No violation of market rules were involved in the €4,000-per-megawatt hour price of electricity experienced in mid-August, the Comeptition Authority (Konkurentsiamet) says, adding that the electricity trading marketplace, the Nord Pool exchange, needs increased flexibility.
Competition Authority Director Evelin Pärn-Lee, said: "The electricity exchange flexibility needs to be increased, while Nord Pool must adapt its processes and offer products in such a way that they fit our local circumstances," following publication of the report.
This would head off a potential repeat of €4,000-per-MWh electricity prices in future; in fact since this figure is the maximum which was permissible at the time under European Commission regulations, while at the same time reaching the ceiling automatically raises it, the theoretical maximum now is €5,000 per MWh.
The report covered electricity prices as quoted on the Nord Pool exchange for Estonia, and also Latvia and Lithuania, with reference to the €4,000 price (plus VAT) posted during one daytime hour on August 17 this year, and finds that the price was the result of a perfect storm of various factors along with "peculiarities arising from the small size of the Baltic market."
The Competition Authority says it is important that, in the event of risk of other soaring price levels returning, bid lists are reopened, which would allow the possibility for market participants to change their production bids.
The prime minister said in August that the Nord Pool exchange needs to be made more transparent, while a situation where maintenance down-time at major plants do not coincide – as reportedly happened on August 17 – should not be repeated.
The major factor nonetheless is low supply, Kallas added, a line which the authority agreed with in its report.
The €4,000 price level, which struck at peak-time, from 6 p.m. to 7 p.m., was avoided in two other hour-slots on the same day via the activation of Lithuanian grid distributor Litgrid's 50MW reserve, while the shortage in production capacity totaled 2.14 MWh across the Baltic states (0.57 MWh in the case of Estonia).
Low winds meant renewable supply was scanty and low capacity in Norwegian hydro-electric plants also had an effect, while, the Competition Authority said, Estonia's small size makes prices even more susceptible to small market changes.
The average price for August 17 2022 on the Nord Pool was €682.05 per MWh.
Baltic energy regulators have presented the results of the analysis to Nord Pool, which has alsp pledged to improve its products and processes.
Electricity prices across Europe have followed an upward trend sicne summer 2021 – the average price for that year was €86-73 per MWh in Estonia, a 157-percent rise on 2020's figure, while the picture is complicated by rising natural gas prices, rising demand following exit from the Covid pandemic and the doubling of CO2 quota prices, the Competition Authority says.
Measures have also been put in place both directly by the government (providing support for domestic energy bill payments) and via the legislature (fixing electricity prices at a maximum of around 17-18 cents per Kwh, though subject to change, through to April 2026).
Editor: Andrew Whyte