Nord Pool Spot is a physical delivery electricity market. The total transaction volume for 2006 was 250 TWh, with a turnover value of 52.3 billion Euros. (Figures include Elbas, the balancing market for Finland, Sweden, Eastern Denmark and Germany). The volumes going through the system have been constantly rising. In 2006 Nord Pool Spot accounted for no less than 63.3 percent, almost two-thirds, of the Nordic wholesale electricity volume.
Nord Pool, the Nordic electricity exchange was established in 1993 following the deregulation of the Norwegian power market. It started out as a Norwegian power marketplace, but is now the world's only multinational marketplace for trading electric power, covering Norway, Sweden, Finland, Denmark and part of Germany. Nord Pool handles a variety of both physical and financial contracts.
Nord Pool Financial Markets provide trades in standardized financial contracts up to 4 years ahead in time. In 2006 the turnover value of financial contracts was 79.2 billion Euros covering a volume of 766 TWh.
At Nord Pool Spot consumers and producers bid in their offers one day in advance. Based on these Nord Pool calculates aggregate demand and supply curves, and thus prices are produced for every hour of the following day.
If the supply and demand of electricity in the Nordic market satisfies transmission capacities within the system, electricity flows freely, and prices in all price areas will be identical. In 2006 this only happened for 16 percent of the hours. If the market requires transmission that exceeds the capacity between two or more price areas (bottlenecks) however the markets will be cleared regionally giving price differences within the system.
By Håkon Mørch Korvald and Tor Arnt Johnsen