A Nordic balancing act

In March 2025, the balancing price in all of the Swedish price zones crashed to the technical floor of EUR -10,000/MWh - setting off a trend of volatile prices and turbulent balancing markets in the Nordics.

Six months on, small producers and certain market actors in the region are struggling to navigate a complex system and differing responses from TSOs across the region, with many market participants calling out for change.

In this episode, Richard speaks to Nordic market experts about why the changes introduced this year are proving problematic and puts important questions to the Danish TSO.

Host: Richard Sverrisson - Editor-in-Chief, Montel News
Contributor: Elias Huuhtanen - Finland Reporter, Montel News

Guests: 
Kia Marie Jerichau - Vice President, Energinet 
Matthew Creese - Head of Market Operations for Wind and Solar, Aneo
Priyanka Shinde - Nordic Market Expert, Montel Analytics

Editor: Oscar Birk
Producer: Sarah Knowles

Transcript

Richard Sverrisson - Editor-in-Chief, Montel News: 0:05

Hello listeners and welcome to Plugged In - the Energy News podcast from Montel, where we bring the latest news issues and changes happening in the energy sector. One cool evening on Sunday the 23rd of March. Everyone in the Nordic region was enjoying the last few hours of a quiet weekend, but 15 minutes before midnight, the balancing price in all Swedish price zones crashed to the technical floor of minus 10,000 euros per megawatt hour. Setting off what has become months and months of volatile prices and turbulent balancing markets. Six months on the Nordic region is still struggling, and some market participants are calling out for reform and change. Why are the markets continuing to be volatile and is there an end in sight to the unpredictable price swings? In this episode, I'm gonna be speaking to Nordic market experts and the Danish TSO. But before I speak to our panel of guests, I'm joined by our reporter in Finland, Elias Huuhtanen. Welcome to the podcast. Elias

Elias Huuhtanen - Finland Reporter, Montel News: 1:06

Thanks for having me.

Richard Sverrisson - Editor-in-Chief, Montel News: 1:08

We are nearly six months on from the first trigger, which kickstarted this period of volatility in Nordic balancing markets. Have we seen any improvement during this time or are the markets just as volatile as they were in March?

Elias Huuhtanen - Finland Reporter, Montel News: 1:22

Yeah, well, they're still very volatile, that's for sure. I just checked the finish prices this week, for example, and on Tuesday on 9.30 AM it was minus 100, and then an hour later it went up to 2,700 Euros. So there's definitely still a lot of volatility going on, but I do have to say that I was quite surprised. I also looked at the wider Nordic region for the past couple of months, and it seems like the most extreme price levels, they are disappearing. We haven't seen them since June, July, and I'm talking about this minus 10,000, plus 10,000 levels. It seems like in August, September obviously we see, still see volatility. We have this 5,000 euro price spikes, but not this technical floors for some reason. I think there, there can be a couple of explanations. There's been various tweaks and measures in introduced by the TSO Sweden introduced this tolerance band where they have more leeway choosing the cheaper bits instead of, exactly matching the volumes for the balancing needs. And Denmark introduced something similar where anything below 25 megawatts is surrounded with zero, so that these smaller balancing needs don't have a disproportionate effect in the market.

Richard Sverrisson - Editor-in-Chief, Montel News: 2:33

That's probably very positive for many to hear Elias. But these are kind of, I'm sure some of these countries are introducing these new measures on their own rather than it being a Pan Nordic element. But is this volatility? As a result of the new 15 minute markets that were introduced or are, what are the other factors at play here?

