Nordic power market at a crossroads

Volatile prices, falling liquidity and declining profitability are some of the many headwinds the Nordic power market faces in the months ahead.

In addition, could political meddling create more damage to the highly complex and problematic market? And why are public misunderstandings about the issue fuelling political debate?

In this episode, Richard speaks to our guests at the Montel Nordic Energy Day in Oslo. They discuss why a free and competitive market is still the best solution, and they explain the changes that need to be made to the market design in order for it to function better. 

Host: Richard Sverrisson - Editor-in-Chief, Montel News
Contributor: Olav Vilnes - Nordic Editor, Montel News

Guests: Kolbjørn Hembre, CEO at Entelios & Fredrik Bodecker, CEO at Bodecker Partners

Editor: Bled Maliqi
Producer: Sarah Knowles
Videographer: Oscar Birk

Transcript

Richard Sverrisson - Editor-in-Chief, Montel News: 0:00

Hello listeners, and welcome to Plugged In - the Energy News podcast from Montel, where we bring in the latest news issues and changes happening in the energy sector. This episode is brought to you from an Nordic Energy Day in Oslo, where the challenges facing the region's markets. A top of the agenda. I'll be speaking to experts from Norway and Sweden, but first I'm joined by a Nordic editor, Olav Vilnes. Well, I'd like to start off by asking you about the main challenges faced by the Nordic Power Market at the moment.

Olav Vilnes - Nordic Editor, Montel News: 0:29

Yeah. One of the main challenges now is to get new investors into fossil free electricity production, which can help the countries reach these ambitious decarbonization targets towards the 2035 and 2040s. And I think power production is already mostly fossil free in the Nordic region, but there's still a lot to do when it comes to switching from fossils to renewables in industries, in transport, farming, so on. And of course then for that you need. More electricity production, green electricity production. And currently there's some kind of a waiting game there where power producers wanting to invest the new generation capacity because prices are too low, while the big industrials who want to switch to electricity they want certainty that the electricity is there, that it is affordable for a long time.

Richard Sverrisson - Editor-in-Chief, Montel News: 1:12

And why are politicians in several countries in the region, becoming increasingly focused on the power of electricity market?

Olav Vilnes - Nordic Editor, Montel News: 1:21

I think the, you saw a big change of energy crisis in energy, price crisis in 2022 when prices rose quite heavily. You've seen huge spread, spread in prices in Scandinavia between the northern parts, which have seen very low prices. This year, like in northern Norway, five euros. It's much higher in the south because prices that are linked to the continental price levels, which have inly inflated by higher gas prices. And then you get the public discontent and you get political intervention. Trying to curb this discontent because the politicians need to win the next election.

Richard Sverrisson - Editor-in-Chief, Montel News: 1:51

Absolutely. That's always the case. I think. That's a familiar area. But how likely do you think are further interventions in, into the Nordic wholesale or retail market?

Olav Vilnes - Nordic Editor, Montel News: 2:00

I don't think you will see big intervention that really. Disturbs the pricing to a large extent. You have seen already in Norway you have this fixed price for households around 40 euros per megawatt for a year. That's of course, an intervention, but it doesn't really dis affect the wholesale market functionality. It's just like it removes flexibility from the system. You've also seen some issues in Norway, some, the base that majority of our, of mps now want, do not want to renew the power links to Denmark, to older power links because they feel there is a. That the public doesn't really want this exchange and therefore that it could be, could give lower price in Norway. But that's may, maybe a short term yeah, maybe good for the short term, but maybe not for the long term.

Richard Sverrisson - Editor-in-Chief, Montel News: 2:41

And certainly not for Pan Nordic relations. Olav, thank you very much for setting the scene for us on the podcast. The Nordic power Market has been a torch bearer for a liberalized electricity markets for decades, but in 2025, it appears to be struggling. Prices are volatile, profitability is declining, and there's a looming threat from politicians. I. who want to interwene to the market. So what do industry leaders in the region think about the challenges currently faced by the power market in the Nordics? I'm pleased to be joined by Fredrik Bodecker, CEO of Bodecker Partners. Welcome back to the podcast, Fredrik. It's great to have you back on again.

