The power market has an advanced trading pattern with many actors involved: system operators, producers, distributors, traders, brokers, clearing companies, financial analysts etc.
360 customers from 20 countries trade in the Nord Pool markets and our customers are typically power producers, suppliers and traders. Large end-users also trade on the markets and buy power directly through Nord Pool rather than through a supplier.
Transmission system operators (TSOs)
A system operator is responsible for an area to be electrically stable, and for the security of supply in his area.
The system operators have the responsibility for both the security of supply and the high-voltage grid (the transmission grid).
There are more than 370 companies responsible for power production in the Nordic and Baltic countries.
In a year with normal rain and snow fall, hydro power accounts for half of the Nordic countries’ electricity demand.
In Norway almost all power is generated by hydro power while Sweden and Finland have a mixture of hydro, nuclear and thermal power (steam driven). Denmark uses predominantly thermal power, but wind power is becoming increasingly important. In Estonia and Lithuania there is mostly thermal driven power. In dry years, Nordic countries become more dependent on the import of power from other countries: Russia, Estonia, Netherlands, Poland and Germany.
Production cost varies. Hydro is the cheapest power source. A low level in the hydro reservoirs will mean producers use more expensive sources which will result in a higher production cost.
There are around 500 distribution companies in the Nordic and Baltic countries.
A distributor ensures that power reaches the end-user. Power is transmitted from the power plant through the central grid and the transmission net to the end-user.
There are around 380 companies supplying Nordic and Baltic end-users of power.
A supplier buys power either directly from a producer, or through Nord Pool. In general, a supplier then resells it to small and medium-sized companies and households.
There is high competition between energy suppliers within each country. Each end-user chooses their preferred supplier and makes a choice between different power contracts. Different types of contracts might be: fixed price contract, market price contract, etc. At present end-users cannot choose a supplier from another country.
A trader represents the entity which owns the power while the trading process is taking place. For example, the trader may buy power from a producer and sell it to a retailer, or the trader may choose to buy power from one retailer and sell it to another retailer. There are many routes from the producer to the end-user.
Brokers play the same role in the power market as estate agents do in the property market. A broker does not own power, but instead acts as an intermediary. A retailer may, for example, ask the broker to find a producer who will sell a given amount of power at a given time.
An end-user of power is either a company or a private household. Every end-user pays for the power consumed to the supplier, he pays for the power transmission to the distributor and he pays taxes. An end-user can choose among a big range of suppliers while he has only one choice with regard to the transmission operator or distributor. Every geographical area has one distributor responsible for the network transmission.