russia as a part of the baltic sea energy market –opportunity or threat?
TRANSCRIPT
Russia as a Part of the Baltic Sea Energy Market –Opportunity or Threat?
Matti TähtinenDevelopment Manager, Fingrid Oyj
Nordic StrategyForum Energy, Yasuragi Hasseludden, 8 – 9 October 2015, Stockholm
Matti Tähtinen
Evolving Operating Environment; Dimensions
FinnishEuropeanBaltic Sea Region
October 2015
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
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 - 2000Trilateral Coupling TLC 2006Central-West Europe 11/2010CWE + Nordic 11/2010Nordic + Baltic 6/2013North-West Europe 2/2014NWE + SWE 5/2014Italian Borders 2/2015
GOALS:Security of SupplySustainabilityCompetitive Market
CONCERNS:Security of SupplyEnergy surplusRenewables insensitive to price
• 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
Cross-Border Transmission Capacities in the Baltic Sea Region
October 2015 Matti Tähtinen
TodayENTSO-E Plan
Prospects for RU - EU Electricity Trade
BackgroundCurrent FundamentsMarket Integration
October 2015 Matti Tähtinen
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
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
0
50
100
150
200
250
300
323
153177
260
100
Indicative annual trade values
€ M
illio
n
1960
-19
70-
2010
-
2000
-
1990
-
1980
-
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
2012 2013 20140
10
20
30
40
50
60
70€/MWh
Capacity Fee RU Energy Price RU Energy Price FI
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
... 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
500 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.
Differences between EU and RU Market Models
Energy only Energy + capacityZonal NodalGate closure CET 12.00 CET 10.30Open cross-border access De facto monopolyEconomic dispatch of generation Central dispatchTSO: role of market facilitator SO: technical role
October 2015 Matti Tähtinen
Vision: Extended Baltic Sea Region Electricity Market
October 2015 Matti Tähtinen
FI - RU New Border
Tariff StructureJun 2015
RevisedCross Border Trade ModelFI - Baltics
More Actors
ExplicitCross Border
Capacity Auction
Phase Out of Border
Tariffs
Reciprocity
Flexibility
Transparency
FI - RUBidirectional
Trade Model
Dec 2014
Upgrade of Interconnection Facilities and Trade Rules
Population 100 millionConsumption 1000 TWh pa.
Generation Capacity 200 GWTrade 100 TWh pa.
October 2015 Matti Tähtinen
Market based, fair and reliable electricity trade with Russia is a viable complement to
the evolving market complex.
