Winter power plant breakdowns could again spike electricity prices

A model at the Energy Discovery Center in Tallinn.
A model at the Energy Discovery Center in Tallinn. Source: Ken Mürk/ERR

The Baltic Sea system operators' security of supply assessment says the winter peak hour capacity buffer is too small. Even though there is enough capacity at the moment, a megawatt-hour of electricity might cost €4,000 again if problems continue to accumulate.

Prime Minister Kaja Kallas warned again on Thursday of power outages due to electricity shortages across the Nordpool region, with the fourth reactor at Sweden's Ringhals nuclear power plant and the third reactor at the Oskarshamn nuclear power plant offline. In Finland, Olkiluoto's third reactor has failed to start up and Estonia's Auvere power plant is still offline.

Elering spokesman Elo Ellermaa told ERR that according to an assessment of the security of supply of the system operators in the Baltic Sea region prepared in October, the reserve capacity during the winter peak hour in the region is alarmingly low.

If a number of simultaneous risk factors materialize, it is possible that the region's production capacities would fall short of its demand. In this instance, the energy deficit will be distributed among neighbors based on the adequacy of their interconnection capacities, similar to how the energy surplus is shared.

"It also means that in a crisis, coordinated action with our neighbors is the key to supply security," Ellermaa added.

He explained that many of the risks identified in the evaluation of supply security have materialized. Accidents at the Narva power stations, the outage of the third reactor at Olkiluoto, and the shutdown of the Swedish nuclear power plant Oskarshamn 3 are now the most significant system capacity accidents.

Ellermaa added that while the failure of Estlink 1 is significant, at peak demand the Baltic and Finnish systems are in roughly the same situation, with no significant flows expected in either direction.

There is still room for consumption increase

The Baltic system operators said local market-based capacities are sufficient to cover use, and there is a reserve of 200-300 megawatts for consumption increase in addition to the 500-600 megawatt now available.

"Also, with a price increase in the range of 200-300 megawatts, there is certainly flexibility in consumption. This would be in addition to the Lithuanian Litgrid strategic reserve of about 600 MW and the emergency reserves of all Baltic system operators, including Elering's Kiisa emergency power plant with 250 MW," he said. "As the potential shortfall would be evenly distributed among all countries, maximum imports from the Nordic countries can also be considered, with plants currently under repair coming back on the market."

Estonia is well connected with its neighbors and Ellermaa said that Latvia, Lithuania and Finland therefore have the same security of supply as Estonia.

"There are no major power plant accidents in Latvia and Lithuania. There are a few in Finland, but the most important thing is when the testing of Olkiluoto 3 will start again," he added.

On August 17, this year, the electricity exchange rate for an hour climbed to €4,000 per megawatt-hour. In response to a question about whether electricity prices could reach similar heights in December, a spokesperson for Elering said that there was now sufficient generation capacity, but that peak costs were possible if additional outages occurred.

Gas plants have shaped electricity prices in recent days

Mattias Kaiv, a spokesman for Eesti Energia, said that the lack of capacity due to the failure of the Auvere power plant is not significant in a context where a number of important generation capacities are down.

For example, the fourth reactor at Ringhals has a capacity of 1120 megawatts, the third reactor at Oskarshamn 1450 megawatts and Olkiluoto's third reactor 1600 megawatts, while Auvere has a capacity of 300 megawatts.

"Prices in Nord Pool's electricity markets in both the Baltic and Nordic countries are fairly similar, influenced primarily by cold weather and low winds. The Auvere station has little impact on electricity prices in the region because its capacity is small in comparison to the region's production and consumption volumes," he explained.

Kaiv explained that Enefit Power will at the same time keep in operation all other controllable generation capacities, which are in the order of 1000 megawatts.

"Gas plants also need to come on to the market to meet demand, and the electricity prices of the last few days have mostly been shaped by them," he added.

Kaev said that Enefit Power has largely completed all planned maintenance for this winter. Six of the seven power plants are in operation, only the Auvere power plant is still under repair.

"The repair crews are hard at work, and the current forecast is that we will restart the Auvere power plant next week," Kaiv said.


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Editor: Kristina Kersa

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