12.3.2007 00:00
Press Releases

Capital expenditure of 1 billion euros in the Nordic grid will reduce transmission congestions and the risks of market participants

Approximately 1 thousand million euros will be used for grid reinforcements recommended by Nordel, the co-operation organisation of the Nordic transmission system operators (TSOs), by 2012.
- After the implementation of the agreed grid projects, we will be considerably closer to having a European electricity market. Developments in the Baltic and Russian electricity markets will also expand the market area to the south and east, says Jukka Ruusunen, Fingrid's President & CEO and President of Nordel.

According to him, the Nordic electricity market is a pioneer and an example both in Europe and elsewhere in the world of a well-functioning multi-national electricity market.

Transmission congestions in the electricity grid constitute risks to the market participants. Congestions can be removed either by grid reinforcements which add to the transmission capacity or by production investments in critical areas. During the past three years, the Nordic TSOs have used a total of 900 million euros in upgrading the transmission grid. In the next few years, approximately 1 thousand million euros will be invested in the five priority cross-sections recommended by Nordel. This sum includes the Fenno-Skan cable connection being constructed between Finland and Sweden. The next development plan shared by the Nordic countries will be completed within Nordel during this year.

Price differences of electricity between various areas are an indication on transmission congestions. In 2006, Finland and Sweden had the same electricity price for 93 per cent of the hours of the year, meaning that there were transmission restrictions for only 7 per cent of the time. The price of electricity was the same in all of the Nordic countries for 33 per cent of the time. - After the agreed grid reinforcements, the transmission congestions will be reduced significantly, and all Nordic countries will have the same price of electricity for 75 per cent of the time. In other words, market efficiency will be enhanced considerably, Jukka Ruusunen says.

Nord Pool Spot takes care of the Elbas market, where electricity trade can take place in almost real time. At the beginning of 2007, the Elbas market expanded to Germany, and it will expand further, in accordance with Nordel’s recommendation, to Western Denmark in April and to Norway by the end of 2007. At that point, the Elbas market together with the Elspot market and regulating power market will constitute the first regional market entity in the world where electricity trade can take place 24 hours a day throughout the year. The market participants can balance their own electricity balances for example in line with changes in weather or in the event of failures at power plants. This will promote competition and reduce the threshold of market access.

Nordel has also decided to harmonise the primary principles of balance management carried out by the TSOs in the Nordic countries. The new principles will be applied as of the beginning of 2009. Harmonisation is a prerequisite for the development of balance management into a Nordic service, where each balance provider only has a single agreement and balance. The uniform principles will concern the balance settlement costs, calculation of balance deviations, and structure of fees. Harmonisation of principles will also promote significantly the development of the Nordic retail market. Jukka Ruusunen, President and CEO of Fingrid Oyj, was elected Nordel’s President as of 7 February 2007. The two-year presidency of Nordel held by Finland will continue until the annual general meeting in June 2008. Juha Kekkonen, Executive Vice President of Fingrid, served as Nordel’s President before Jukka Ruusunen.

Further information on Nordel: www.nordel.org. Further information: 
Jukka Ruusunen, President & CEO, +358 (0)30 395 5140