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The Nordic Market: Signs of Stress?

Author

Listed:
  • von der Fehr, N-H.M.
  • Amundsen , E.S.
  • Bergman, L.

Abstract

The supply shock that hit the Nordic electricity market in 2002-2003 put the market to a severe test. A sharp reduction in inflow to hydro reservoirs during the normally wet months of late autumn pushed electricity prices to unprecedented levels. We take this event as the starting point for analysing some potential weaknesses of the Nordic market. We conclude that fears regarding supply security and adequacy are likely to be unfounded. Nevertheless, as inherited over-capacity is eroded, and new market-based environmental regulation takes effect, tighter market conditions are to be expected. It is then crucial that retail markets are fully developed so as to allow consumers to adequately protect themselves from occurrences of price spikes.

Suggested Citation

  • von der Fehr, N-H.M. & Amundsen , E.S. & Bergman, L., 2005. "The Nordic Market: Signs of Stress?," Cambridge Working Papers in Economics 0525, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0525
    Note: CMI, IO
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    File URL: http://www.econ.cam.ac.uk/electricity/publications/wp/ep76.pdf
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    References listed on IDEAS

    as
    1. Amundsen, Eirik S. & Nesse, Arvid & Tjotta, Sigve, 1999. "Deregulation of the Nordic power market and environmental policy," Energy Economics, Elsevier, vol. 21(5), pages 417-434, October.
    2. Hauch, Jens, 2003. "Electricity trade and CO2 emission reductions in the Nordic countries," Energy Economics, Elsevier, vol. 25(5), pages 509-526, September.
    3. Hindsberger, Magnus & Nybroe, Malene Hein & Ravn, Hans F. & Schmidt, Rune, 2003. "Co-existence of electricity, TEP, and TGC markets in the Baltic Sea Region," Energy Policy, Elsevier, vol. 31(1), pages 85-96, January.
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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