Vattenfall expects the Nordic electricity market to continue to be characterized by expectations of low growth (around 0.6% per annum). The supply side continues to be strong under normal hydrological conditions with relatively low prices. A new market characteristic of Nordic electricity prices that has emerged during the period is the influence of the market price of the European CO2 allowances.
The German electricity market, like the Nordic market, is expected to continue to grow at a slow pace (around 0.5% per annum). After 2010, demand growth is expected to slow down further still, to 0.1% year on year. Wholesale spot price levels have been showing an increasing trend during 2005 and have been driven mainly by extremely high fuel prices and high CO2 emission prices. Wind power capacity in Germany has increased rapidly in the last few years driven by large subsidies.
Meanwhile in Poland, the electricity market is expected to continue to grow at a relatively high rate of 1.7% year on year. Market restructuring has continued to be slow, since new privatization projects have not yet been carried through. As a consequence of EU membership, Poland will need to continue to rapidly implement liberalization over the next few years, to enforce stricter environmental regulations (currently only met by a small proportion of the installed capacity), and to resolve cross-border trade issues, Vattenfall believes.
We believe that our best contribution to building trust in the market is by being open and sharing our knowledge and understanding of the present state of our home markets, the trends on the integrated electricity market in Europe and how we judge its future development. Our hope and firm belief is that we can thereby improve the understanding of the electricity markets in a wider audience and contribute to building a good basis for reasonable expectations, says Vattenfall’s CEO, Lars Josefsson.
