7at EEX and ICE, and physical power at EPEX Spot. In 2020, the combined (buy and sell) EPEX Spot Nordic volumes were 12 TWh for day-ahead and 1.7 TWh for intraday. Who drives the wholesale market?The discussion around electricity prices is often concentrated on production. When there are price peaks, the focus of the analysts and the public is often on producers' pricing. For me, this is just a part of the story. When understanding the market mechanism and EUPHEMIA, it can be concluded that the buy-side behaviour is just as significant. During winter 2009-2010 in Finland, the spot price reached 1400/MWh for several hours. I still remember that market analysts quite quickly concluded that this was very unlikely to happen again under similar conditions. Why? Because the demand side could have more efficiently adjusted their processes and bidding to the market. Since 2010, when the extreme daily average price in Finland was ~500/MWh, we have seen only a few days over 100/MWh; this is a clear indication that market and participants together increased the flexibility. We will surely see similar changes in market behaviour in future ­ e.g. when further electrified industry and RES producers need to adjust actions to their exposure to market prices. The market has absorbed the huge wave of renewable production into it since 2010 ­ in the Nordics mainly in form of wind. This new capacity has been more intermittent than the production it has replaced. Looking at the data, so far the inclusion has been successful, in my opinion. As an example, we can look at two days in February and see how flexible hydro balanced the day-to-day change equivalent to Swedish nuclear production!The increased price fluctuation in 2020 and 2021 still is not directly hinting at any major problems. BUT, there are signs that the inclusion of new supply and demand having a different profile and geographical distribution is not getting easier. On June 29th we saw 10 different area prices for 13 Nordic price zones which highlights the challenges. Naturally, social welfare in the transition towards clean energy is much more than short-term energy prices ­ where my focus is. Nevertheless, I strongly believe that maximal utilisation of a well-functioning energy market creates the best conditions for innovative and efficient solutions for CO2 reductions and utilisation of flexibility. And this applies to both demand and supply. The story of day-ahead auction is so far a success story and it is developing.MI Monthly is a blog series produced by Fortum's TAO (Trading and Asset Optimisation) unit. In this monthly LinkedIn blog, we explore the various aspects of energy markets and the balancing of energy systems through the lens of our market intelligence. Each monthly blog will be published in the writer's profile: please feel free to take the conversation forward and share these blog posts. ac1e39
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