Cloudberry Annual report 2021 Introduction 16 Market and power prices In our view, the demand for clean renewable power in Europe will continue to increase. Businesses are seeking clean energy sources and shifting their strategies towards net-zero carbon emissions, while regulators are speeding up decision making with stricter penalties for emissions. During 2021, we saw an increase of corporates seeking PPAs to cover their own electrical supply. We expect a further increase in the coming years. The war in Ukraine may cause long term effects and changes to the European energy markets. During 2021, Europe, and the Nordics, saw record high power prices, primarily driven by soaring gas prices. A doubling of the CO2 prices, little rain in Norway and less-than-normal wind across Europe drove the prices further up. For the year 2021, the Nordic System price ended at above 62 euro/MWh, the highest ever recorded price. For NO1, NO2 and NO5, the average price for 2021 ended at approximately 75 euro/MWh. However, the internal price difference in Norway were at record levels: In Northern Norway, the average price ended at 35 euro/MWh. Similarly, prices in Southern Sweden (80 euro/MWh) were twice the average price in Northern Sweden (42,5 euro/MWh) for the year. We expect the internal price differences to sustain, although at lower, relative levels in the medium to short term. At long term, additional grid development (such as the upgrade of the 300 kV Aurland-Sogndal line to 420 kV), will reduce the bottleneck between the Norwegian price areas NO3 and NO5. Going forward, we expect the high gas- and CO2-prices to keep the prices higher than normal in especially NO1, NO2 and NO5 in 2022. Morethan-usual rain during the spring/summer/autumn seasons might change the outlook. During 2021, about 90% of Cloudberry’s power sale was sold at spot prices. So far in 2022, 100% of Cloudberry’s power production is exposed to spot prices. We remain positive to Nordic power prices, especially in the southern price areas in Sweden (SE3+4) and Norway (NO1+2+5). However, the Company is actively pursuing opportunities, primarily with corporate off-takers. On 24 February 2022, Russia attacked Ukraine. Russia, as the largest exporter of natural gas to Europe, has since been the subject of heavy sanctions. The Nord Stream 2, a gas pipeline between Russia and Germany has been abandoned, and the EU has put forward plans to cut all imports of Russian gas as soon as possible. The results have been record high gas- and power prices in the first quarter of 2022, and on the front of the price curve. The outlook is heavily influenced by the (at the time of writing) ongoing war, with high energy prices, high volatility, and uncertainty.
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