Power plants preparing to offer frequency reserves during desynchronization process

In preparation for desynchronization from the Russian electricity grid, Baltic system operators will launch a market for frequency reserves from Tuesday. The reserve capacities procured from the market will also have to cover the countries' electricity needs during the weekend's "energy island" test.
Estonia, Latvia and Lithuania will all decouple from the Russian electricity grid this Saturday and connect to the continental European frequency band on Sunday, February 9. From Tuesday, power generators will be able to bid on the frequency reserve market for the price at which they are willing to keep their generation capacity in reserve.
The reserve capacity can be activated by the generator to maintain the frequency of the electricity grid, if necessary.
"These are new markets where we will first procure the availability of frequency reserves and from Wednesday we will also start to operate the frequency reserves as required," said Elering management board member Erkki Sapp. According to Sapp, Wednesday, Thursday and Friday are primarily a testing phase in order to ensure readiness for the weekend's desynchronization process.
According to Sapp, there will be no separate reserve of generation capacity for the weekend's "energy island" test.
"All the power plants that exist in the Baltic countries have to be ready to produce, unless they are simply out of order. The logic of the electricity market is that if a power plant is not specifically out of order or otherwise unavailable, it has to bid into the market. From that point of view, everything is ready in any case, exactly as it is today, ready for the weekend," Sapp said.
"Which power plants will actually produce electricity for the market or are in reserve will be determined by the respective market mechanisms," Sapp noted, adding that in the grand scheme of things, nothing will be different during the desynchronization.
All Enefit plants operational except for outage at Auvere
According to Enefit Power chief Lauri Karp, all of the power plants managed by the company, that is units 3, 4, 5, 6 and 8 of the Estonia Power Plant and unit 11 of the Baltic Power Plant, are operational.
The Auvere power plant is out of service, due to undergoing emergency repairs after regular maintenance. An investigation into the fault, which occurred on Friday, is underway and the date the plant could be back on line will be known by Tuesday.
"Which blocks will be put on the market will be determined on a daily basis through market bidding. For the colder months of winter, including the desynchronization period, Enefit Power has not planned any scheduled repairs or maintenance," Karp said.
The frequency reserve market tenders will take place before the day-ahead electricity market tenders.
"The fastest, frequency holding reserve readiness procurement will be held first, followed by the slower, manual frequency restoration and automatic frequency restoration procurement, which will be held together. Then there will be a day-after market," Sapp explained.
All market players wishing to participate in the frequency reserve market will have to undergo a pre-qualification process. According to Sapp, all the major Baltic power plants have already done so and will be ready to bid from Tuesday.
Price impact of frequency reserves will be seen in time
According to Sapp, it is difficult to assess how trading on the frequency reserve market could change the market dynamics.
"It is likely to vary a lot from day to day, depending on what the overall level of electricity prices is. It will also depend on which power plants make the most sense to offer reserves. It is difficult to give a general rule at this stage," he said.
"Our expectation is that there will be more bidders in the frequency reserve market later this year. Quite a number of generators are coming on stream in the Baltic states this year, which will have an impact on the frequency reserve market," Sapp said.
Karp noted that holding reserves may have a two-pronged effect on prices. On the one hand, supply to the day-ahead market will be reduced at the expense of frequency reserves, and on the other hand, the need to hold reserves may bring capacity to the market that would otherwise be left idle.
The price may be boosted by a reduction in supply as some capacity is reserved for frequency holdings. There is also the limitation of interconnection capacity after desynchronization. The price may be lowered by constraints on transmission capacity within the Baltic states, which may result in a larger amount of cheap energy remaining in Estonia.
The situation on the electricity market is normal compared to previous years, with the main difference being that the weather has been slightly warmer than usual this January going into February, resulting in lower levels of electricity consumption.
"There have been a few thaws, which means Latvia's hydroelectricity levels are somewhat higher than normal in the fall and winter," Sapp described.
Generally, hydropower plants are fast-responding and flexible resources, which are well suited to providing frequency reserves. "However, they do have a limit on how much water is available at any given time, which determines how many consecutive hours the hydro station can provide frequency reserves for," said Sapp.
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Editor: Michael Cole