Find Finland's Cheapest Spot-Price Electricity Contract
In other Nordic countries, spot-price contracts are traditionally a more popular option. For example in Sweden 54% and in Norway as many as 96% of consumers choose spot-price electricity when changing electricity contracts.
Cheapest spot price contract
Spot contract pricing - How does spot contract work?
Stock exchange electricity means the purchase of electricity from the electricity exchange, where the price of electricity is determined based on supply and demand. Electricity exchanges are open marketplaces where electricity producers and buyers can trade.
The price of exchange electricity varies constantly. In the pricing of exchange electricity, spot pricing is followed, which is based on the hourly prices determined by the electricity exchange. The spot price is determined based on supply and demand. In addition to this, the price of the exchange electricity contract is also affected by the electricity transfer price, electricity tax and other possible fees.
The price of stock electricity can vary significantly at different times depending on the day, week and year. For example, the demand for electricity in Finland is highest on cold winter mornings, when the price can be high. Similarly, on sunny and windy days, when the production of renewable energy is high, the price of electricity can be very low.
Some electricity providers, such as Fortum, offer price guarantees as additional services, with which you can lock in the price of electricity on the exchange for a certain period of time. The price guarantee reduces the price risk that is included in even the cheapest exchange electricity contracts.
Nordpool electricity exchange
The Nordpool electricity exchange is the basis of the Nordic and Baltic exchange electricity contracts, where hourly electricity prices are determined according to supply and demand. In the exchange, electricity sellers, i.e. producers, and electricity buyers, i.e. sales companies, agree on electricity prices for each hour, so that the price is up-to-date and in line with the market.
Electricity exchanges are important actors in the energy market because they enable the electricity price to be flexible according to the market situation. They also promote competition and efficiency in the electricity market.
- On a daily basis: The price of electricity is affected by demand fluctuations at different times of the day. Electricity usage is at its peak in the evenings, when prices rise. At night, the demand for electricity is lower and the exchange price is cheaper.
- Annually: Climate and weather conditions are factors that affect electricity price changes. For example, on freezing days, the demand for electric heating increases, which leads to an increase in the price of electricity.
- In the broader picture, both inflation, Finland's energy trade and world politics affect the price of electricity on the exchange.
Electricity companies try to evaluate the electricity price development and price the fixed-term electricity contracts accordingly. The customer who chooses the exchange electricity contract bears the risk of the electricity price increase, but also benefits from price reductions.
Spot price electricity- how is the price formed?
In exchange electricity contracts, you pay the energy price in addition to the basic monthly fee. The basic fee is currently between 4.5 and 6 euros for most of the electricity companies. The energy price portion, on the other hand, is calculated based on electricity consumption and the corresponding electricity exchange spot price. In addition to these, the price includes a margin per kwh and value added tax.
Spot price contract for a business
You can find exchange electricity for your company with our help. Right now, the best exchange electricity for the company is Fortum Tarkka. Fortum also offers the most affordable fixed-term electricity contract for a company, Fortum Varma.
Is spot price contract a good deal in 2023?
At the moment, exchange electricity is worth it. The price of electricity on the exchange is now low, and the electricity companies have not reduced the price of fixed-term electricity contracts at the same pace, so that we would recommend it. However, if you estimate that the price of electricity will skyrocket like last year's fall, a fixed-term electricity contract may be a good choice. Exchange electricity is worthwhile if you want to actively pay attention to electricity consumption.
To whom is a spot contract not suitable?
If you don't have a problem with committing, and if you get tired of being charged and you want to lock in the same price for a year or two, exchange electricity is not the best choice for you. Then choose a fixed-term electricity contract. Note, however, that it binds you for a longer period of time, unless you are prepared to pay a contract penalty, which varies in size, but will definitely feel in your wallet. Termination of the exchange electricity contract usually takes effect within two weeks. That is why it is also known as an open-ended electricity contract.
Pros & cons of a spot price contract
Exchange electricity can offer significant savings, but its downside is the unpredictability caused by price fluctuations. You should weigh the advantages and disadvantages according to your own situation and needs before choosing a stock exchange electricity contract.
Spot price contract in the future
Innovative solutions and more sustainable energy
In the future, the exchange-traded electricity market will probably develop even more dynamically, and new energy sources and smart solutions can significantly change the structure of the electricity market.
Renewable energy sources and decentralized energy production.
