Finland a trailblazer in demand-side management in Europe – transformation of power system calls for major changes in electricity market structures

The inflexibility and increasing unpredictability of production must in the future be balanced by more extensive demand-side management and expanding electricity markets. Major changes are necessary in the structures of the electricity markets. As Finland’s transmission system operator (TSO), Fingrid has an important role in the development of future electricity markets, an example of which is the 15-minute imbalance settlement period.

The structures of electricity production are undergoing a major change. Power plants utilising conventional fossil fuels are leaving the markets, while more and more electricity is being produced with nuclear power and renewables – in line with the European Union’s and Finland’s climate policies. This, however, weakens the flexibility that is necessary for the system to balance the production and consumption of electricity at all times. Also the predictability of production is suffering as the share of solar and wind power grows, further increasing the need for flexibility.

Finland a trailblazer in demand-side management

The transformation of the power system calls for major changes in the structures of the electricity markets. To enable the management of electricity demand, it is necessary to develop the wholesale markets in such a way that consumers can more easily enter the markets. Consumption serves as an excellent control element in balancing the fluctuations of wind and solar power on the intraday markets.

Finland is a trailblazer in all of Europe as an enabler of demand-side management. Fingrid has also actively embarked on developing and promoting the possibilities of demand-side management in Finland. These actions have been noted in a European study on demand-side management, for example, where Finland was ranked as a pioneer in the field. One example of this is the share of consumption in the frequency-controlled disturbance reserve procured by Fingrid for 2018, which now exceeds 70 per cent.

Finland joins the 15-minute imbalance settlement period

The one-hour market time frame currently in use in the electricity markets is too long for fluctuating sources of energy. Wind speeds and sunlight intensities can change several times within an hour. A decision has been made in Europe to switch to a 15-minute imbalance settlement period to better match the variations in electricity production and consumption. Fingrid is preparing for the change in the market time frame in co-operation with other Nordic TSOs. The shorter market time frame calls for investments by all market players and grid companies, as well as more advanced operational processes. Fingrid’s centralised information exchange system for the retail markets, the Datahub, will promote this development.

“It is important for Finland to switch to the 15-minute imbalance settlement period at the same time with other Nordic countries. Otherwise, we jeopardise the ability of Finnish players to participate in the Nordic markets, which would hurt electricity users, producers and distributors alike,” emphasises Jukka Ruusunen, President and CEO of Fingrid.

Extensive electricity markets based on strong cross-border transmission provide the preconditions for balancing out the production and consumption of electricity over a larger area. The newly signed Nordic agreement on joint imbalance settlement will help to keep Finland closely aligned with the Nordic power markets also in future.

“We have agreed on building joint Nordic markets for reserve and regulating power over the next three years. These markets will help bring about a cost-effective shift in the production structure in the Nordic countries,” says Ruusunen.

The latest energy issues will be presented at a seminar and webcast on 4th April, starting at 1 pm

Fingrid is today organising the Fingrid Current news seminar.
The seminar programme kicks off at 1 pm, and it can also be followed live on the internet: https://prospectumlive.com/event/fingrid_20180404

The link to the event can also be found on the page: https://www.fingrid.fi/sivut/ajankohtaista/tapahtumat/fingrid-current/#seminaarit-2018

Further information:

Asta Sihvonen-Punkka, Senior Vice President, Markets, Fingrid, tel. +358 50 573 9053

Jukka Ruusunen, President & CEO, Fingrid, tel. +358 40 593 8428

The European study on demand-side management