Fredrik Bodecker, CEO at Bodecker Partners: 3:16

Thank you. Nice to be here.

Richard Sverrisson - Editor-in-Chief, Montel News: 3:17

And also a warm welcome to Kolbjørn Hembre, CEO at Entelios.

Kolbjørn Hembre, CEO at Entelios: 3:21

Thank you.

Richard Sverrisson - Editor-in-Chief, Montel News: 3:22

Fredrik, I'd like to start by asking you about your position on the current market current market design, if you like. Is it fit for purpose?

Fredrik Bodecker, CEO at Bodecker Partners: 3:30

Yes. I actually, I would say that there's a lot of I'll say criticism that things aren't working, but being around for quite a few years and having a many different, periods to compare with us, I'd say. I would say, yeah it's working. And it's getting better, I would say. But there is definitely as you said, a threat of, I would say, politicians coming in and changing things that will lead to more changes that will lead to more changes, and then it won't work so good anymore. But but for the for the moment, I think it's okay. Of course, I would also. I would love three times more liquidity and lower imbalance prices. And but being originally a greedy capitalist trader, I would say let price signals show the way for us and we will get things working.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:14

But why do the politicians want to meddle and meddle now?

Fredrik Bodecker, CEO at Bodecker Partners: 4:17

I would say that it's the old answer they, they always had that they need a lot of votes and let's react fast on, on things that that will give a lot of votes. High prices high volatility large imbalance prices. Yes, I know it hurts hurts a lot of players. But we. Already seen the signs that there are new players coming in, old players adapting and these things will, they will eventually fix themselves if if we are let to do that.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:43

Mm-hmm. If you step back and let the market do its work, is that what you're saying?

Fredrik Bodecker, CEO at Bodecker Partners: 4:45

Yeah. Yeah.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:46

What's your view here? Kolbjørn.

Kolbjørn Hembre, CEO at Entelios: 4:48

No, I, it's more or less the same. I think it's the price who will balance out the market. I have used to say that it's two ways of doing this. It's the Chinese model where someone decides who will get power when it's a lack of power. And then you have the European or the Western model where the price will make someone to, turns out if it's lack of energy, so that's how a free market works. If you don't start to to give subsidies to part of the market like we see in Norway now, I am, I'm doubting that will solve the problem. I think it'll just increase the problem.

Richard Sverrisson - Editor-in-Chief, Montel News: 5:23

And of course there's an election looming in Norway. And some of these areas are quite political cables, wind power, retail, electricity prices. Do you think there's gonna be a greater threat of political intervention, post-election?

Kolbjørn Hembre, CEO at Entelios: 5:38

No, but I think if you take Norgespris which I think the good thing about Norgespris is that you get the public discussions down. And when you have a lot of, I will say people discussing a market they don't know anything about, you get the very, un ground up discussion in a way. If you understand what I mean. So I think that could maybe silent the big discussions and let then the professionals solve it in the end. But to add on that, which I'm a little bit afraid of we are a part of the power market and that people is not. That big, to be honest. We are now in this position where we are doing this more and more complicated. We have a dozen of price areas. We have an imbalance market where even I been in the business for third year, struggled to understand and to read the market. Then of course for a industry in Sweden or or a real estate company in the Nordics, they struggle to in a way predict the prices and and if they don't understand and if they think things are unfair. Then you actually run into trouble. And that's what we are doing as a branch.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:49

As a sector. Absolutely. So in terms of if you, the experts find the market currently as it stands too complicated then we're heading maybe in the wrong direction, but Fredrik, what's the situation? Sweden, as there also been calls for intervention and to, you know, provide stable prices for retail customers, et cetera.

