wind meets about 8 percent of total
consumption, and installed capacity has more than doubled to about
5,000 MW in 2014 from 2010. Its wind power association predicts the
capacity to rise to some 7,000 MW by 2017.
In Norway, the government has pledged to change tax rules to catch
up with Sweden.
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These plans are beginning to bear results.
Naturkraft, a joint venture between Norway's Statoil and Statkraft,
said this month it would put its 420 megawatt (MW) Kaarstoe
gas-fired power plant in "cold reserve" from January.
Mothballing the 2 billion crowns ($302 million) plant, which had
operated for only a few days per year, would help to save 50-80
million crowns per year, Naturkraft's chief executive John Terje
Staveland told Reuters.
Earlier this year, Finnish utility Fortum shut its 695 MW Inkoo
coal-fire power plant.
Sweden's Vattenfall said in May it will shut down its 409 MW
coal-fired Fyn power plant in Denmark from May 2016.
The state-run utility sold its 314 MW coal-fired Amager power plant
in Copenhagen to a Danish utility HOFOR, which plans to replace coal
with biomass.
The developments in the Nordic countries is also beginning to affect
utilities in the Baltic states as their grids get more integrated.
Estonia's energy group Eesti Energia saw its power sales to drop by
30 percent during the first half of the year after a 650 MW link to
Finland came online at end-2013.
Cheaper power imports from the Nordics have halved Eesti Energia's
profit margin to 12 euros per MWh in the second quarter, the company
said in its quarterly report.
Lithuania, which expects to have a 700 MW interconnection to Sweden
by end-2015, has said it would shut 900 MW of gas-fired capacity by
2016 due to negative margins.(1 US dollar = 6.6199 Norwegian krone)
(1 US dollar = 0.7895 euro)
(Editing by Henning Gloystein and William Hardy)
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