The intention of this thesis is, from a basic statistical viewpoint, to capture the relationship between the price of electricity and a sample of factors influencing the price. The thesis also aims at investigating whether knowledge about the relationship is useful when investing on Nord Pool. Tested factors are temperature, import, price of emission rights as well as a number of hydrological factors. The investigated period stretches from year 2000 until week 32 year 2007. The relevance of each factor was also evaluated yearly as well as for shorter periods in order to get a more comprehensive view of the relationship. Because of the volatility of the power market there are good possibilities to profit from investments made, no matter if the intention is to hedge coming power deliveries or if the investment is based on pure speculative intentions. The opportunity for high yield makes the power market very interesting as investment alternative but in comparison to the equity market the power market seems, for non-professional investor, significantly more complex and technically difficult to understand. In order to operate on Nord Pool an investor should have an understanding for the price formation process and which factors that affect the price of electricity on Nord Pool. The relationship between the electricity price and the chosen factors has been evaluated using basic linear-, multiple- and stepwise regression analysis. As a complement to these studies, tests with differentiated variables were also conducted. The investigated factors were selected after the pre-study and discussions with persons working with power trading at Fortum, E.ON and Vattenfall. The data used in the statistical tests consists of mean values from a total of 397 weeks collected from Nord Pool, SMHI and Svensk Energi. The test results show that of the changes in the price of electricity, approximately 50 % can be explained by the given factors during the evaluated time period. The import factor showed the highest determination coefficient with the price of electricity. In many cases the import is needed to cover the Nordic electricity demand and through the marginal pricing model the ...
