result management system report for college project
Russia as a Part of the Baltic Sea Energy Market –Opportunity or Threat?
1. Russia as a Part of the Baltic Sea Energy Market –
Opportunity or Threat?
Matti Tähtinen
Development Manager, Fingrid Oyj
Nordic StrategyForum Energy, Yasuragi Hasseludden, 8 – 9 October 2015, Stockholm
3. Evolving Operating Environment – Finnish Dimension
October 2015 Matti Tähtinen
2014
• Electricity consumption 83 TWh, decline of 0,8 % from previous year (90 TWh in 2007)
• Imports of 18 TWh i.e. in net terms over 20 % of consumption
• Nordic system price and PA Finland at lowest level since 2007
• Great price area differences - PA Finland higher than others
• Imports from Russia 3,4 TWh, export option since Dec 2014
Outlook
• Largely imports dependent; Olkiluoto 3 plant of 1600 MW (2018) only of partial help
• Securing peak power challenged
• Securing flexibility of utmost importance
• Declining system inertia
• Surplus biased energy futures low; risk of condensing power being phased out
* Source: Pöyry Management Consulting Oy
4. Evolving Operating Environment – European Dimension
European Day-Ahead Market 2015
19 Countries
2800 TWh Annually
4 TWh Daily at € 150 Million
Market moves closer to real time
October 2015 Matti Tähtinen
Development of Single Day-Ahead Price Coupling
Nordic 1995 - 2000
Trilateral Coupling TLC 2006
Central-West Europe 11/2010
CWE + Nordic 11/2010
Nordic + Baltic 6/2013
North-West Europe 2/2014
NWE + SWE 5/2014
Italian Borders 2/2015
GOALS:
Security of Supply
Sustainability
Competitive Market
CONCERNS:
Security of Supply
Energy surplus
Renewables insensitive to price
5. • Change from bilateral hydro vs. thermal dominant to a larger, renewables dominant region
• Regional grid development; 5 primary design drivers
• Great seasonal, time of day and weather dependent variation in generation and price patterns
• Uncertainties; political inclusive
October 2015 Matti Tähtinen
Evolving Operating Environment – Baltic Sea Region Dimension
ENTSO-E Plan
7. Prospects for RU - EU Electricity Trade
Background
Current Fundaments
Market Integration
October 2015 Matti Tähtinen
8. Russian Trade - Relevant Milestones
October 2015 Matti Tähtinen
1960 – Electricity Imports from Russia to Finland
1960 – Nordel Cooperation
1990 – Nordic Electricity Market
2000 – Russian Electricity Market
2010 – North European Electricity Market
2013 – BEMIP
2014 – Bidirectional trade
9. Electricity Trade RU – FI / Nordic Market
• Trade increase along with cross border capacity
• Major share of Russian total electricity exports via Finland
• Russian electricity remained competitive for decades
• Within recent years price competitivity collapsed
– Capacity fee introduced in Russia
– Up swing of plant fuel prices in Russia
– Down swing of Nordic spot price
• Until Dec 2014 imports only (max. 1300 MW)
• 7 Jun 2015 first ever export from Finland (140 MW)
October 2015 Matti Tähtinen
3
23
153
177
260
100
0
50
100
150
200
250
300
€Million
Indicative annual trade
values
10. Primary Fundaments of Cross Border Trade RU - Nordic Market
• Market based electricity trade
• Capacity fee in RU system curtails imports during day times
• Price setting differences across the border
– Price volatility in Russia lesser than in Nordic market
– Electricity price in Russia linked to domestic natural gas market price
– Export prospects at rainy or windy seasons and over summer months
– Exchange rates € / ₽ reflected in traded volumes
October 2015 Matti Tähtinen
0
10
20
30
40
50
60
70
2012 2013 2014
€/MWh
Capacity Fee RU
Energy Price RU
Energy Price FI
11. Integration of Nordics and Baltics continues...
• Baltics included in the Nordic market system
• Market mechanisms for regulation power and
system reserves under preparation
• Action plan "BEMIP 2"; MoU June 2015
• Further interconnectors to EU in operation 2016
– Sweden (700 MW)
– Poland (500 MW)
October 2015 Matti Tähtinen
12. ... which provides new route options for electricity trade
between EU and RU since
October 2015 Matti Tähtinen
Needed are
• political will
• match between different market models
1300/320 MW
700 MW
1000 MW
• new EU interconnectors will cater for regional security of supply,
• electricity is viable source to EU - RU trading and
• market liquidity will remarkably increase within the region
• access to Central Europe via Poland in particular and vice versa.
13. Differences between EU and RU Market Models
Energy only Energy + capacity
Zonal Nodal
Gate closure CET 12.00 CET 10.30
Open cross-border access De facto monopoly
Economic dispatch of generation Central dispatch
TSO: role of market facilitator SO: technical role
October 2015 Matti Tähtinen
14. Vision: Extended Baltic Sea Region Electricity Market
October 2015 Matti Tähtinen
FI - RU
New Border
Tariff
Structure
Jun 2015
Revised
Cross Border
Trade Model
FI - Baltics
More Actors
Explicit
Cross
Border
Capacity
Auction
Phase Out
of Border
Tariffs
FI - RU
Bidirectional
Trade
Model
Dec 2014
Population 100 million
Consumption 1000 TWh pa.
Generation Capacity 200 GW
Trade 100 TWh pa.
15. October 2015 Matti Tähtinen
Market based, fair and reliable electricity trade with Russia is
a viable complement to
the evolving market complex.
main issue is diminsihing proportion of coal condensed vs. increasing wind
focus on biofuel condensed power plants to maintain regulation power (+ inertia)
inertia
within the rotating mass of conventional power plants which supports power system stability
solar and wind mill plants do not provide inertia
one of a rationing factors for the max unit size that can be connected to the system
sudden and forceful changes in grid power flows driven by weather
limited regulation and peak power => energy vs. power => rise of national protectionism
system inertia diminishes as proportion of conventional plants in generation is declining
energy surplus due to subsidy renewables
investment outlook negative on conventional base load and on back-up generation in particular
renewables insensitive to price signals
"Invisible hand" in handicap in balancing supply and demand
political decision re. blackout 2006 impacting 15 million
capacity market?
discussion on ISO to secure sharing of resources?
Regional Grid development; 5 Primary Design Drivers
1 Interconnection capacity between Nordics and cont'l Europe
2 North - south flow
3 Consumption in the arctic zone
4 Market integration of Baltics
5 Shutdown of condensed and nuclear generation
Uncertainties
- solar and wind soon exceeding 20 % of installed EU capacity
- estimated wind capacity 25 GW by 2025 in Nordics only
- DE and DK renewables count for 90 % of power need
- volatility vs. peak to peak
- nuclear generation (DE, SE, FI, RU)
- German power balance (solar/wind/nuclear/condensed)
- Baltic interconnections
- EU - RU trade rules
- spot prices
note a nuclear plant of 1200 MW due commissioning in Belarussia
mechanism for regulation power and system reserves already deployed FI - EE