Compared with the first months of summer, electricity prices have started to climb. Last month, electricity cost an average of 3.7 cents per kilowatt-hour. On Thursday, the most expensive time of day was between 9 p.m. and 10 p.m., when the price reached 37.4 cents per kilowatt-hour.

Alo Vallikivi, head of energy products at Enefit, said this is a fairly common occurrence. Cheap electricity from a low-price region is not reaching the more expensive region.

"At the moment, the problem is not in the connection between Estonia and Finland, which is working very well, and the prices in Estonia and Finland are almost identical. Rather, the issue is that cheap electricity produced in northern Sweden is not reaching Finland, as the connections there are disrupted or undergoing regular maintenance," Vallikivi said.

"That is quite a simple and clear explanation for why prices are so high in the evening hours. The cheap resource that should be reaching us — and has in previous months through Finland to Estonia, Latvia, and Lithuania — is currently not getting here," he added.

Weather-dependent

Marko Allikson, a partner at Baltic Energy Partners, pointed out that higher consumption has also pushed up electricity prices. He noted that a lot depends on the weather.

"Favorable wind conditions are what keep our prices close to Finland's. If Finland's prices go up because there is no wind there, or if there is wind in Finland but not here, in both cases, our prices can rise. Generally, during the day our prices are still the same as Finland's, since the connection is large enough and a lot of solar power is produced throughout the Baltics. But it is the evening hours that really go up. As soon as electricity has to be produced from fossil fuels—and usually that means gas—prices clearly rise above 100," Allikson said.

Allikson also noted that this summer, gas storage facilities have filled faster than expected compared to last year. This is despite the European Union easing its gas storage targets to 80 percent, and allowing countries in exceptional cases to meet only three-quarters of the target.

"Despite the fact that this year no natural gas has come through Ukraine, meaning there is significantly less gas coming from Russia overall, gas storage in Europe has filled faster this summer than last year. The levels have been slowly catching up to last year's, although the difference is still large at the moment. Right now, the filling rate is around 71 percent, but if things continue like this, the final result will likely be somewhere between 80 and 90 percent. That's sufficient—meaning that from the standpoint of supply security, we will be well prepared for winter," Allikson said.

--

Follow ERR News on Facebook and Twitter and never miss an update!