Fredrik Bodecker, CEO at Bodecker Partners: 7:07

Yeah, we had a lot of discussions around that. There were proposals, I think before the previous election to do, I would say a similar thing to Norgespris, to have, say a Swedish price there and not be contaminated by the German price level. And living in the south of Sweden, of course, as a private person I can understand the reason we pay quite a lot more than the people in the North. But I think that. And I think that's a very good point that when these suggestions come up, that, that have been tested many times before politicians deciding price levels. It's not very new and still waiting for time when it has worked. But when these things come up and we start discussing them, I think that's good because if we can have a reasonable discussion we will say, be able to point out now this won't work. We need to do it differently. But at the same time, I'm always coming back to that if there are 1 million voters that wants one thing, it can be as stupid as you wish. That's,

Richard Sverrisson - Editor-in-Chief, Montel News: 8:03

of course, That's the situation in which we, we operate of course and live in. But Fredrik you mentioned market liquidity. We're seeing that obviously dwindling. We're seeing very volatile prices. Kolbjørn mentioned, certainly you both mentioned the imbalance prices, which are very high and the growth in renewables is slowing. So the Nordic power market is facing several challenges and some, even some politicians have called the market dysfunctional. Do you, would you agree with that?

Fredrik Bodecker, CEO at Bodecker Partners: 8:29

Yeah. But there are, say these child diseases that pops up. We have introduced several new things into the market. The flow-based coupling new ways to trade MFRR and all these thing things. And there are, and we are still in those periods where we are adapting to that. I would say, even though a lot of the experts said, don't do this and don't do this way, but. Authorities did it anyway. And now we see, okay, look, we said it wouldn't work, it's not working, but we are kind of fixing it. Slowly but surely there are like always smart or let's say not so smart but traders in the gray zone utilizing this. And that's, I think that's the way to do it. You gotta expose your ideas to people that wants to utilize the loopholes and then cover them one by one. But generally not patching these loopholes with a, with new rules. Yes. Challenges, but I think it's good. Let us face those challenges and let us solve those problems and solve them without complicating the system too much.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:28

What do you think Kolbjørn what are the greatest challenges facing the sector at the moment, in Norway and in the wider Nordic region?

Kolbjørn Hembre, CEO at Entelios: 9:34

I think we are not prepared for you know, the green shift where you get a lot of wind and solar into the system, which is very unstable. And the actors in the in the power market historically has been very steady. It's been based on magazines and on nuclear power, which is a very stable ground. So I think we are not we need to learn this, as Fredrik said, we have to take it step by step because it's a new situation where no one actually know what to do exactly. The other part, which I think is also a problematic thing in the Nordics, is that we have a consumer side, the consumption side is not flexible. They use energy when they need it. And there is very few points where you have big flexibility on taking consumption down. So when you have not stable production, but you have a stable consumption side, then you run into trouble. And I think we haven't been good enough prepared, and also the authorities is not prepared for it. So they are, I think they're testing with flow flow based and with new balance pricing systems which I think is in the right direction, but we are not able to foreseen the effect for it. So for wind producers, for actors like us, which is a trader it's very hard to, in a way to take on board very new and predictable cost. Into all plants. So the risk is increasing dramatically.

Richard Sverrisson - Editor-in-Chief, Montel News: 11:07

Fredrik, you coming in?

Fredrik Bodecker, CEO at Bodecker Partners: 11:08

Yeah. I just thought of one thing that, that kind of shows this journey at least in the Swedish system is. Couple of years ago the win wind power owners and industry was blamed of causing a lot of imbalances. And I think it, that was a valid criticism because the system hadn't adapted to that. So there was not a system view. One, once again, politicians had decided we need a lot of wind, but they forgot about, it's a system. And a lot of criticism. And then slowly the system was changed in balance. Costs shifted. So those who cause imbalances now pay for them. And I would say that is a system that is more or less in place, or it will be in place in a very different way than it was some years ago. And. On the other hand, many of my clients are wind farm owners, so they didn't have that in their 15 year budgets. So that's, I think that's a little unfortunate.'cause they were promised to say another future. But yeah, you have to adapt.

