According to Taavi Veskimagi, CEO of the Estonian state-owned transmission system operator (TSO) Elering, the current low price of electricity does not allow for investments.
Veskimagi said that the current quarter’s price jump to more than EUR 40 per megawatt-hour was rather an anomaly, and electricity prices were forecast to return to EUR 40 or even below per megawatt-hour in 2019-2020.
“The price jump derived largely from the fact that some 10 terawatt-hours of electricity evaporated in Norway this spring,” he explained. “Thus we cannot draw any long-term conclusions based on this price increase.”
According to Veskimagi, electricity prices need to reach approximately EUR 50 per megawatt-hour before investments start being made in increasing generating capacity.
“The current price level, where some electricity generation costs are not reflected in the price, takes away the opportunity to build conventional electric power plants,” he explained. “But these kinds of plants are a necessary part of the system to ensure that the lights stay on at all times, not just when the sun is shining or it is very windy.”
Elering’s concern is not high prices, but rather the fact that the price may in the future be too low, which would not allow for new investments to be made in new power plants.
“And this is a problem when it comes to supplying consumers with electricity,” he added. (ERR/Business World Magazine)
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