US power traders may be rushing to close short positions, but across the Atlantic some players are only just learning to love risk taking. One of the biggest market mania indicators yet has come not from the mega deals of August – Suez Lyonnaise’s bid for Tractebel and AES’s acquisition of Drax in the UK – but from a potential deal in the Nordic region. Forestry giant StoraEnso announced it will sell half of its Finnish and Swedish power assets after building them up for decades to ensure one of its chief costs – power – was largely under its own control.

StoraEnso is not pledging full confidence in a cheap competitive market. It will only sell external interests and keep its mills’ power plants, but its power self-sufficiency will fall from 90 to 40 per cent. StoraEnso consumed 19.4 TWh in 1998, 5.7 per cent of Nordic consumption. Consumption and national shares in Sweden and Finland were 6.5 TWh/5 per cent and 8 TWh/10.9 per cent, respectively.

Why is StoraEnso so confident? In the short term, the Nordic region is a power buyer’s paradise. Nord Pool prices hit new lows this summer that industry in the rest of Europe and most of the US can only envy. The long term outlook is hazier, but a good case can be made for betting on continued low prices. Remaining Swedish reactors may stay on line for decades after (or even if?) Barsebäck 1 is sacrificed to the greens, reducing supply concerns that the Swedish nuclear debate has raised. In Finland, supply security is taken so seriously that the country may build a fifth reactor. If it can deliver power at rock-bottom prices, like the Olkiluoto nuclear plant that StoraEnso has an 11.3 per cent stake in, the project is a real possibility, not an underemployed nuclear engineer’s daydream.

Cross-border rivalry may intensify. StoraEnso hints it will use its strong position: “The energy market and thus StoraEnso would benefit if big international energy companies gained synergies by expanding their international network of assets.” StoraEnso’s CEO says weight will be thrown around: “We are an attractive customer for a power company and will be able to conclude economic power supply arrangements.” But what if StoraEnso is wrong? Will utility consolidation, green limits on capacity expansion, and rising export demands (new cables to the high priced thermal markets of the Continent are all the rage) combine to send Nordic power prices soaring? The stakes are very high. StoraEnso is not the first or the last Nordic industrial player to decide to sell power assets. Surely swathes of industrial generation capacity on the Continent could be auctioned off in the years ahead, as power markets there catch up with trends in the advanced Nordic market. Will power traders offer industry the risk management services it might sorely need one day? Or will the merger-mad utilities finally seek and secure revenge for the market beating they are enduring today?