Richard Sverrisson - Editor-in-Chief, Montel News: 12:03

I wanna come back to that later, Fredrik. But in the meantime, Kolbjørn, is there anything that the companies or the sector more generally can be doing to inform the public or to provide a greater information or explanation about how the system works. I'm thinking in terms of, interconnectors aren't all bad, for example or why some pay more for their power than others. And there is a reason for that is, is the sector doing enough, do you think?

Kolbjørn Hembre, CEO at Entelios: 12:26

No. I think we are not at the at all good enough to explain how this is working for me. It's like a road system. You have Q problems into Oslo or to Stockholm or to Copenhagen, and then you solve it by by introducing q fees and this kind of things. It's the same thing here. We have to adapt in a way, a new traffic situation. But we're not able to simplify it in our explanation in the public. So we as a branch have to, in a way engage more sophisticated marketers which can help us to explain this on a much more easy way because it's not that complicated, to be honest.

Richard Sverrisson - Editor-in-Chief, Montel News: 13:05

Engage the PR people and the people that can go out and explain it and, you know, less complicated way, should we say. I mean, I don't want to dumb it down, but I think, it needs to be explained. Absolutely. And Fredrik you mentioned some wind producers. Now I think, the low prices in Northern Sweden, northern Norway as well are having quite a disastrous effects, on the profitability of wind developers and producers. But what can be done to alleviate that situation? Is it, I would think it's a perfect incentive to build more batteries shortly and maybe some form of industrials such as, data centers, et cetera. Is that happening?

Fredrik Bodecker, CEO at Bodecker Partners: 13:39

Yes, I would say you shouldn't say batteries to me because then I won't stop speaking as they were talking. It's definitely my favorite area. Yes we are seeing that ma many players now are in different stages of looking how batteries can help them from getting into standalone batteries to putting it behind the meter at their, their, let's say. Places. And I think also they have realized that waiting for all these power to X projects, that huge demand that was supposed to come, even the data centers now that everyone and their grandmother needs to build a data center and needs thousand megawatts. That's not going to happen tomorrow, but putting a battery in place, you can do that in. 9-15 months If you're fast, get through the paperwork. Yeah those things will come. Those things will, and also for. I would say, and I've been on the barricades for this for many years, that the wind producers must take more control of how they're producing. There are things that they aren't allowed to do. They aren't allowed to purposely curtail to, let's say increase prices like hydro producers are like allowed to do for some reason. But they are forced to curtail not to become imal imbalance. And this is something we see now lot more and more of them are getting very active in curtailing so they don't cause imbalances. And that then opens up for the curtail volume to be traded on the short term markets. That is a super, super interesting area where they take control and yeah,

Richard Sverrisson - Editor-in-Chief, Montel News: 15:08

and it's a win-win in a sense.

Fredrik Bodecker, CEO at Bodecker Partners: 15:10

Yeah. The downside is that we, there's a lot of energy that is curtailed that could have been used for other things. If we had the, if the TSOs hadn't slept on the job and built the wires north, south, then we would been able to outcompete German coal, for example.

Richard Sverrisson - Editor-in-Chief, Montel News: 15:28

Yeah. Yeah. What's your view here, Kolbjørn? Can we, can we blame or point the finger at the system operators or the other factors that play here?

Kolbjørn Hembre, CEO at Entelios: 15:36

Yeah. I think for sure they have also stepped in in many years. And I also think we are too slow in adapting batteries into the market. I think it's more favorable with batteries linked to solar and wind than just put them up as a effect reserve in the grid. Because then we can benefit much more from the batteries actually. Because one part of the battery market, which I maybe not agreed too much with Fredrik, I don't know but that's, if you invest if a company invests four, 4 billion Swedish coronary in a battery park all that money has to be paid by the consumers in the end. And the branch in itself are not willing to take that investment. So we see companies investing in batteries with no link actually to the market or to the branch. And they just actually add an extra cost into the market without optimizing the grid system and the market. Here we should maybe have

Richard Sverrisson - Editor-in-Chief, Montel News: 16:37

a broader discussion. A bit more, a systemic approach, you're saying? Yeah, exactly. Yeah. Absolutely. And, but there's also been a big slowdown in the renewables build in certainly in some areas in the Nordic region and Norway in particular. What are the reasons for this? I'm thinking, in terms of wind in particular and also hydro. A new hydro is problematic in Norway, isn't it? What are the reasons behind it? Is it all nimbyism and people protesting against wind turbines or is there more to it than that?

