Russia as a Part of the Baltic Sea Energy Market – Opportunity or Threat?
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Matti Tähtinen, Development Manager, Fingrid Oyj Nordic StrategyForum Energy, Yasuragi Hasseludden, 8 – 9 October 2015, Stockholm
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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
- 2. Evolving Operating Environment; Dimensions Finnish European Baltic Sea Region October 2015 Matti Tähtinen
- 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
- 6. Cross-Border Transmission Capacities in the Baltic Sea Region October 2015 Matti Tähtinen Today 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.
Hinweis der Redaktion
- 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