Wind power impact on market power on the Finnish electricity market

Finland has together with the Nordic countries been a forerunner in the deregulation of its electricity markets. From 2011 onwards, Finland has experienced a remarkable increase in wind power, with numerous small wind power companies entering the market, and the trend is continuing. Wind power, and its rapid growth, affects the competition on the deregulated market, and thus the potential for market power. Therefore, the impact of wind power on market power potential on the Finnish electricity market is studied in this contribution. To analyse the market power potential, the Herfindahl-Hirschman-index and the Lerner index are used. The HHI shows an increasingly unconcentrated market with more integration of wind power between 2005 and 2018. The Lerner index is strongly dependent on the spot price, but the impact of wind power can be seen as a weak trend towards less market power potential with more wind power production.