Certain details have been omitted from the reports due to the inclusion of confidential business information.
The unusually low price of exchange electricity in November was traced back to a human error, according to a report by Norwegian company, Kinect Energyn, presented to the Energy Agency. This incident was reported by the news agency STT.
The company’s error led to a drastic increase in the production forecast for the wind farm, by a thousandfold. This inflated forecast was then sent to the Nordic electricity exchange Nordpool as a sales offer.
The fallout from this mistake resulted in the hourly prices of electricity on the stock exchange dropping to negative tens of cents for several hours. This mishap led to losses totalling tens of millions for energy companies and also had financial implications for other industry players.
On Friday, the Finnish Energy Agency, which supervises the Finnish electricity market, provided STT with reports from Kinect Energy and Nordpool regarding the incident. However, parts of the reports were redacted due to the presence of sensitive business information. Consequently, the precise details leading to the error remain unknown.
When interviewed by STT, Pekka Salomaa, the Director of the Energy Industry, declined to speculate further about the reasons for the incorrect offer. Instead, he highlighted the significant increase in the wind farm’s production forecast.
Salomaa questioned whether there might have been a mix-up between kilowatts and megawatts at some point.
According to STT’s report, it was found during the investigation that the trading on Thursday, November 23, was handled by a substitute for the usual employee. This substitute was not aware of the error in the wind farm’s production forecast, which ultimately led to a seriously flawed final offer being submitted to Nord Pool for Friday’s trading.
Similarly, unusually high prices in January
The Energy Agency has also announced that it will be conducting a more detailed investigation into the situation of the electricity market at the start of January, according to a release made on Friday.
In early January this year, the price of electricity on the exchange soared to unprecedented levels. On Friday, January 5, the taxable price was over two euros per kilowatt-hour, and the taxable price of exchange electricity for the entire first calendar week was 300.98 euros per megawatt-hour.
The Energy Agency attributed this price spike to a critical juncture in the energy market when demand was high and supply was limited. In such circumstances, even minor changes in the purchase and sale offers on the electricity exchange can cause significant fluctuations in electricity prices. The shortage in supply was due to cold weather conditions and low wind power production.
No suspicion of violation so far
As per the Energy Agency’s press release, there is currently no ongoing investigation into whether any market participant violated legislation during the first week of January.
The in-depth report produced by the agency will examine, among other things, whether the European Union’s REMIT regulation was violated in January. This regulation prohibits the misuse of insider information and market manipulation. In addition, it requires market participants to publicly disclose any insider information they possess.
