The Nordic Power Market

Perhaps the most important energy market in Europe is the Nordic power market and the power bourse Nord Pool – Europe’s first freely traded power market and a reference market for all power traders worldwide.

Nord Pool is a traditional marketplace where power producers, industry, traders, and distribution companies meet. From an investment perspective, the Nordic power market is interesting because of its high price volatility, historically the second most volatile market after coffee.

Nordic Power market prices are not influenced by traditional economic factors, but weather and climate factors. Price development is correlated with temperatures and the hydrologic situation in the region. Much of the electricity production in the Nordic region is based on hydropower, which output is highly correlated with precipitation levels. Over the past years, prices for carbon dioxide quotas and continental power prices have played a greater role in price formation.