Exchange electricity price
Exchange electricity is the cheapest for many households in the long term electricity contract Type. In 2020, the average price of electricity on the exchange was 3.47 cents/kwh + electricity company margin. However, exchange-traded electricity is fundamentally different from fixed-price electricity contracts in terms of price volatility - price fluctuations in the short term can be large, although in the long term, exchange-traded electricity has been proven to be the cheapest type of electricity contract.
In the summer of 2021, electricity prices have reached record lows. Electricity has cost up to more than 16 cents/kWh on some days in July, which is exceptionally expensive compared to previous years. Normally, exchange electricity has not been this expensive, even on winter days.
Indeed, the rise in electricity prices on the stock exchange has already had an impact on the prices of general electricity contracts. In late spring 2021, electricity was still available for less than 5 cents/kWh for the whole contract period on a 24-month contract, but the situation is different now. Short, 3-month contracts are available our comparison but still below 5 cents/kWh.
How is the price of electricity determined?
The final price of electricity on the exchange is the sum of three different components: the spot price of electricity, the electricity company's margin and the electricity company's fixed monthly fee.
Nord Pool spot price
The spot price of electricity on the electricity exchanges is the main factor affecting the price of electricity. The spot price is the hourly exchange price in the Finnish price zone of the Nord Pool electricity exchange, i.e. the price at which electricity companies buy electricity from Nord Pool. The spot price of electricity on the exchange is affected by weather, rainfall and water resources (for hydroelectric power generation) and disruptions to electricity generation or transmission. All of these affect the demand or supply of electricity, which determines the price on the Finnish exchange.
Monthly averages of spot prices (cents/kWh, incl. VAT)
Electricity company margin
The price paid by the customer for exchange electricity is of course also affected by the exchange electricity margin. For exchange-traded electricity, the price of the electricity contract is determined as the sum of the spot price, the electricity company's margin and the electricity company's fixed monthly price. The margin is simply the proportion that the electricity company adds to the spot price.
The electricity company's margin on exchange-traded electricity contracts is usually around 0.15 - 0.4 cents / kwh, depending on the company and the contract.
Fixed monthly fee from the electricity company
In addition to the margin, exchange-traded electricity contracts often include a fixed monthly fee, which is not dependent on the amount of electricity consumed. The monthly fee is usually around €3.5-5/month.
The cheapest exchange traded electricity contract in our comparison
Currently, the cheapest exchange-traded electricity contract in our comparison is Lumo Energy Hourly Spot. The low margin on the contract and the low monthly fee ensure that you don't have to pay too much for electricity from the exchange.
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Lumo Energy Hourly Spot
How much can the price of electricity on the exchange fluctuate?
In a stock market environment, price fluctuations can be large in the short term. Therefore, a household using electricity from exchanges should be prepared for large fluctuations in the size of electricity bills if it consumes a lot of electricity.
Spot price - large fluctuations
Prices on the electricity exchange can vary significantly - in summer, electricity can be almost free at night, while on a winter's day, when it is freezing cold, prices can be several times higher than the average price. Electricity prices on the exchange also fluctuate significantly over the long term - below is a list of average prices over the past few years.
2018 - 5,80 snt/kWh
2019 - 5,46 snt/kWh
2020 - 3,47 snt/kWh
1/2021 – 6/2021 - 5,90 snt/kWh
Electricity company margin
The margin varies slightly between companies - usually the fixed monthly fee for exchange electricity is around €3.5-5/month.
Is exchange electricity the cheapest electricity contract?
In terms of accounting, exchange electricity has been the cheapest electricity contract in the long term in many locations. However, in general, exchange-traded electricity is not the cheapest type of contract for apartment buildings with low electricity consumption. This is due to the fixed monthly fee for exchange-type electricity contracts; for low-consumption properties, the cheapest option overall is the no monthly fee electricity contract, although the price of electricity is often slightly higher for this type of contract.
Electrically heated detached houses - electricity from the exchange often the cheapest
The electrically heated detached house is by far the most electricity-consuming type of housing among households. An electrically heated detached house can consume around 20 000 kWh of electricity per year. In many cases, electricity from exchanges is the cheapest option, as the average price is almost always cheaper in the long run than fixed-price contracts. For example, a difference of 1 cent/kWh in the price of electricity would already save €200 for such a site.
Easily compare the cheapest type of contract
It is worth tendering for electricity on a regular basis to avoid unnecessarily high costs for your own contract. You can compare electricity contract prices on our website comparison tool quickly and easily, and the table shows you how the monthly contract price and margin affect the annual electricity price for different consumption levels.
The tool uses the average price of the previous year in the calculation formula for electricity on the exchange, so the actual price of the contract may vary depending on the fluctuations of the spot price on the exchange. The final amount to be paid for electricity is made up not only of the electricity price but also of the transmission price and electricity tax, which cannot be tendered. However, these make up a significant proportion of the final electricity price, so someone considering a detached house, for example, should include the transmission price and electricity tax in the final price.