Integration of Electricity markets of Baltic/Nordic and · PDF fileIntegration of Electricity...
Transcript of Integration of Electricity markets of Baltic/Nordic and · PDF fileIntegration of Electricity...
Integration of Electricity markets of Baltic/Nordic
and Europe
Jukka Ruusunen
President and CEO, Fingrid Oyj
Tallinn University of Technology: "Strategic Development of Energy System"
November 4, 2015
Finland runs on electricity.Fingrid's most important task is to ensure that Finland
obtains electricity without disturbances at all times.
November 2015 Jukka Ruusunen
2
What is Fingrid?
November 2015 Jukka Ruusunen
3
Owners
Our Mission
by reliably
transmitting
electricity
actively
promoting the
electricity market
developing the
transmission
system in the long
time span
We work for the benefit of our customers and society
November 2015 Jukka Ruusunen
EU energy union:
Towards a fully developed internal electricity market
Integrated markets in all time frames and participation of both large and small resources
Stronger link between the wholesale and retail prices
Integration of flexible resources
Energy transition Market rules suited to intermittent
production
Transition made at minimum cost
Correct price signals are crucial
Market-based solutions subsidies
capacity mechanisms
Empowering customers
ENTSO-E member countries 2014:
34 countries and about 740 million citizens served
Generation 1024 GW
Transmission lines 307 000 km
Demand 3210 TWh/year
Exchanges about 424 TWh/yearNovember 2015 Jukka Ruusunen
5
Regional focus:From Nordic electricity market to integrated Baltic Sea market
Baltic countries part of the "Nord Pool market" from 2013
Common EU market rules
New cross-border connections 2015-2016
Next steps: BEMIP 2 from 2015
Balancing market integration
Retail market development
Synchronization of Baltic power system
Increased stakeholder involvement
1000 M
W2 x
600 M
W
1500 MW
1200 MW
November 2015 Jukka Ruusunen
6
Main transmission
direction and
net energy flow (TWh/a)
The power price in the Baltic Sea region is at its lowest since
20002011 2014
SYS
29,6 SYS
47,1
Area prices (/MWh):
< 20 20-25 25-30 30-35
35-40 40-45 45-50 > 50
2
2015*(*until 9.10.)
SYS*
20,5
Note! Sweden split
into 4 bidding zones
in November 2011
Congestion
in transmission
lines (% of hours)
4 2 3*
22%
22 %
48% 50%
113 3*
November 2015 Jukka Ruusunen
New interconnectors in Baltic Sea area integrate the market
and improve security of supply
Long-term main drivers
Significant increase of subsidized intermittent wind
power in Nordics
Increase of electricity demand has seized
Weakened competitiveness of conventional
production decommissioning has already started
Future expectations
New interconnectors increase security of supply
Baltic price level closer to Nordic -
competitiveness of condensing capacity in
Baltics?
Decommissioning of Swedish nuclear power plants
while Finnish nuclear power increases
Integration continues: balancing and retail markets
15
20
25
30
35
40
45
50
55
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Yearly average electricity prices per country [/MWh]
Sweden Norway Denmark
Finland Estonia
November 2015 Jukka Ruusunen
Power trade between Finland and Russia
Historically the trade volumes have
risen with increasing transmission
capacity
Russian generation used to be
competitive
Competitiveness has collapsed
after 2010
Introduction of capacity
mechanism
Increase of fuel prices in Russia
Decrease of power price in
Nordics
0
50
100
150
200
250
300
1960's 1970's 1980's 1990's 2000's 2010's
Mill
ion e
uro
s
Rough estimate of the yearly value of Russian-Finland cross-border
trade
0
10
20
30
40
50
60
70
2012 2013 2014
/M
Wh
Energiahinta, VenjKapasiteettimaksu, VenjEnergiahinta, Suomi
Capacity payment, Russia
Power price, Russia
Power price, Finland
November 2015 Jukka Ruusunen
9
Pragmatic solutions for Finland-Russia cross-border trade
Economical benefits to both parties
Fingrid develops more market based cross-border trade
More flexibility, reciprocal principles & transparency
Trade is conducted via Nord Pool Spot power exchange
Bidirectional trade possible since summer 2015
Dynamic tariff enables trade even with low price
differences
Volatility of Russian rouble affects on trade
Next steps targeting flexibility
Shifting capacity from bilateral trade to spot trade
Cooperation in technical reserves
Technical modernization of cross border connections?
Harmonization of Baltic and Finnish trade set-up towards
Russia?
November 2015 Jukka Ruusunen
10
On the journey towards a new energy system...
November 2015 Jukka Ruusunen
11
How does electricity travel?
Electricity cannot be stored
Supply and demand in balance in real time!
"The invisible hand"
guides generation and
demand
Transmission system
operators responsible
for keeping the balance
in real time
New energy system:
markets and operation
get closer to each other
November 2015 Jukka Ruusunen
12
Wind and solar challenge the current market model...
November 2015 Jukka Ruusunen
Dispatch
Renewables not sensitive to price signals
More difficult for the "the invisible hand" to balancesupply and demand
Investments
Renewables push down wholesale market prices
Profitability of market based investments disappears
No investments for back-up capacity
13
...and reshape the Nordic power system
November 2015 Jukka Ruusunen
There is surplus of energy BUTthere will be scarcity of
peak power
flexibility
inertia
14
Possible implications
November 2015 Jukka Ruusunen
Power shortages for citizens
during peak hours
Centralized control actions to
balance supply and demand
Restrictions for the operation of
big nuclear units
15
EU
EU-level goals to maximize European
welfare:
CO2-emissions within the EU
emissions trading system
Total goal for renewable energy +
allocation to Member States
Energy efficiency in EU
EU-level electricity markets and
increased cross-border competition
Member
states
Goals of individual Member States to
maximize national welfare:
Generation technologies, self-
sufficiency
National support mechanisms e.g. for
renewables
National energy taxes
National measures to enhance
energy efficiency
Electricity price in the Member States
price regulation in some countries
Problem of the EU energy policy:
How to combine top-down
and bottom-up?
November 2015 Jukka Ruusunen
16
On the journey towards a new energy system
Short term: market integration is proceeding towards the
biggest electricity market in the world!
From Nordic market to the Baltic Sea market
Change of the energy system towards CO2-free generation
challenges the grid and the market model
Low market prices no market based investments on
generation
Empowering customers: role of consumers increasing
new business models needed
November 2015 Jukka Ruusunen
17
Powering Finland.