Kolbjørn Hembre, CEO at Entelios: 17:03

It's, first of all, the opinion that doesn't want want throw wind that have to change. I think that's and we maybe see signals now that it's coming more and more. One other problem is of course, that. When you combine wind with a very flexible water production then they will all compete the wind in a way. So it's hard to operate and the cap we see the capture rate the real price they get from wind production is much small, much lower than the average price in the market. This one I think has been a surprise for the early movers in the wind market. But we see now we are in business also together with Fredrik that we have to educate the wind builders. That they have to operate the park into the market, not just produce when it's blow and expect that you get money for the production. Because that was the starting point.

Richard Sverrisson - Editor-in-Chief, Montel News: 17:57

You're saying they need to take control and yeah. Yeah.

Fredrik Bodecker, CEO at Bodecker Partners: 17:59

Yeah. That's a funny anecdote there. I think it was nine years ago I was at a Montel conference where an analyst from power, which was not a part of Montel he was the first one that said, okay. We need to look at this cannibalization, it's, it could happen if we don't stop building. And this was nine years ago and he was very correct.

Richard Sverrisson - Editor-in-Chief, Montel News: 18:20

The cannibalization think when there's an massive oversupply and they, basically prices tumble. Yeah,

Fredrik Bodecker, CEO at Bodecker Partners: 18:25

Yeah. That's, but I also think we have to look at the big picture here that we need more energy long term. We have a huge surplus in the north of Norway, Finland, Sweden. But, I think every civilization needs more energy. That's I would say very contrary to a speaker from a large energy company I listened to as a, at the recent conference who said that we must change our behavior and use less energy. And I would say, I think that's the wrong track there.

Richard Sverrisson - Editor-in-Chief, Montel News: 18:52

Certainly the world in which we're going into with the increasing use of AI and the more sophisticated technology around phones and et cetera, et cetera, requires more energy. And that should ideally be renewable. But Sweden, but Fredrik Sweden has, seems to be opted for nuclear rather than than wind. And certainly offshore wind. There's a clear decision to not go for that, but go for nuclear. What's the reasoning here?

Fredrik Bodecker, CEO at Bodecker Partners: 19:17

Yeah. And I think this is interesting question because up until yesterday that would still have been uncertain because we have a new election next year in September, but yesterday the Sweden social democrats came out and said that now they are pro financing Swedish nuclear. So I would say that probability Of nuclear being built. I won't say how much, but at least one nuclear power plant being built is very high in my mind. Yeah. It, it tends to fall in these political camps. Left then wind offshore. Wind. Nuclear. I wish it wasn't that way. I wish we had a neutral stance also leaning back to what you said about the public discussion. Can't we try to find some neutral judge coming here and say, okay, now we need to discuss this once and for all.

Richard Sverrisson - Editor-in-Chief, Montel News: 20:03

But you're saying in Sweden there is a broader, broad political consensus that the social Democrats have come.

Fredrik Bodecker, CEO at Bodecker Partners: 20:07

It's Very broad now. It's only the greens and the left and and yes the social Democrats wouldn't need, would need them in probably to form a government, but I don't think they're position is so strong anymore.

Richard Sverrisson - Editor-in-Chief, Montel News: 20:21

It, it's interesting as I think you know that it's very true, but in countries such as the, that great Britain and France, there is a, there's a broader consensus on the left as well. And I think it's Sweden and certainly Finland, that there is more a greater public acceptance of nuclear, whereas the, and France as well, of course but where compared to other countries, we have in recent years, seen very bullish forecasts for demand growth in the Nordic region. Certainly some of the TSOs in recent years have been very optimistic in what they see as growth in, in demand for electricity. What's your view here, Kolbjørn? Do you share those kind of those kind of forecasts for bullish demand growth?

