Elering, Eesti Energia draw different conclusion on electricity price surge

High-voltage power lines. Photo is illustrative. Source: Elering

Last week's peak electricity prices of €255 per megawatt hour (Mwh) were unusual but not without precedent, grid operator Elering says, adding that more fluctuations can be expected in future – and these can even be of benefit to industry. On the other hand, state-owned energy generator Eesti Energia disagrees with Elering that Estonia's energy security is assured, with supplies guaranteed to 2025, noting the country's high levels of energy dependence on outside supplier countries and the vulnerability of these connections.

As reported on ERR News, a surge in electricity prices last Wednesday saw figures of €255 per Mwh for a few hours.

As of Monday, however, the price had fallen to €40 per Mwh, ERR's online news in Estonian reports.

A result of the availability of hydro-electric power (which in turn is affected by reservoir water levels), the price of CO2, and power outages and scheduled maintenance as well as the laws of supply and demand, were all factors, but last Wednesday's high was mainly the result of the failure of the NordBalt undersea cable linking Lithuania to Sweden, and power failures in Riga, but maintenance on the Estlink 1 cable between Finland and Estonia, and power failures in Estonia, were also factors, grid distributor Elering's communications manager Ain Köster told ERR.

"Last week, EstLink 1 was under maintenance, which has now ended. NordBalt was in an emergency. For example, the Auvere power plant has been experiencing issues," Köster said.

The NordBalt link is due to recommence normal operations today, Tuesday.

According to Köster, such major fluctuations are not without precedent, however.

Köster said that prices of over €200 per Mwh for a few hours' stretch at a time were seen last year and the year before, though the highest level for 2017 was €120 per Mwh, he said.

Spring generally has seen quite low electricity prices, he noted.

Elering and Eesti Energia have different perceptions on security of supply

While full protection is not possible, Estonia has th necessary reserves in the event of crises, Elering says, including it's 250 MW emergency reserve power plants in Kiisa, Saku municipality, near Tallinn.

Lithuania and Latvia also have reserves, including hydro-electric power stations, and since Estonia is plugged into the Russian and Belarusian grid system still, electricity from these states is also an option, as is that from nations as far afield as Portugal.

Estonian power plants' reliability issues

Ain Köster said Estonian power plants' reliability is clearly lower than that of international connections.

"The utilization of the two EstLink [international] cables has typically been at the level of 95 to 98 percent per year. The comparable indicator of power plants is clearly lower than this level," he said.

Andres Tropp of state-owned energy producer Eesti Energia concurred, saying that cross border connections were more-or-less at 100 percent reliability, at least with submarine cables, compared with 80-90 percent for domestic power plants.

With Auvere, there had been annual maintenance going on from May to June, which did not unduly affect prices other right at the beginning of the work.

However, Tropp did not agree with Elering that electricity supply security is guaranteed in Estonia, noting that one cross-border connection loss as experienced recently has already significantly impacted the entire sector.

"It is common knowledge that the security of supply margin in both the Estonian electricity system and neighboring electricity systems has fallen rapidly in recent years," he said.

This is also reflected by the fact that whereas Sweden has a small deficit in its electricity trade (i.e. has to import slightly more than it produces at times), and Finland's stands around 15-20 percent per year, in the Baltic States this figure can be around 60-70 percent dependence on imported electricity, for stretches of a few hours.

"Nevertheless, the Estonian system operator (i.e. Elering - ed.) Is convinced that the flawless operation of the electricity system is guaranteed at least until 2025," said Tropp.

Tropp said that unlike with Elering, Lithuania's system operator has started to support the introduction of a capacity mechanism in the Baltic States which would bring hundreds of megawatts of new managed capacity to the market, in order to ensure security.

"At the moment, it is difficult to say who is right. Perhaps the regional production adequacy report to be published in the autumn will provide more clarity," Tropp said.

"However, given the circumstances, there is reason to keep a close eye on security of supply indicators," he went on.

Industrial consumers of electricity beset with problems

As well as affecting domestic consumers, short stints of very high prices affect industry. One example of this was Kunda-based pulpwood producer Estonian Cell, whose spokesperson Siiri Lahe said that they had had to ride out the peak since closing a large factory that quickly is not an option.

"It is not possible to sell the products produced during these hours profitably. As a 24/7 plant cannot be stopped or started a the flick of a switch, we also take into account this when making management decisions," she noted, adding that an agreement is being reached with their supplier on solutions for temporarily weathering sudden rises.

Ain Köster said more fluctuations are likely in future, and are part and parcel of the market in other countries – notably in Denmark, which actually experienced negative electricity prices at one time.

"There is much more flexibility in the electricity market of the future than now," he said, adding that industry can benefit from this.


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Editor: Andrew Whyte

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