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Nordic Power Price Climbs After Carbon Emissions Erase Losses

Feb. 1 (Bloomberg) -- Nordic electricity for next month had the biggest gain in more than two weeks after carbon prices rebounded, increasing production costs at fossil fuel-fired generators.

Power for March gained as much as 1.5 percent to 37.50 euros ($51.07) a megawatt-hour on Nasdaq OMX Group Inc.’s energy exchange in Oslo, the biggest rise since Jan. 16. The contract traded at 37.35 euros as of 2:08 p.m. Power for delivery next quarter traded 1.6 percent higher at 35.65 euros after rising as high as 35.70 euros.

EU carbon permits for December surged 20 percent to 4.11 euros a metric ton after falling as low as 3.22 euros on the ICE Futures Europe exchange in London. Electricity prices can track carbon, which influences generating costs at coal and gas-fed plants.

Freezing temperatures are likely to spur demand for electric heating in the coming weeks. Low temperatures in Oslo may drop to minus 15 degrees Celsius (7 Fahrenheit) on Feb. 4, from minus 12 today, according to CustomWeather Inc. data on Bloomberg. Temperatures are forecast to drop to minus 24 degrees on Feb. 12.

“If the weather gets cold, it will erode water supplies and offer support to prices for the April through September period,” Kjell Idar Saure, a trader at utility Tussa Kraft AS, said by phone from Oersta, on Norway’s west coast.

The amount of water and snow available to generate electricity in the region may be 13.2 terawatt-hours below normal for the time of year in two weeks, Markedskraft AS data on Bloomberg show. That’s 23 percent more than today’s deficit of 10.8 terawatt-hours. The Nordic region meets more than half of its power needs by running water through turbines.

To contact the reporter on this story: Torsten Fagerholm in Helsinki at tfagerholm@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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