Our Energy Q&A is your source to understand key trends in the current market. Our energy experts share their insights and advice on how to navigate the trends and changes.
Q1
Why is the energy market experiencing such significant price volatility?
Frequent price fluctuations in the Nordic energy market have become the 'new normal'. Weather-dependent renewable energy sources such as solar, wind and hydropower make up an increasing share of energy production. As the options for large-scale electricity storage are currently limited, production does not always match daily or seasonal demand, and the resulting imbalance between supply and demand often leads to large price fluctuations.
In addition, uncertainty about future security of supply due to geopolitical conflicts and tensions can push energy prices up or down, with single events in an unstable world often having a noticeable and immediate impact on prices. One example is the sabotage of the Nord Stream gas pipelines in autumn 2022, which sent shockwaves through European gas markets and led to significant price increases.
Q2
What impact does price volatility have on competitiveness?
Failure to actively manage volatility in the energy market – ensuring stability of supply, energy efficiency and budget security in a market with fluctuating prices – can weaken competitiveness.
Price volatility in the energy sector today has the potential to increase a company's financial risks and create significant cost uncertainty in both the short and long term. Unexpected or elevated energy costs for production, heating, and transport can make it difficult to compete with companies that have more stable, proactive, or energy-efficient solutions in place.
Q3
Can you protect yourself against price volatility?
The most effective way to safeguard your business from price volatility is through a well-designed risk management strategy built on several pillars. This includes a diversified procurement approach—combining fixed-price contracts with buying and selling when market conditions are most favourable. Done right, it can reduce both risk and your average cost, especially if the strategy is supported by real-time monitoring and AI-driven forecasting, which makes it easier and more efficient to respond to market movements.
With Demand Response, you can adjust your consumption based on price levels. This requires an analysis of your production processes to identify where and when you can shift or reduce usage from expensive hours to cheaper ones. PPAs (Power Purchase Agreements) can also provide long-term, stable prices for renewable energy while supporting both your company’s own transition and the broader shift towards sustainable energy.
Q4
Is price volatility in the energy market here to stay?
In the coming decades, the energy market will continue to be marked by significant price volatility, driven primarily by ongoing electrification aimed at greater sustainability and, ideally, climate neutrality. The industry association Eurelectric estimates that Europe’s electrification rate must rise from today’s 23% of total energy consumption to 35% by 2030 and 50–70% by 2050 in order to reach climate neutrality.
Advances in battery technology and the expansion of Power-to-X facilities - which enable the storage of solar, wind, and hydropower, for example by converting it into hydrogen - will gradually mature the market and help smooth out volatility. Until that happens, however, the market will remain vulnerable, particularly to weather fluctuations. Companies that invest early in energy flexibility, AI-driven digital management tools, and strategic energy advisory/market monitoring will be best positioned to turn increased electrification into a competitive advantage through proactive energy management.
Q5
How can energy price volatility be turned into a strategic advantage?
A strong risk and portfolio management is essential for navigating energy market volatility, enabling your organisation to not only withstand major price swings, but to turn them into strategic opportunities, and in some cases, additional revenue. This approach allows you to actively capitalise on market dynamics rather than passively accepting the prevailing daily or hourly rates.
At Mind Energy, we understand how each company can best capitalise on current and future price volatility to make it a unique strategic advantage rather than a source of uncertainty. Fortunately, there are many options. Our specialists in market trends, meteorology, digitalisation, and data translate insights into actionable advice and concrete recommendations – giving you a solid foundation for decisions that support your growth goals, risk profile, and sustainable green transition.