One of the most significant changes in the exchange electricity market is the shift away from fossil fuels towards renewable energy sources such as solar, wind and hydropower. Decentralized energy production, where energy is produced from smaller, local sources, will probably become more common, which can increase the price fluctuations of stock exchange electricity, but at the same time also improve the security of energy supply and reduce dependence on centralized power plants.
Smart exchange electricity grids and energy storage
The future electricity market will make even more use of intelligent electricity networks, which are better able to balance the demand and supply of electricity in real time. Energy storage solutions, such as the development of battery technology, will play a central role in improving the functionality and stability of the electricity market, especially when an increasingly large part of electricity production is based on weather-dependent renewable energy sources.
Exchange electricity demand vs. supply
In the electricity market of the future, consumers can be even more active players who participate in balancing the electricity market, for example by reacting to price signals and adjusting their own electricity consumption. An increase in demand flexibility can help smooth out price fluctuations in the electricity market.
5 tips for choosing spot-price contract
Compare different electricity companies: Get to know the exchange electricity contracts offered by different electricity companies and choose one that meets your needs and wishes. Pay attention to the contract terms, reviews, service level, and customer support.
Add a fixed-price portion to the contract: In some cases, it may make sense to also include a fixed-price portion in the exchange electricity contract, which covers e.g. transfer fees or basic fees (such as Fortum Price Guarantee).
Follow weather forecasts: Weather conditions affect the formation of electricity prices, so following weather forecasts can help you understand when the price of electricity may be higher or lower.
Energy saving: Purchasing electricity from the exchange encourages energy saving, because price fluctuations make electricity consumption more cost-effective. Try to find ways to reduce electricity consumption at home and at work, for example by turning off devices when not in use.
Use smart devices and apps: Smart home devices, such as thermostats, lighting systems and energy management apps , can help monitor and manage electricity consumption in real time. Estimate your electricity consumption: Keep in mind that exchange electricity is not necessarily the best option for everyone. If your electricity consumption is relatively constant and you want to avoid the uncertainty caused by price fluctuations, a fixed-price electricity contract may be a better option.
FAQ
When is spot price the cheapest?
The price of electricity on the exchange constantly varies based on market conditions, supply and demand. Therefore, it is not possible to determine the time and day of the cheapest exchange electricity in advance. The price of electricity on the exchange is made up of trades carried out on the stock exchange and depends, for example, on the amount of electricity production, the need for control power, the availability of renewable energy and the amount of consumption.
Which spot price contract should I choose?
At the moment, you should take Fortum Tarkka. It is the cheapest exchange electricity contract right now. Fortum is a reliable domestic electricity company. However, the price of exchange electricity changes all the time, so we cannot guarantee that it will be the best option in the future.
How is the electricity spot price calculated?
The price of stock electricity is determined on the basis of trades carried out on the electricity exchange. The electricity exchange functions as a marketplace where electricity producers and consumers can buy and sell electricity. The price of exchange electricity is usually calculated on an hourly basis. Each hour has its own price, which is based on the balance of supply and demand at that moment. Continuous trading takes place on the electricity exchange, and the price is formed through trades.
Is spot price the same for everyone?
Exchange electricity is not the same for everyone, but its price can vary in different market areas and at different times. Exchange electricity can be bought in several markets, such as Nord Pool Spot Europe, EPEX SPOT in Germany and MWh in the Baltics. These markets serve different regions and may have their own price dynamics. In Finland, there is a difference between the electricity companies in the basic charges in exchange electricity contracts.
Is a spot price contract risky?
Exchange electricity is associated with certain risks that should be taken into account:
1) Risk of price fluctuations: The price of electricity on the exchange is constantly fluctuating based on market conditions, supply and demand. This means that the price can rise or fall quickly, which can affect the electricity bill.
2) Market risk: Exchange electricity is based on trades carried out on the electricity exchange. Market risk can cause sudden changes in prices as a result of the economy, political decisions or environmental factors.
3) Contract and credit risk: Buying electricity on the exchange may require contracts and credit agreements with electricity companies. Contractual and credit risks can arise if the party does not fulfill its obligations.
Teemu Pesonen
Teemu Pesonen is one of the founding members of Sähkösopimukset.com and a platform technology professional with over 10 years of experience. His goal is to build the best comparison website for electricity contracts in Finland - not more than that.
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