24.11.2021 12:07
Current News, Electricity Market

ENTSO-E report indicates good electricity adequacy in Finland in the 2020s

The European Network of Transmission System Operators for Electricity (ENTSO-E) published a report on 23 November on the adequacy of electricity in Europe in 2025 and 2030.

The study, known as the European Resource Adequacy Assessment (ERAA), is based on a probabilistic analysis and seeks to model and analyse potential events that could affect the adequacy of electrical power. The study has an important factor in determining the national need for strategic reserves.

The study indicates a loss of load expectation in Finland of less than two hours per year in 2025 and less than one hour per year in 2030. A loss of load occurs when domestic electricity generation and imports are not enough to cover the total electricity consumption. This does not necessarily result in power cuts for consumers, as Fingrid can use resources such as strategic reserves to balance generation and consumption.

The reduction in Finland’s thermal power capacity will reduce resource adequacy. Conversely, resource adequacy will be improved when the Olkiluoto 3 nuclear power plant comes online in the first half of the 2020s and the cross-border interconnector Aurora Line between Finland and Sweden is commissioned in the mid-2020s. The rapid growth in wind power, combined with an increase in the availability of demand-side response, will also improve resource adequacy. In the late 2020s, demand-side response will make a significant contribution to the balance between generation and consumption.

On a European level, the results of the study for 2025 foresee thermal power plant capacity becoming less profitable, particularly since wind and solar power capacity are expected to increase, along with the costs of emission rights. This will put pressure on thermal power generators to reduce their capacity, thereby reducing the resource adequacy. According to ENTSO-E, a demand-side response and additional peak generation capacity will be required to ensure resource adequacy.

Probability calculations in the resource adequacy study

ENTSO-E’s ERAA is based on a probabilistic analysis, which considers the weather conditions affecting supply and demand, as well as unexpected outages in generation units and transmission connections. Weather conditions are taken into account by using historical data combined with random outages in generation units and transmission connections.

The key outcomes of the analysis are the metrics of resource adequacy: the loss of load expectation (LOLE) and the expected energy not served (EENS). The expected values are calculated as averages of a combination of different weather years and outages, and, therefore, they give a picture of the expected situation. Resource adequacy differs significantly in individual years due to weather conditions and unexpected outages.

New legislation will require the methodology used in the ERAA report to be applied when determining the need for strategic reserves in the future. The purpose of the strategic reserve system is to safeguard the security of the energy supply if market-based resources are insufficient to cover electricity consumption. Finland has set a target level for the security of supply (known as the reliability standard), which calls for the loss of load expectation to be no higher than three hours per year and the expected energy not served to be no more than 1,800 MWh per year.

Additional information:

Jussi Närhi, Specialist, Fingrid Oyj, tel. +358 40 846 8948
ERAA 2021 report on the ENTSO-E website: https://www.entsoe.eu/outlooks/eraa/eraa-downloads/

Info box 1

The European Network of Transmission System Operators for Electricity (ENTSO-E) is the association for the cooperation of the European transmission system operators. ENTSO-E began operating in 2009 with the aim of developing the EU’s electricity markets and improving collaboration between the transmission system operators. The European Union’s Electricity Regulation, part of the Clean Energy Package, obligates ENTSO-E to develop a methodology for assessing resource adequacy.

The European Resource Adequacy Assessment (ERAA) is a pan-European monitoring assessment of power system resource adequacy of up to 10 years ahead and is the successor of the Mid-term Adequacy Assessments (MAF). It is based upon a state-of-the-art probabilistic analysis, aiming to model and analyse possible events with potentially adverse consequences for the supply of electric power and will be the central reference point to take qualified decisions on strategic matters such as the introduction of capacity mechanisms (CMs). Further information about the ERAA and the methodology used is available from the following sources:

ENTSO-E European Resource Adequacy Assessment homepage: https://www.entsoe.eu/outlooks/eraa/

Article about the methodology in the Fingrid magazine: https://www.fingridlehti.fi/en/proability-calculations-help-to-assess-power-adequacy/

Info box 2

The loss of load expectation (LOLE) is the number of hours per year in which the supply of electricity is not enough to meet demand on market terms. The expected energy not served (EENS) describes the volume of electrical energy that will not be supplied during these hours.

Fingrid can react to a momentary loss of load by using strategic reserve to balance generation and consumption. A momentary loss of load does not necessarily result in restrictions to the use of electricity by consumers, in other words an electricity shortage. An electricity shortage is a manageable situation in which electricity consumption has to be restricted. Restrictions on electricity consumption would most likely momentarily apply to a small minority of electricity consumers. Electricity supply for functions important to society can also be secured in the event of an electricity shortage.

For further information about how Fingrid responds to electricity shortages, see: https://www.fingrid.fi/en/electricity-market/power-system/management-of-power-shortage/