Elias Huuhtanen - Finland Reporter, Montel News: 2:53

Yeah, it seems to be a bit of a, like a cocktail of many different major reforms that happened quite closely in time, obviously. Yeah. The big one is the all algorithmic trading, the MFRR energy activation market, where in the past you would have a real person somewhere in a control room at TSO, making decisions on where to balance and which bits to activate and so forth. Now that's done by a computer. Obviously a computer can process way more information, take account into account way more factors. But anyone who's been on social media, for example, knows that algorithms can have a mind of their own. It's a bit difficult to predict what they're gonna do. So that's made it. The life a bit more difficult for traders. You mentioned the 15 minute windows. That's definitely adding more complexity or challenge to the market. At least the hourly window doesn't really cut it anymore. You have to match the supply and demand more. Accurately, but that also means that the trader has to be on top of their game every 15 minute intro, which can be quite challenging. And on top of everything, you have the flow-based coupling that happened last October. I think it's meant to use the grids more efficiently with these algorithms and computers, but then for us humans, they can result in counterintuitive flows and results. And then. We also have, this is pure speculation of course, but there has been some signs, especially in the Baltic balancing markets, that maybe there's some kind of market manipulation going on. Maybe the pocket participants taking advantage of this price swings. Something similar is happening in Sweden where the watch dog is looking into the beating behavior of individual market participants. But so far there's no direct evidence that kind of stuff is happening. But there's some. Some hints.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:45

Yeah. Some of alleged market manipulation. I think it's fair to say Elias, and you've, you highlighted very much the sort of cocktail of complexity if you allow me to use that phrase Elias but what's the sentiment in the market regarding algorithmic trading? Has it been warmly welcomed or what's the reaction been in, in the banse market? That is,

Elias Huuhtanen - Finland Reporter, Montel News: 5:04

I wouldn't say that it's been war on their, well, I think most participants agree with the goals that. We're gonna move into this more, this power mix dominated by renewables. And we need this. We need to be reacting to balancing needs more quickly. We need this 15 minute trading windows to match the supply. What has been criticized is the speed of the transition. Maybe there's way too many reforms happening at the same time, and the people hardest hit by this are. Renewables producers, but especially smaller renewables producers. For the bigger participants, yeah, they can afford to set up these trading teams that look specifically in the balancing markets, and maybe they can even make a profit off of these price swings. But for smaller producers, they can't really afford that. So for example, in Sweden you have smaller wind producers. They have to predict what the wind is gonna be tomorrow at noon. And then if they're one, two meters per second off, and that coincides with the extreme price levels. We've had a case in Sweden where a smaller producer lost half their monthly revenue because they miscalculated the wind by two meters per second, and that was set the minus 10,000 or plus 10,000 price level.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:21

That's very interesting indeed Elias. I think we'll be watching this space very closely and certainly you will be from Helsinki. Thanks very much, Elias.

Elias Huuhtanen - Finland Reporter, Montel News: 6:29

Thank you.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:29

So how long will this balancing market volatility last? I'm pleased to be joined by Kia Marie Jerichau, vice president at the Danish TSO Energinet. Warm. Welcome to you Kia Marie.

Kia Marie Jerichau - Vice President, Energinet: 6:42

Thank you.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:43

And also join us today is Matthew Creese, head of market operations for wind and solar at Aneo. A warm welcome to you Matthew.

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 6:50

Hello. Thanks for having me.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:52

And last, but certainly not least, is our very own Nordic market expert, Priyanka Shinde. Warm welcome back onto the Pod Priyanka.

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 7:00

Thank you, Richard. It's a pleasure to be here.

Richard Sverrisson - Editor-in-Chief, Montel News: 7:02

If I can start by asking you really a very general question, if you like, a sort of a bluffers guide to balancing markets. If you would put it that way Matthew. What really are balancing markets and why are they so important?

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 7:16

The electricity system I think people are quite aware, needs to be in balance in terms of consumption and production at all times. So electrons don't like to wait around anywhere. So the balancing markets are markets set up to help ensure that the physical system operates as it should. All our electrical equipment stays online and so forth. And so we have a number of different markets to try and manage the gross energy. But the balancing is then to make sure that we physically can deliver and the system is secure.

Richard Sverrisson - Editor-in-Chief, Montel News: 7:48

So it's absolutely crucial, and obviously it, it's become very much more complex with all the influx of especially wind, solar, and other renewable generation Matthew. But so we've seen some changes made in the Nordic market in particular. Could you grow through some of those changes and say why they were introduced?

