Everyone involved in the electricity market

A green electricity system will reward the active electricity consumer for flexibility.

Electricity must be generated and consumed in precisely the same amount at every moment. If generation outweighs demand, the power system’s heartbeat, i.e. frequency, rises. Correspondingly, if there is not enough generation, the frequency drops. Excessive frequency disturbances can cause problems such as defects in electrical equipment and, in the worst-case scenario, a considerably lengthy blackout. Electricity production has traditionally been flexible, matching consumers’ needs. With the change in the electricity market, flexible generation capacity that has the ability to regulate has been replaced by weather-dependent generation. An increased amount of weather-dependent generation calls for increased power system flexibility.

In the electricity market, the price of electricity illustrates the balance between consumption and production. In the real-time markets, i.e. the balancing power and reserve markets, price variations can even be great. It is easy to understand that, for instance, when a large production plant experiences a disturbance, quick measures are needed to balance the power system, and other operators must be able to either reduce their electricity consumption or boost their production very rapidly. The higher price in the real-time market reflects the growth in the need for balancing.

In Finland, big industry has for some time been active in the electricity market and, guided by price signals, has adapted its electricity consumption. With a green electricity system, this alone is not sufficient: an increasing number of electricity consumers will have to be able to adapt their electricity consumption to weather-dependent generation. Since the price of electricity guides and reflects the need to adapt consumption, active and flexible electricity consumers benefit financially through their participation in the electricity market.

Fingrid’s goal is to enable full-scale use of the power system’s potential to adapt in the electricity and real-time markets. Our goal is to eliminate barriers to market entry so that every consumer can have the opportunity to influence and benefit from the change taking place in the electricity system, either directly or through a service provider. At the same time, we are especially improving transparency in the real-time markets and increasing the availability of electricity market data.

Our aim is to develop electricity balance pricing to increase financial incentives for active electricity market operators. When the value of flexibility in a green electricity system grows, it will also mean that inflexible electricity producers and consumers will have to correspondingly pay a larger share of the overall costs to balance the power system. Active electricity consumers, however, will benefit from the change.