Elering: Russia may seek fees for system services in future

Elering CEO Taavi Veskimägi.
Elering CEO Taavi Veskimägi. Source: Siim Lõvi/ERR

The likelihood that Russia seeks a fee from the Baltic states for frequency regulation will increase over time as investments made into Kaliningrad's electricity system have made it independent of the Baltics, Taavi Veskimägi, CEO of Estonian transmission system operator (TSO) Elering, said.

As the Baltic states are planning to synchronise their power grids with the Continental European frequency band in 2025, in order to ensure the energy independence of the exclave of Kaliningrad, Russia has established two 160-megawatt liquefied natural gas-based power stations and an LNG floating terminal which allows for the supply of gas to these plants even if there is no natural gas moving via pipelines from Lithuania to Kaliningrad anymore.

In addition to capacity, these are also able to offer system services to Kaliningrad, meaning that interdependence between the power grids of the BRELL countries will be eliminated.

Within the joint synchronisation area of the Baltic states, Russia and Belarus, frequency regulation is first and foremost carried out with the help of power stations located in the electricity system of Northwest Russia. Thus far, Estonia has not paid for this service.

"The likelihood that Russia may present an invoice for the system services to the Baltic states will increase in time," Mr Veskimägi told BNS. "And indeed, there is essentially nothing wrong with this. They are, in essence, providing a frequency regulation service for us."

Elering has assessed that it would cost approximately €30 million per year to develop and maintain the same capacities.

Currently, Estonia is paying Russian energy company Inter RAO for a cross-border imbalance. Prices have been established for open supply sale and purchase, and although the balance has been better managed, the price per unit has increased for Estonia.

"Russia should have made its network independent of the Baltic states by the beginning of next year," Mr Veskimägi said. "But similarly to the Baltic states, the operation of Kaliningrad is cheaper as part of a large Russian system than as a small standalone island."

Baltic energy independence continues to be improved

According to the CEO, within the last decade, work has been done systematically to reduce the dependency of the Baltic power grid on the functioning of the Russian system; external connections with Finland, Sweden and Poland have been built, and domestic networks have been strengthened.

"Today, the Estonian electricity system can be maintained without electricity having to be produced in Narva," Mr Veskimägi said. "Just a few years ago, this would not have been possible."

The final energy security risk, he added, will be eliminated with desynchronisation.

According to Mr Veskimägi, the socio-economic cost of a three-day blackout in the Baltics would be €2.3 billion, which is why he cannot agree with claims that joining the Continental European frequency ban is expensive.

"We can carry out some investments, which we also have to do when continuing to work in the Russian network, with the help of the Connecting Europe Facility (CEF) during the desynchronisation project, and thus these expenses will not be included in our consumers' network fees," Mr Veskimägi highlighted. "The two existing connections with Latvia have to be updated and a third new connection built in Estonia for the synchronisation. Construction of the new connection began recently, and not a cent of Estonian electricity consumer money will be spent on this investment."

Thanks to the synchronisation project, old lines beginning in Narva and running to Latvia via Valga can be updated primarily with the help of EU funding, thanks to which this work will be cheaper for consumers, he noted.

Desynchronisation in stages

In the first stage of the desynchronisation, investments will be carried out that are vital for strengthening the network within the Baltic states. The three Baltic TSOs in October submitted a joint application to the CEF for €432 million, with Estonia's share totalling €187.7 million.

"This money will first and foremost be spent on updating the two existing Estonia-Latvia connections," Mr Veskimägi explained. "The details of the second and third round of synchronisation investments will be determined later; the content thereof has not yet been agreed upon."

The second stage of investments needed for synchronisation will include investments needed for maintaining frequency, and the third stage will involve investments to be agreed upon in a future stage of the project, including investments necessary for connecting the Lithuanian and Polish networks.

Testing to begin next year

Two 12-hour separation tests, scheduled to take place next June, are being planned for the synchronisation of the Baltic states with the Continental European frequency area.

"Preparations for the separation tests are underway, and the assessment of various connected risks, including cyber risks, is under very intense scrutiny," Mr Veskimägi said. "We are cooperating in this field with our Latvian and Lithuanian colleagues, the institutions of involved countries as well as with foreign experts."

In late May, Russia is to test disconnecting Kaliningrad from the Baltic grid for 72 hours.

"By means of various tests, we want to achieve confidence that we will be able to cope, if necessary, independently as three Baltic countries during the 2020-2025 period — ie prior to synchronisation with the Continental European frequency area," Mr Veskimägi said.

According to Timo Tatar, head of the Energy Department at the Ministry of Economic Affairs and Communications, it is to be expected that Russia is also preparing for desynchronisation.

"[This] requires the improvement of power grids both in the Baltic states as well as in the Russian and Belarusian networks," Mr Tatar told BNS. "All of the cooperation and coexistence thus far has been regulated by the BRELL agreement between system operators, which also stipulates the format of information exchange and technical cooperation. The agreement has worked well so far. Nobody has announced cutting off the Baltic states today."


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Editor: Aili Vahtla

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