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 8:07

Prior to March this year, each of the countries in the Nordic system were managing their own area by looking at the frequency, so adjusting production or units according to that, whereas the new system now is done on a much more granular level. That each price area needs to be in balance, so to speak, rather than by following the frequency. Each, the frequency is a result of making sure that things are in balance beforehand.

Richard Sverrisson - Editor-in-Chief, Montel News: 8:35

And how have these changes been received? Priyanka? What have been some of the consequences that you've noticed?

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 8:40

I would say that are several consequences that we have seen in the market in terms of the prices that are coming out of this new change as a result because it's really sending in inputs to a computer and getting outputs out of that. So it is sometimes can be very volatile prices at the same time that have been delays with the data publication. Market actors have been confused as a result, and it also puts more risk on the strategies of how to act in the market and also in terms of, yeah, balancing costs, I would say have also risen as a result.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:15

Yeah. We'll return to that point in a minute. Matthew you wanted to raise a point?

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 9:19

Yeah, so the other important change that's gone from a manual operation of people deciding and putting in the balancing amounts to a fully automated system. So an algorithm determining based upon inputs. It's also gone from 60 minute resolution to 15 minute resolution. So we've seen a lot of differences there.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:39

Kiaa Marie, there's Priyanka mentioned some of the criticism some of the responses from market participants. There's maybe, is there a feeling that there are too many changes made in a short space of time? Or what's the view from the TSO here?

Kia Marie Jerichau - Vice President, Energinet: 9:52

I think that from the TSO side, we also agreed that there's a lot of changes being made at the same time. I don't think that any of us expected that some of these changes that we've been preparing for almost 10 years were going to happen right around the same time, within the same half year perhaps. So it is a lot to deal with for the TSOs, but also especially for the market players who's who's affected by this. I think I think everyone can agree on that. That being said, it's also something where everything is very connected to each other. So making one change without making the others is not necessarily the right approach. And we've tried to balance these different changes. So making sure that when we do one change, you will still be able to actually trade your balances in in the different market timeframes. We are still missing the last one, which is the 15 minute day ahead, which will come in October. So when we're done with that, I think that many of these biggest changes that we've seen for the past half year that we are done with them. But we also we also have a lot of of other big changes ahead of us. So the system that we are operating and the system that we are all participating in is changing very rapidly, very fast. Then the rules and the markets have to change with it. I think that's just the way it is right now.

Richard Sverrisson - Editor-in-Chief, Montel News: 11:12

Absolutely. So the 15 minute timeframe in the day ahead market could also throw a more, an extra layer of complexity into the mix, is that what you're saying? Kia Marie.

Kia Marie Jerichau - Vice President, Energinet: 11:20

It will add more complexity, but it will also be part of the of the final solution. So I think that it will be a benefit for everyone to have this final piece of the puzzle when we see that in October.

Richard Sverrisson - Editor-in-Chief, Montel News: 11:31

And Priyanka, you wanted to jump in here?

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 11:34

I just wanted to bring us to last October actually back about referring to the changes that we talked about because that's when we had this flow-based market coupling change and with this new mechanism of the balancing, which came live in March. So if we connect these two, it's also been a result that we see less cross border capacities remaining for intraday and balancing market trading, which is also coming back to what Matthew was saying in the beginning in terms of the areas being responsible for balancing themselves more. And actually this is also coming with less cross border capacities remaining for the balancing markets.

Richard Sverrisson - Editor-in-Chief, Montel News: 12:13

Matthew, can you explain why the algorithm used here in, in the 15 minute market or the 15 minute timeframe in balancing is problematic.

