Today's record high electricity stock exchange price is due to a number of factors coinciding at the same time and all options to increase imports are exhausted, Nord Pool said on Tuesday.
This evening between 6 p.m. and 7 p.m. Estonia, Latvia and Lithuania's stock exchange electricity price will hit €4,000 — shattering previous records.
Currently supply is weak in the Baltics and import capacity from Finland, Sweden and Poland has been exhausted, Ingrid Arus, regional manager of Nord Pool Baltics, told ERR.
But this is still not enough and demand is outstripping supply.
"In this case, the two curves do not intersect and the market price is at a maximum," she said.
Asked if similar prices will become more frequent in the coming months, Arus said the reasons for the price hikes need to be understood.
"In Estonia, a very big part of the Narva power plant blocks are being repaired. They should come online this week, one on Thursday and two new blocks next week, then the situation will be much better,' she said.
Latvia relies on hydropower but as Europe is suffering from a drought, reservoir reserves are low and production has decreased. There has also been little wind this summer and gas is likely being stored for the winter period, Arus explained the reasons behind the new prices.
"So in this hour, everything that could affect the situation has happened," she said, explaining today's record.
Arus told ERR on Wednesday that the lack of supply does not mean customers will be left without electricity.
The day-ahead market, whose prices are reported by Nord Pool, is only one part of the market. When it closes, energy moves onto other markets where it can continue to be traded, she said.
Former minister: Electricity exchange has collapsed
Former Economic Affairs Minister Taavi Aas (Center) said the record prices show the system is not working and that the electricity exchange has collapsed.
We cannot keep hoping this is an anomaly, he said, adding when there is a production deficit records will be frequently broken.
"The government must immediately convene an emergency crisis session and apply last winter's support measures which provided relief for families and businesses. We do not have time to wait for electricity market reform, people need help from the state right now," he said.
The Center Party MP said Prime Minister Kaja Kallas (Reform) must explain why things are not working and why supply is not meeting demand.
"In Estonia, inflation has been over 20 percent for three months, many businesses have already announced layoffs and several are considering declaring bankruptcy. I would like to remind you that it is still summer, but the heating season will soon start and then the impact of high electricity prices will be significantly greater," Aas said.
Prices will continue to rise
Nord Pool's price ceiling rose to €4,000 per megawatt-hour for the first time in May this year, rising from €3,000.
The maximum price must be increased if it exceeds 60 percent of the maximum rate in a pricing area, EU regulations state. However, the new automatic price rate is delayed and takes five weeks to kick-in on the stock market.
This means, five weeks from now, the rate is likely to rise again to €5,000 to reflect current prices.
However, Nord Pool's Arus is optimistic that relief is at hand.
"I hope that if the shale plants start now it can [bring] a lot of relief. Today, there is 160 megawatts of throughput capacity reduction between Finland and Estonia, a little less [power] comes in at peak also between Sweden and Lithuania. Looking at bids for today and demand curves for tomorrow, the deficit was not great. If these restrictions disappear, the situation will be much better," she said.
Narva power station planned long in advance
Andres Vainola, chairman of the board of Enefit Power, said problems with managed production capacity are occurring across the three Baltic states, not just in Estonia.
"For some reason, the gas power plants located in the Baltic countries have not made their offers to the market. This is a total of almost 2,000 MW of capacity," he said. "External connections are at maximum load at the same time."
Vainola said maintenance work at power plants in Narva has been planned long in advance and the market made aware.
"This kind of work is done in the summer, that is, in a period of lower consumption, in order to prepare the power plants for the period of higher demand in autumn and winter," he explained.
He said three oil shale plants are currently working and maintenance work at the Auvere plant will end in the coming days.
Customers using a fixed rate electricity package will not be affected by today's high prices.
Editor: Helen Wright