Electricity import volumes from Russia vary depending on market situationThe volume of electricity imported to Finland from Russia has varied considerably within a single day in recent times. This is a new phenomenon associated with changes in the price of electricity in the Nordic and Russian electricity markets. Electricity trade between Russia and Finland is undergoing a change in other ways, too. The goal is to increase two-way trade between the countries.
Electricity has previously flowed from Russia to Finland as steady imports at 1,300 megawatts per hour. At present, imports go up and down depending on the price of electricity on both sides of the border. Up until last autumn, the sales of electricity from Russia to Finland were profitable at almost all times. However, in recent times electricity has been more expensive in Russia than in Finland at daytime, and sales to Finland have been lucrative mainly at night and on weekends.
“The basic principle is that electricity always flows from an area of a lower price to an area of a higher price. We are not accustomed to fluctuations in electricity imports from Russia, but now electricity trade between Russia and Finland is becoming more market-driven. The price of electricity determines the direction of cross-border electricity transmissions, which is why we need to upgrade our trading systems to enable electricity exports to Russia in the future,” said Jukka Ruusunen, President of the Finnish electricity transmission system operator Fingrid, in the company’s electricity market seminar today.
In August 2011, a trial commenced in electricity trade between Russia and Finland, whereby 100 megawatts of the total transmission capacity between the two countries is reserved for use by the Nordic electricity exchange. Earlier, electricity imports from Russia were based entirely on bilateral trade, and the import volume was set in advance, irrespective of the market price. In the new procedure, the delivery volume is determined in the electricity exchange by the market situation.
“So far, this procedure only applies to 100 megawatts while the total transmission capacity is 1,300 megawatts. However, we believe that the share of exchange trade can be increased gradually. This requires the establishment of a kind of bridge between the two different markets.”
Launching direct trade of electricity between Russia and Finland is a first step towards more market-focused procedures in electricity trade between Russia and the EU. It also serves as a model for EU-level development work, which has been launched between ENTSO-E (European Network of Transmission System Operators for Electricity) and Russian parties. The objective is an increasingly broader and more effective European electricity market.
Cable fault in Fenno-Skan 2
raises the prices in Finland
raises the prices in Finland
In addition to changes in electricity trade with Russia, Fingrid’s electricity market seminar discussed current events in the Nordic electricity market. Insufficiency of electricity transmission capacity on the border between Finland and Sweden has been a problem in the past year. The available capacity has been normal, but the commercial demand has been extraordinarily high. The spot market in the Nordic countries has had a uniform price in only 20 to 30 per cent of the time.
The situation was initially relieved by the new Fenno-Skan 2 connection commissioned in November 2011. It increased the transmission capacity between Finland and Sweden by 40 per cent.
“Unfortunately, there was a failure in the submarine cable of this HVDC connection in February as a result of damage caused by a ship’s anchor. It now seems that the cable can be repaired in the beginning of May. The cable fault has been reflected in Finland as clearly higher area prices than in the other Nordic countries. Due to the good Nordic water reservoir situation, inexpensive Nordic electricity could have been bought to Finland, but the available transmission capacity has not enabled the transmission of all electricity to Finland,” said Jukka Ruusunen.
“More than 40 upgrade projects for the electricity transmission network are planned in our adjacent regions in the next 10 years, used for responding to the market challenges in this region. As an example, potential electricity surplus in Norway and Sweden must be transmitted to wherever there is demand for it. Renewable electricity production methods will increase the need for balancing capacity and the need to strengthen the internal networks. The change in the power balance caused by the decision of Germany to abandon nuclear power will also be reflected in the Nordic countries,” Jukka Ruusunen stated.
Fingrid arranged today a seminar on the topical challenges in the electricity market, with the electricity trade between Russia and Finland as well as the changes in the electricity market in the Baltic Sea region as the foremost topics. The presentations given in the electricity market seminar can be viewed as a live webcasting and afterwards on the Internet at http://qsb.webcast.fi/f/fingrid/fingrid_2012_0412/
Jukka Ruusunen, President & CEO, tel. +358 (0)40 593 8428
Juha Kekkonen, Executive Vice President, tel. +358 (0)40 560 5274