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 12:22

Computers, zeros and ones, there's nothing in between. It's also worth mentioning, October last year was the first time that market players got an insight to the actual impacts of these algorithms and how they'll operate. And I'm talking there about this shadow operation data. Kia Maria talked about. It's been going on for 10 years. A potential criticism is that it's been extremely technical. There's been a lack of understanding and what the impact is to the actual market players and the financial outcomes. So this huge step change, and I think it's quite clear, seeing the results from the algorithm and so forth, that rather than the things being smooth and you get signals, we get these very large jumps. The algorithm gets an input that you have to balance with X amount of megawatts no matter what the cost. At the same time, back to this very large jump, I think it's quite clear that the market players and the market hasn't been ready for it because of these demands that are now put on it. The algorithm is also, in some ways being refined. The TSOs have said yes, there are issues that they are looking at, they're trying to make improvements, but at the same time, that's causing a quite a lot of pain for a number of players. So this combination of very technical, but then also the impact and the flow on it unin unintended consequences. So it's a, yes, we believe we're on the right track. As Kia Marie also said, for the system that we're moving to, we need to have automated systems. We need to work at 15 minutes. There's also this lag of implementing a very large change and the flow on effect. So when yeah, transparency, the volumes participants, we've got a lot of wind in Sweden, for example, that haven't even been able to turn off for negative prices in spot market. So there's no chance that they can participate in the balancing and these volumes that the TSOs are asking for, it's gonna take time. So we're stuck in this supply demand imbalance at the moment. When it's coming to the balancing markets, and that's also one of the causes of these volatility, very high prices and that sort of thing.

Richard Sverrisson - Editor-in-Chief, Montel News: 14:34

So these small volumes are causing huge price swings. Is that also the case? Yeah.

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 14:39

Yeah, we see that sort of,

Richard Sverrisson - Editor-in-Chief, Montel News: 14:41

yeah. So Priyanka, before I turn to Kia Marie in and get your response to what Matthew was saying there. We don't wanna put you on the spot, Kia Marie. It's not, you didn't design the system, but but Priyanka you, you mentioned costs. Could you just outline how the costs have increased since March for market participants?

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 14:57

Yeah. So in that way it definitely depends on who are you in the market, what is your trading strategy. So the costs are bit related to that. But in, on an average, we can also see that there have been, players who have even experienced balancing costs increasing to even five times the original the prices, the costs before because of very sudden volatile prices. Quite extreme prices. And yeah, that's one of the implications, and this also has a bit to do what I said was with respect to the market design that we have in place in Nordics, which is designed such that, you know, the market the system incentivizes those who are helping the system, but it punishes those who are in opposite direction. But because it's become so unpredictable in a way that it is easy to be in the opposite direction, and then you get, punished for that.

Richard Sverrisson - Editor-in-Chief, Montel News: 15:49

And punished with hit, it means extremely high cost.

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 15:52

Yes. Yes.

Richard Sverrisson - Editor-in-Chief, Montel News: 15:53

Exactly. And so much so that some people are, expecting some companies to go under as a result if you're a small wind power producer or solar producer in the markets. But so that, but that's the obviously an extreme consequence. But Kia Maria, I said, I don't wanna put you on the spot here, this, how do you respond to some of the changes in some of the, I bet you, that's probably very mild compared to some of the charges that have been leveled maybe at other changes. How do you respond as a TSO?

Kia Marie Jerichau - Vice President, Energinet: 16:19

Well, I think as Matthew said, that we have had many changes at the same time. We've also not been able to see the effects of the changes put together before we were actually in operation. We have been able to look at data from shadow operation and trying to predict what would the effects be but the reality is that the behavior that we are seeing from market actors, the strategies that they're using. The way they are pricing, the risk in these new markets is different from what we saw in our shadow operation. So I also think that it's quite natural that when you have a completely new market, there is a lot of risk. There's a lot of uncertainty prices. Would often also reflect that's normal. But what we are trying to balance right now in the TSOs is, so how much should we intervene? How much of this is just to do with a new market startup? And how much is actually things that needs to be changed in the algorithms and in the markets. One of the strategies that we've had is to try to soften the blow and look at the algorithm. See as you said, Matthew, sometimes this is, this has become very automatic and there's not always a person sitting behind the computer being able to say, this doesn't really make sense in this specific scenario. We don't have that anymore, but we can change the algorithm a little bit so that we soften the edges of the whole operation. And that's what we're trying to do now, so that we don't go out into the extremes. We've had, you could say two problems. Main problems with the prices that at least I, I see it, the way I see it, one is that the price level has increased and one is that we've had some very high price spikes. And for me it's especially the price spikes, that's an issue right now because that's also what's causing even more uncertainty, putting on even more risk to the pricing strategies. And that's my main focus to change that. The fact that the prices are a little bit higher is perhaps to be expected. I think that the new system, the new way we're operating the system is also reflecting the real price of having an imbalance in a green system. I don't think that the price is at the right level yet, but I do think that a higher price than what we saw before is to be expected, and now we have to find the right level. So my main focus right now is to fix the spikes and making sure that. The markets always represents the physics behind it. I think that's one of the main goals for us when we are forming the markets. It's, that's that there's always a physical explanation behind. So that's the main focus for now.

