Reserves

Balancing the power system

In the power system, production and consumption must always be balanced. Significant frequency deviations could damage the components of the power system, equipment, and facilities connected to the power grid, and in the worst case, lead to a widespread power outage.

In electricity markets, producers and consumers have an incentive to balance their electricity production, consumption, sales, and purchases as accurately as possible. Producers and consumers sell and buy the electricity they plan to produce and consume in advance. Thus, companies operating in the electricity market handle most of the power system balancing among themselves even before the electricity is used.

However, electricity production and consumption always vary from the forecast. For example, there may be inaccuracies in electricity consumption forecasts, weather-dependent production is variable, and unexpected faults can occur in power plants or transmission connections. Real-time imbalances between production and consumption are corrected with power system reserves. In Finland, Fingrid is responsible for balancing the power system.

General information about reserve markets

Reserves needed for balancing the power system are procured on a market basis from reserve markets maintained by Fingrid. Reserve markets are part of the electricity markets. Fingrid does not produce reserves itself but procures them from companies that can regulate their electricity production or consumption according to the needs of the power system. Reserves include different types of power plants, consumption sites, and energy storage systems. Aggregated entities consisting of several smaller units can also participate in the reserve markets.

There are different types of reserve products for balancing the power system, which together meet the various needs of the power system. Reserve products include faster reserves that automatically support the system within seconds and slower reserves that can balance the power system for up to several hours. Reserves are procured for every hour of the year.

Participation in reserve markets does not prevent simultaneous participation in wholesale electricity markets.

Reserve procurement costs are covered by the grid service fees and balance service fees charged from Fingrid's transmission network customers and balance responsible parties.

More supply is needed in reserve markets

Companies with the ability to regulate their electricity power can earn additional revenue by participating in the reserve markets. The procurement volumes in the reserve markets are increasing with clean energy transition, and a significant increase in supply is needed.

With the reserve income calculator (in Finnish), one can estimate the value of one megawatt of reserve capacity in the reserve markets over a selected period based on historical prices.