Kolbjørn Hembre, CEO at Entelios: 20:57

To be honest, I think they are, A little bit optimistic. On the other side, I think we should be prepared. As Fred also mentioned earlier that if we can use more energy actually the Nordics will be in a better position. Energy is a solution to growth so to prepare and I think especially the grid operators and, also producers. They have to be the frontrunner in this. The problem is of course to to make all decisions economical but to build an infrastructure which can handle a growth. I'm supportive into that. But if it comes, if it, if you take 10 years ahead. Yeah, it could be the data centers and quick movers, but to build industry and these kind of things that will take time, I think to be honest.

Richard Sverrisson - Editor-in-Chief, Montel News: 21:45

A final question for you gentlemen. I'd like to go into lots of other detail, but unfortunately time does not allow what does the power market look like in, in 2035, Fredrik, in the Nordic region?

Fredrik Bodecker, CEO at Bodecker Partners: 21:59

10 years that that, that moves pretty fast. I realize now, after 30 years in the business I'm, but I'm optimistic as I started even if there are challenges, we will solve them. But slower than we thought. I'm, I think that we are. Let's say on the step of a revolution here with the AI, that's a case. Easy to say it, but it's the more I look into it, I think, okay, this is the big thing. And in my world, the cost of providing AI that will converge to the cost of energy. So where will we find the cheapest energy? And there, Sweden, Norway, Finland has an excellent position, so hopefully in 2035 our three TSOs have learned to cooperate and they have, let say, problem up in the north and north to south. And that's what I want to see in the 2035. I think that's the absolute key to get the TSOs into the same room and solve that problem. Start cooperating and start building, not waiting for demand, but they need to have some strong guidance I think. That build, build and it'll come.

Richard Sverrisson - Editor-in-Chief, Montel News: 23:07

Absolutely. What's your view Kolbjørn??

Kolbjørn Hembre, CEO at Entelios: 23:09

No it's quite the same. I think cooperation between the Nordic countries is crucial. We have difficult different geographical countries. Norway can use the the height and the reservoirs much better I think. if Sweden can contribute with more stable. Nuclear, I think that's great for the market. But we have to cooperate. We have to make A-plan Nordic. And I also think in 2035 we are much more linked to Europe. It's a big discussion in Norway going on cut the cables. Nothing in Europe is telling that we should be more on our own. We are actually more together. So also a link to Europe that we have to solve in Europe. The energy crisis and energy what challenge and we have to be a part of that solution as Nordic countries also. So that's my my view on 2035.

Richard Sverrisson - Editor-in-Chief, Montel News: 24:03

Yep. So not so much as cut the cables, but build more cables even.

Kolbjørn Hembre, CEO at Entelios: 24:06

I think so,

Richard Sverrisson - Editor-in-Chief, Montel News: 24:07

and increase interconnectivity is a solution here I think. And, not so be so neighbour guessing or isolationistic. Fredrik?

Fredrik Bodecker, CEO at Bodecker Partners: 24:13

Yeah. And I think that's quite ironic that also in Sweden they put this German cable on, on halt and so they have the same discussion there and at the same time 90% of the discussion is around how stupid Trump is. And then we are doing the exact same thing. We're, isolation.

Richard Sverrisson - Editor-in-Chief, Montel News: 24:29

But I think it's nice that you guys ending on a spirit of cooperation, you know, pan Nordic Corporation and optimism, Fredrik and Kolbjørn. Thank you very much indeed for being guests on the Montel podcast today. It's been an excellent and insightful discussion. I hope you agree, listeners, and thank you for tuning in to this episode. Our podcast episodes are released every Friday. For the latest news from Montel, please visit montelnews.com and you can follow us on LinkedIn, Bluesky, and other social media channels. See you next time.