Full capacity electricity production will not affect stock exchange price

Lights. Source: Anna Aurelia Minev/ERR

State-owned energy group Eesti Energia has started up all its production capacities due to the increased demand for electricity, but this will not help bring the current extremely high stock exchange prices down.

Eesti Energia spokesperson Priit Luts confirmed that the Narva power plants do not contribute to the formation of the high prices. "Narva power plants have not shaped the stock market price for a long time, because they are not the most expensive production methods on the market. Electricity production from gas has been more expensive than production from coal or oil shale for a long time. Not to mention reserve power plants," Luts said.

The stock exchange price is determined by the capacity offered by all market participants and the price is dictated by the one who is the last to launch its reserves to cover demand.

"We are not an island, the price does not depend on how high a price the plants are producing electricity at for us. Even if we had more production by a half, the price would still not come down, because that electricity is moving elsewhere. We do not create the price. The question is at what price the last [producers added to the grid] will agree to launch their reserves," Luts said.

In addition to oil shale, the more modern Enefit Power plants also use retort gas and waste wood as fuel to reduce CO2 emissions and be more competitive in the market.

Eesti Energia has utilized the entire production capacity of the Narva power plants. Blocks number 3, 4, 5, 6, 8 of Eesti Elektrijaam and block 11 of Balti Elektrijaam are in operation. Of these, block number 3 had been preserved until now, it was put into use on Nov. 25. Block number 4 was connected to the network in September.

"Everything there is is in operation, except for the Auvere power plant, which is expected to return to the market on Dec. 13," Luts said, explaining that the Auvere plant has been out of operation since the end of November due to a failure of the external heat exchanger.

Eesti Energia's plants are operating at a total capacity of almost 900 MW on Monday. Wind farms and cogeneration plants add a pinch of capacity as well. The production volume in Estonia was 1,200 MW at 11 a.m. At the same time, Estonia's demand was 1,500 MW.

Ain Köster, head of communications of transmission system operator (TSO) Elering, told ERR that electricity supply is guaranteed throughout the region, but the price of electricity will start to rise further with the introduction of reserves.

"There is still a small reserve, but it is important to re-establish capacity unused due to emergency or scheduled maintenance, especially in the Baltic countries. Still in reserve are the strategic reserves of Finland and Sweden and the emergency reserves of the Baltic states, but their launch will mean even higher electricity prices than today's peak," Köster said.


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Editor: Kristjan Kallaste

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