Nord Pool curve prices climb as Mind Energy warns market is mispricing El Nino risk

Nord Pool curve prices climb as Mind Energy warns market is mispricing El Nino risk Forward power prices have risen on industrial demand hopes, but analysts say the curve underweights a hydrology shock that could swing Nordic balances. Nordic power curve prices have climbed sharply, and market participants told Montel this week (week of 2026-05-18) the move could signal an expected boost in industrial demand in the years ahead. The question now circulating on desks is whether the rise reflects something real or a crowd leaning the same way.² That matters because the consensus has turned one-directional. Signals tracked across Nord Pool day-ahead are reading bullish at full strength, with no bearish weight on the other side, the kind of positioning that leaves a market exposed if the underlying assumption proves wrong. A curve priced for steady demand growth has little room for a supply shock it has not budgeted for.² Mind Energy's argument, carried by Montel, is that the Nordic market is underestimating El Nino risk. The warning lands against a hydrology backdrop that is already tight. Hydropower reserves in the Nordic region are running at a deficit, and that is the single variable that moves this market more than any other.³ The counter-case is real and worth stating. A sharp increase in renewable energy output across Europe will spur imports and limit the impact of the current hydropower deficit in the Nordic region, analysts told Montel earlier (2026-05-07). More wind and solar capacity on the continent means the Nordics can draw power across interconnectors when their own reservoirs run low, capping the upside that a dry spell would otherwise deliver.³ So the market is pricing two offsetting forces. On one side, a hydro deficit and a hydrology risk that Mind Energy says is being waved away. On the other, a wall of continental renewables that can flow north when prices justify it. Whether imports actually arrive depends on grid availability and on whether the rest of Europe has surplus to spare when the Nordics need it most.³ There is a structural cushion taking shape further out. Germany's plans for 12 GW of new gas-fired capacity, funded by a capacity mechanism, could reduce price spikes in the Nordic power market, Thema Consulting said in a report released on Tuesday (2026-05-19). The effect would be felt most during the tight hours when Nordic prices spike, precisely the moments an El Nino-driven hydro shortfall would expose.¹ But that gas capacity is a plan, not megawatts on the bar. The Thema analysis describes new build still to be commissioned, and the timeline matters more than the headline number. If a dry winter arrives before the German capacity does, the cushion is theoretical and the Nordic curve carries the risk alone.¹ The liquidity picture under all this is thin. Nord Pool said in April (2026-04-16) it was ready to discuss opening the market an hour later than currently, because trading volumes are very low between 08:00 and 09:00 CET. The exchange noted that only around 2% of trades occur in that window. A market that bullish on a single demand thesis, trading in thin conditions, can reprice fast in either direction.⁴ That cuts both ways for anyone positioned on the curve. The same thinness that let prices run on a demand story can unwind them just as quickly if the hydrology call goes against the consensus, or if El Nino fails to deliver the deficit Mind Energy fears. Conviction is high and the float supporting it is low.^4,2 What to watch is the hydrology data and the import path. If Nordic reservoir levels keep sliding while continental renewable output underdelivers, the bullish curve gets its confirmation the hard way. If European wind and solor keep the interconnectors flowing north, the deficit stays contained and the El Nino warning ages into a footnote.³ For now the curve and the warning point in opposite directions. The market has decided demand is rising and priced it. Mind Energy is telling traders they have left a weather variable out of the equation. One of those views is about to get tested against the reservoirs.^2,3