How Nord Pool Works — Merit-Order, Marginal Power Plants, and Negative Pricing
In Nord Pool's electricity exchange, prices are set hourly (or every 15 minutes from 2025 onwards) using the merit-order principle. The price of the most expensive power plant still needed to meet demand—the marginal power plant—becomes the price for all electricity sold at that moment. Surprisingly, it's rarely nuclear power, despite producing a quarter of Finland's electricity. It's usually natural gas or biomass.
Merit-order is the foundation of electricity markets. It means that on the exchange, sellers offer power from cheapest to most expensive—a nuclear plant bids low, a gas plant bids high. Buyers (grid operators, large industries) want cheap electricity. Nord Pool matches supply and demand so that each hour's (or 15-minute period's) price is determined where the supply and demand curves meet. That price point belongs to some power plant: the most expensive one still needed to meet consumption. This is the marginal power plant, and its price becomes everyone's price.
This leads to a counterintuitive conclusion that surprises many: even though nuclear produces a quarter of Finland's power and hydropower generates cheaply, neither sets the price. The price is set by whatever plant is most expensive at that moment. On expensive days, it's natural gas or biomass. With wind blowing at night, it can be worthless—and when wind generates more than demand, the price goes negative.
Merit-order in Practice: The Curve and Marginal Price
Imagine electricity supplied to Finland in this order:
- Nuclear plants (OL1, OL2, OL3): 1,000 MW at 2 €/MWh
- Hydropower: 600 MW at 3 €/MWh
- Wind: 600 MW at 5 €/MWh (variable, often zero or negative)
- Biomass: 400 MW at 25 €/MWh
- Natural gas: 300 MW at 60 €/MWh
- Oil/peaks: 100 MW at 150 €/MWh
On Friday afternoon, demand is 2,400 MW. Nord Pool's day-ahead clearing buys supply from bottom up: all nuclear (1,000 MW), then hydropower (600 MW), then wind (600 MW), then biomass (200 MW out of 400 MW capacity). The last supply needed is 200 MW of biomass at 25 €/MWh. All remaining power, including nuclear, sells at 25 €/MWh because 200 MW of biomass was the marginal plant.
Saturday night, wind blows strongly (800 MW) and industry is offline. Demand is just 800 MW. Only nuclear and wind are needed. Wind bids at -5 €/MWh (paying for someone to take the power away). Nord Pool's marginal price is negative. Producers pay for someone to accept their electricity—because electricity cannot be stored and must be generated.
Finnish Data 2025–2026: Power Plants and Quarter-Hour Pricing
Finland currently has approximately 190 individual production units according to Fingrid statistics, mostly small. Significant ones include:
- Nuclear power (OL1, OL2, OL3): approximately 4,400 MW total, averaging 17% of Finland's electricity production in 2025
- Hydropower: approximately 3,200 MW, 8–14% (dependent on water levels)
- Wind: approximately 9,433 MW in 2025 (more than nuclear, but variable)
- Biomass/waste: approximately 2,600 MW
- Natural gas and oil: approximately 1,300 MW combined
Recent electricity prices have been analyzed by Datahub, which operates Finland's central register of all grid electricity trading since 2022. Datahub transitioned to 15-minute measurement October 1, 2025, making marginal plants more visible.
In 2025, on Finland's FI price region, Nord Pool statistics show that natural gas set the margin in approximately 60–70% of expensive hours (winter afternoons and evenings). About 447 hours per year had negative pricing, mainly during wind and hydropower peaks at night or in spring. These hours don't appear in the average (2025 FI average was roughly 47 EUR/MWh), but they exist.
Common Questions: Why Negative Price with Wind?
"How can electricity price go negative? Someone still sells cheaply and it becomes minus?"
Finnish online forum user, electricity discussion, 2025
Negative pricing happens because electricity cannot be stored. When a wind farm generates 500 MW at night and demand is only 400 MW, 100 MW sits unused. The producer can either shut down turbines (expensive) or pay someone to take the power. It's like a farmer with 100 tons of potatoes at a market closing time—they pay someone to haul them away. Price goes negative.
Negative pricing benefits spot-price customers who can time that hour. Electric vehicle owners who identify negative hours and charge then save substantially. Households with smart heat pumps can do the same.
Can Each Power Plant "Set Prices" to Its Advantage?
No, and it wouldn't be rational anyway. Nord Pool is structured so each producer bids their price without knowing others' bids in advance. Settlement is entirely mathematical: the highest accepted buy bid sets the margin. A single plant cannot bid above the margin because it simply won't sell.
The exception is market power cases, where a single producer controls supply. These have been rare in Finland, but hydropower-heavy companies can influence prices during long droughts. The Finnish Energy Authority monitors these.
15-Minute Pricing Makes the Merit-Order Curve Visible
Before October 2025, billing was hourly. The marginal plant might change every 15 minutes, but that was hidden in the hourly average. Now, with quarter-hour billing (from October 1, 2025 onwards), each 15-minute period shows the true marginal price at that moment. A wind gust or consumption spike shows in 15-minute resolution.
This is healthier for markets: consumers see clearly when power is cheap or expensive and can react. For producers, it means volatility is more visible—but the market also becomes more liquid as price signals are clearer.
Example: Winter Friday Evening vs. Windy Saturday Night
A family's electric car and heat pump charge optimally. Consider two scenarios from Q1 2026.
| Scenario | Time | Wind + Demand | Margin | Price (excl. tax) |
|---|---|---|---|---|
| Friday evening | 5:00–6:00 PM (4 quarters) | Weak wind, demand spikes | Natural gas | 45–52 ¢/kWh |
| Saturday night | 3:00–4:00 AM (4 quarters) | Strong wind, low demand | Wind or negative | -5–2 ¢/kWh |
The car charges 40 kWh. Friday evening at 50 ¢/kWh × 40 = €20. Saturday night at 0.5 ¢/kWh × 40 = €0.20. The difference is €19.80. This is the merit-order principle made tangible: the marginal power plant determines everything.
My Take: Electricity Price Is Political, But Merit-Order Is Economic Reality
Politicians often say "we cannot control electricity price" or "EU rules force us." Partially true. Merit-order is market economics and cannot be "bypassed" without large costs. But what energy sets the margin—renewable versus fossil fuels—is a choice. To prevent biomass or gas from setting expensive prices requires more nuclear and wind plus energy storage or consumption flexibility. Finland is fortunate: nuclear is cheap, hydropower has reservoirs, and wind capacity is growing.
For consumers, the key variable isn't fuel type but which plant sets the margin each hour. This is increasingly natural gas or biomass—and quite regularly wind at night, meaning negative or very low prices.
Sources
- Nord Pool: Day-ahead market — settlement methodology (Tier A)
- Fingrid: Electricity system status and production capacity — nuclear, wind, hydropower 2025 (Tier A)
- Datahub: Finland's electricity market central register, 15-minute measurement from Oct 1, 2025 (Tier A)
- Finnish Energy Authority: Electricity market statistics and market power monitoring (Tier A)
- Fingrid: Datahub — implementation of 15-minute measurement data (Tier A)
- Nord Pool: Historical price data for FI region, 2025 average 47 EUR/MWh (Tier A)
- VTT: Merit-order and spot electricity markets, research platform (Tier B)
- Fortum: Spot electricity and negative hours — customer information 2025 (Tier B)