Richard Sverrisson - Editor-in-Chief, Montel News: 19:00

Right. I'd like to to ask you more about that later on in the podcast, especially, I think the behavior of some market participants and how that changed is quite interesting, I think. But Matthew you'd like to jump in here.

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 19:11

Yeah, so from a market actor, which is active across most of the dodic, one of the things which has been extremely difficult is that each of the TSOs are starting to do, implement their own thing. So it's really important to have an effective and efficient market. And as an actor it's extremely hard when we have three or four different. It has been a common Nordic, it's called a new Nordic balancing model, but since it's been introduced, we now have very different messages. So that's also been very hard. Another comment, also, around the price levels. Again, the very big difference between the operators and the algorithm. 30% of the time previously, there was no net balancing. Whereas now it's almost 99% of the time. So it's not just the prices have increased, but the 30% more of the time were exposed as well. So it's a double, a triple hit. You've got extreme prices, you've got some sort of imbalance and price difference almost a hundred percent of the time. And then also the general level has increased. The other comment as well is that these very large changes, a lot of the other systems around supporting the financial systems, the investment and so forth, they work on a different timescale so that we're seeing that in order to solve this, again, back to supply demand imbalances, a lot of the financial structures for these green systems, solar, wind, PPAs, and that sort of stuff. It restricts the operation. So even though the market signal is there and people might like to do it, talking 10, 15, 20 year contracts, and so we're seeing a lot of yeah. Wouldn't say anguish, but contract terminations, large changes and that sort of thing. It's a system which has to, it's an ecosystem.

Richard Sverrisson - Editor-in-Chief, Montel News: 21:07

Absolutely. Priyanka, you'd like to come in here as well, but just before then, Matthew what has been the impact on renewable producers in the region of the changes?

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 21:15

So for example, we've heard, and we understand some wind farms in summer, they just turned off their wind farm. Costs and risks were too high compared to income. We're seeing this change of people now starting to think we've been very active in this space with all of our wind farms participating in the market, but we've also seen that even though we're active in the market, some aspects of this algorithm. Is deleting our bids, so we can't actually participate and provide some of the things. But again, that comes back to physics. These algorithms work on the network level, not just a price level. So it's all these type of small things. Also adding up the complexity is exploding or has exploded recently, so it's taking a while for everyone to just catch up.

Richard Sverrisson - Editor-in-Chief, Montel News: 21:59

And it might even get worse. I mean, or more complex if you like. I dunno whether I can so it's better off or worse, but Priyanka, you'd like to make a comment here as well.

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 22:09

Yeah, I wanted to just add on what Matthew mentioned in terms of different TSOs doing different things, and also with his comment of, the system going into regulation hours like more often now. So more activations. And I think this is an important point to highlight here, that Energinet actually has in introduced a deadband just a couple of months back, right? So this is a change which allows us to kind of get into a system where the spot price is equal to imbalance price more often than before. And we are already seeing the changes as a result of this. So it helps in making the system I mean the price is a bit more milder because that was, again, coming to Matthew's comment. So then what happens is that internet is doing one thing, but we are talking about Nordic level thing. And then unfortunately, some other TSOs are not doing other things to make the prices milder. So it's a bit of differences that we see. So it can be a bit confusing for the overall market. Since we're talking about a joint Nordic market. So it would be nice to do more joint initiatives. And also in terms of data transparency, I think that is also a big problem because different TSOs have I mean they're operating a common market, but Energinet for example, I think you are sharing so much data. I think it's very much welcome actually in the market. So it's really good initiative from your side. Also Fingrid is sharing much more data, so we would like more TSOs to be more open and transparent because it brings more level playing field for market actors across Nordics, I would say.

