Operating environment in Q1 2024
European power markets
The winter in Continental Europe was mild. This together with a healthy LNG supply and steadily increasing renewable power production provided for continuing downward development in the European gas and power markets. In the Nordics, January was cold, leading to high spot prices especially in Finland and the Baltics. After the cold start, however, February and March were somewhat milder than normal. Supported by development of Continental European power futures and the above-normal precipitation levels, the Nordic futures declined during the first quarter of 2024.
According to preliminary statistics, power consumption in the Nordic countries was 119 (109) TWh during the first quarter of 2024. Due to a continued recovery, Nordic power demand is now close to the level prior to the energy crisis.
In Central Western Europe (Germany, France, Austria, Switzerland, Belgium and the Netherlands), power consumption in the first quarter of 2024 was 350 (350) TWh, according to preliminary statistics. Power demand in Continental Europe continued to be clearly below the five-year average, affected by energy conservation measures and mild winter quarters.
At the beginning of the first quarter of 2024, the Nordic hydro reservoirs were at 77 TWh, which was 7 TWh below the long-term average and 2 TWh below the level of the previous year. Both Nordic inflow and hydro generation were relatively close to normal levels. At the end of the quarter, the reservoir levels were at 33 TWh, which is 8 TWh below the long-term average and 5 TWh lower than in the previous year.
During the first quarter of 2024, the average system spot price at Nord Pool was EUR 59 (85) per MWh. The average area price in Finland was EUR 73 (78) per MWh. In Sweden, the average area price in the SE3 area (Stockholm) was EUR 56 (76) per MWh, and the price in the SE2 area (Sundsvall) was EUR 48 (53) per MWh. In Germany, the average spot price in the first quarter was EUR 68 (116) per MWh.
In late April, the Nordic system electricity forward price on Nasdaq Commodities for the remainder of 2024 was around EUR 37 per MWh and for 2025 around EUR 44 per MWh. The Nordic water reservoirs were at 32 TWh, which is about 4 TWh below the long-term average and at the same level as one year earlier. The German electricity forward price for the remainder of 2024 was around EUR 90 per MWh and for 2025 around EUR 91 per MWh.
European commodity markets
Gas demand in Central Western Europe was 602 (621) TWh in the first quarter of 2024. The Central Western European gas storage levels decreased from 559 TWh at the beginning of the quarter to 363 TWh at the end of the quarter, which is 16 TWh higher than one year ago and 112 TWh higher than the five-year average (2019–2023).
The average gas front-month price (TTF) in the first quarter of 2024 was EUR 28 (53) per MWh. The 2025 forward price decreased from EUR 33 per MWh at the beginning of the first quarter to EUR 31 per MWh at the end of the quarter, which is EUR 17 per MWh lower than one year earlier.
The EUA (EU Allowance) price decreased from EUR 76 per tonne at the beginning of the first quarter of 2024 to EUR 62 per tonne at the end of the quarter, which is EUR 30 per MWh lower than one year earlier.
The forward quotation for coal (ICE Rotterdam) for 2025 increased from USD 94 per tonne at the beginning of the first quarter of 2024 to USD 118 per tonne at the end of the quarter, which is EUR 19 per MWh lower than one year earlier.
In late April, the TTF forward price for gas for the remainder of 2024 was EUR 32 per MWh. The forward quotation for EUAs for 2024 was at the level of EUR 68 per tonne. The forward price for coal (ICE Rotterdam) for the remainder of 2024 was USD 114 per tonne.
Regulatory environment
European industrial competitiveness becoming more important
Ahead of the approaching EU elections and the new legislative cycle of the EU institutions, industrial competitiveness and decarbonisation have risen high on the EU’s agenda. The request is to complement the EU Green Deal, the flagship project of the current EU Commission, with an ‘Industrial Deal’ or 'Competitiveness Deal' focusing on the double challenge of keeping the European industry competitive while addressing its decarbonisation needs.
Fortum together with Eurelectric have joined the Antwerp Declaration, which calls for a clear, predictable and sustainable industrial policy to complement the European Green Deal. The declaration, signed by over 1,000 industrial representatives, is now being developed into more concrete policy asks for the next EU legislative period. The Declaration is well aligned with Fortum’s own priorities for the next EU mandate.
The EU Commission has launched a new European Industrial Alliance on Small Modular Reactors (SMR), which aims to accelerate the development, demonstration and deployment of SMRs in Europe by the early 2030s. Fortum has applied to become a member of the SMR alliance. In addition, in the context of the Net Zero Industrial Act, nuclear has been recognised as a strategic net-zero technology contributing to the EU’s decarbonisation target in addition to renewable technologies.
EU 2040 Communication supporting high climate ambition
On 6 February, the Commission published a non-legislative ‘Communication’ on the EU 2040 climate target. The Commission recommends a 90% emission reduction by 2040 compared to 1990 levels and assumes almost full decarbonisation of electricity around 2040 and the share of electricity in final energy consumption to double to about 50%. Renewables and nuclear are expected to generate over 90% of total electricity by 2040. The Commission is proposing an Industrial Deal and assumes industrial emissions to be reduced by approximately 85%. The 2040 target and related legislation will be developed by the new Commission in 2025-26.
Fortum supports the EU’s early action and high ambition to 2040. We welcome that electrification of society through decarbonised electricity is considered a priority and that both nuclear energy and renewable and low-carbon electrolytic hydrogen are acknowledged as key in decarbonisation. The EU 2040 Communication is well aligned with Fortum’s strategy.
Corporate Sustainability Due Diligence directive almost finalised
The Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to adhere to human rights and environmental due diligence obligations in the companies’ own operations and chain of activities, as well as to adopt a climate transition plan. Based on the provisional political agreement in December 2023, member states approved the final text in March 2024 and the Parliament in April 2024. The scope has been reduced compared to the original proposal, resulting in fewer companies being subject to CSDDD. The directive will be applied to large companies (over 5,000 employees and EUR 1,500 million turnover) after three years, and to smaller companies 1–2 years later.
Fortum has supported EU-level CSDDD legislation, which aims to reduce harmful human rights and environmental impacts in global supply chains and create a level playing field for companies in different countries. While the proposal has improved in many aspects during the negotiations, Fortum would have preferred a higher number of companies in the value chain to be included in the scope.
New Swedish energy policy goals and ongoing investigations
On 19 March, the Swedish Government presented its proposal for new energy policy goals facilitating the green transition through fossil-free electrification. The target is to meet a demand of 300 TWh by 2045 in a way that contributes to Sweden's competitiveness. The Swedish TSO, Svenska Kraftnät, is proposed to have the overall responsibility for monitoring the development and taking direct necessary actions.
There are several ongoing government investigations relating to market design, risk sharing for new nuclear, the environmental permitting process and offshore wind. From Fortum’s perspective the market design investigation, covering remuneration of ancillary services and capacity mechanisms, will be crucial in terms of enabling future investments in new power production. The results of the investigation will be presented in April 2025.