About the market> Supply and demand

At the Nord Pool spot market producers and distributors of electricity meet for a daily auction of power. The demand curve is almost inelastic, while the supply curve has an exponential form including many steps corresponding to the marginal cost of producing electricity from different energy sources. In larger parts of a normal year Finnish and Danish coal power balance the market and creates the Nord Pool spotprice.

The Nordic hydropower production may vary by + / - 20% depending on how much precipitation that accrue to the hydro reservoirs. In a dry year prices can become very high because the market is balanced by the marginal cost of gas or oil, while a wet year may mean that nuclear power balances the market with considerably lower prices as a result.