Richard Sverrisson - Editor-in-Chief, Montel News: 23:40

What do you say here, Kia? I know you've introduced Energinet has has introduced some changes. Maybe you could talk us through some of those and why you made them, but also why this hasn't been done on a sort of Nordic level. It's been done on a national level. 'Cause there is a danger here as Matthew emphasizes that, if we're building wind, but we're not producing any wind from them. And also we're doing a pan , Nordic, even pan, even market. But we're going back to national measures. Then that goes against the grain of what we're trying to achieve, maybe in the mid and long term.

Kia Marie Jerichau - Vice President, Energinet: 24:10

Yeah, I think it's true that we have had a little bit of a different approach in the different Nordic countries towards these issues. I think that also reflects that even though we have a very close collaboration in the Nordics, we're also different countries. We have different energy mixes and different market actors. So everything hasn't been completely harmonized across the four Nordic countries. And that's. Also quite obvious when we then have issues like the ones we are seeing right now. It also means that the Nordic changes would probably be a little bit bigger changes. So it takes longer to to agree on those and to prepare those, also we would like to have enough data to make good choices if we do make big changes. So the big changes and the common Nordic changes perhaps has a bit of a longer time horizon than some of the smaller changes that we are able to do on a national level and where we can move with a little bit more speed. So I think that. What we've, what Matthew is perhaps describing and what we're experiencing right now is that it's been six months almost and we have seen issues, and I think all the TSOs have seen issues that they've tried to solve as best as they can with some of these more speedy national measures. So now we are moving into a phase where it's perhaps more common greater changes that we will be able to do, takes a bit longer to agree on what's the best approach, but also we would like to have the right data if we're making bigger changes. Again, this is really a balancing act. In more ways than once. So we're also trying to make sure, so how do we create stable signals to the market while also making these smaller increment incremental changes? So we also don't want to confuse anyone unnecessarily. So that's the reason why we're holding back with making any large, significant changes that will just disturb and overturn the market once again without being completely sure that's a databased valid and the right decision to do that. So that's why it takes a little bit longer for some of those changes and for the more coordinated changes you could say.

Richard Sverrisson - Editor-in-Chief, Montel News: 26:24

You mentioned earlier, Kia Marie that the 10 year sort of timeframe. This was talked about 10 years ago. You also talked a little bit about you know, the change in the, in the behavior of market participants. Could you explain that a little bit more? 'cause obviously if you are, if you were monitoring the behavior when you're in a test phase and then the actual, when you start, go live, it's very different then obviously that poses some problems.

Kia Marie Jerichau - Vice President, Energinet: 26:47

Yeah when I say 10 years, I am, I'm just referring to the fact that this is only a stepping stone towards the real goal, which is for the Nordics to connect to the European balancing platforms, Mari and Picasso. I think the conversations about that started 10 years ago, and then we formed the Nordic Balancing Model corroboration in 2018 and has been, have been working on this since then. So the mi, the milestone that we reached in the spring and in March was quite significant and perhaps the biggest one, the most important one we still have ahead of us to have a Nordic transition towards the, Mari and Picasso platforms. I think that's important to remember that this is a stepping stone to enable the Nordics to participate in European markets for balancing. Yeah. So that being said, that's also perhaps you could say, what about the market behavior? Then why are we even doing this if it's not really helping the market participants right now? And it's bad for solar. It's bad for wind. Why did we do it? I think that there are two main things here. One thing is to have common European balancing platforms and the other ones is to have 15 minute markets. So with the transition throughout all of Europe towards more wind and solar, we also need to be able to balance the system more closely to the operational actual physical time where we need to have balance between production and consumption. So moving from 60 minutes into 15 minutes is quite important for that. Then you could say that perhaps the assets out there and the market participants haven't been, are not able to respond to the incentives that we are trying to give to the markets for keeping the balance. But I do think that this is also something that needs to be an operation and needs to work in real life before it actually takes full effect. And that's what we're seeing right now, that we're out of step with each other and that's a problem. But I'm hoping that within short, a short while, we will be able to walk together at the same pace again.

Richard Sverrisson - Editor-in-Chief, Montel News: 28:52

Yep. Perfect. Matthew, would you say these are more than just teething problems? So do you expect this volatility, these extreme price swings to continue for the coming months and even the coming quarters?

Mathew Creese - Head of Market Operations for Wind and Solar, Aneo: 29:04

I personally think that these price spikes will be around for quite a while. As I said that there's a supply demand imbalance at the moment, and it does take time. We've got, I don't know, a handful of applications in with Swedish and finished TSOs, and it's still being weighted upon, so we're trying to get systems in. At the same time, when we look at the fundamental changes of each area, has to try and manage its own balance. Take SE1 northern Sweden, it does have quite a lot of wind. It's got quite a lot of hydro. When we get to winter, how are we gonna manage icing on very large wind farm when it goes from potentially full production to zero production? In a short period of time and that type of thing. And that's also one of the main, some of the main drivers, these price spikes. Yes, there's been some bidding behavior and that type of thing, but when you use up every single megawatt of available capacity to manage the system, that's gonna continue for a while, I believe. And then we've also got, as we mentioned, Picasso and those sorts of changes as well. That's gonna introduce another step change we have to rebalance and the, and that sort of thing. So in that sort of sense, maybe I'm a bit too much of a pessimist on this, but there's gonna be challenges for a while ahead. We all hope it's gonna, this medium term type of get to a better level, but we're still gonna be faced with challenges for quite a long time ahead.

Richard Sverrisson - Editor-in-Chief, Montel News: 30:29

Absolutely. We don't wanna scare away any potential renewable energy investors either. Priyanka, are you an optimist or a pessimist here?

Priyanka Shinde - Nordic Market Expert, Montel Analytics: 30:37

I would like to be realistic but yeah, in an optimistic way. Actually on, on that, I would just say that, we already see that the market is adapting to these new changes, and I think market always adapts whenever there are market design changes. In the beginning, yes, there is always some sort of confusion. Everybody's trying to do something about it, but I think there's always a choice if you want to go with the flow or if you want to do something about, and there have been DRPs who are also, let's say, trying to look for alternative solutions. Maybe get flexibility in the same portfolio, getting wind and storages, and do something around those together as a portfolio. So it's all about how quickly can you adapt. At the same time, you also see actions coming from the TSO side. Market surveillance is also working actually very well with the regulators. So we see that, if somebody's not bidding in correctly, then there are also actions taken. Right now there's one such case in Sweden, for example, so that's being under in, that's in under investigation. So it can also be, a ray of hope that at least people are not exploiting the situation in the market. But yes, I also agree with what Matthew said, that winter is coming, the famous phrase, winter is coming and there can be extreme situations, so we always have to be on our toes, especially now already towards autumn. We do see some challenges with the evening ramps, for example, that can lead, to more activations and extreme prices. At the same time, we are also hearing from some producers, like even hydro producers who are saying that due to more rapid startup and shutdown that is happening due to more activations within a day, they also need to price in the maintenance cost and so on into their bidding. So it can also impact what will happen going in the future. But I think the result, like final outcome, which we will see out of this, will be a result of the actions from the TSOs, from the market actors and all of us together. So it's really a function of what all of us do.

Richard Sverrisson - Editor-in-Chief, Montel News: 32:39

And that's what that's what Pan Nordic Corporation is all about. So Matthew, Priyanka and Kia Marie, thank you very much for being guests on Plugged In - the Montel News Podcast. We could talk for hours. Our new listeners, thanks for listening to this episode of Plugged In. If you enjoyed this discussion, please like rate and follow to make sure you get the latest podcast episodes as soon as we release them every Friday. We'd also love to read your reviews of the podcast. It helps us to keep up to date with what you, our listeners, think of our podcast and what content you want to receive more of. Finally, you can head to montelnews.com for more news and analysis from our team of journalists across Europe and beyond. See you next time.