Key Themes for the Baltic Power Market Veiko Rim Energy Trading, - - PowerPoint PPT Presentation

Key Themes for the Baltic Power Market

Veiko Räim Energy Trading, Eesti Energia 03.05.2016

Post NordBalt Attention Needed

• n Border Capacity Allocation
• Introduction of NordBalt and LitPol in

2015/16

• Welcome upcoming new connections

between EST/LAT and LIT/POL by 2020

– Baltic market integration increasing but also more sizeable electricity transit to Poland

• Predictable capacity allocation on the

borders of paramount importance for modelling the power market

– LitPol off-peak capacity allocation – NordBalt intraday capacity allocation (example 20.04.16)

• Regulators´ vigilance required to

guarantee transparent and effective marketplace

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15 30 45 60 75

15 - Jan 15 - Apr 15 - Jul 15 - Oct 16 - Jan 16 - Apr

EUR/MWh Power Prices in Nordics/Baltics SE4 FIN EST LAT LIT POL

LIT-POL and SE4-POL Off-peak Capacity Limitations

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Extended Family of FTRs Needed

• Baltic market EPADs limited to

allow for meaningful hedging

• Retail market customers

interested in fixed prices for term longer than a year

• Extended introduction of

FTRs/PTRs would allow more competition in retail market

– EST-LAT FTRs in principle work well, increased size and longer duration needed (say 200 MW for 2-3 years) – Introduction of NordBalt and LitPol FTRs urgently needed – In longer term bottleneck may appear

• n FIN-EST border
• TSOs constant attention needed
• n the evolving topic

200 400 600 800 1000 1200

Month ahead Quarter ahead Year ahead 2 years ahead 3 years ahead

MW, Estonia-Latvia border capacity

FTRs on Estonia-Latvia border

Monthly FTRs Quarterly FTRs Annual FTRs Extended FTRs Total capacity

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Non-EU Imports’ Impact on Finnish and Baltic Power Prices

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• Clash of power market models

between Russia and EU

• Cheaper power in Russian off-

peak (sometimes also within the week, e.g. March 8) influences Finland and the Baltics

• Instead of Lithuanian export

tariff introduced in 2016, dynamic Baltic (and perhaps Baltic/Finnish) export-import tariff needed to address current limitations

Conclusion

• Regional power market facing new bottlenecks and increased

interdependence after NordBalt and LitPol

• Important that regulators take a close eye on application of

transparency rules and conditions, which are applied on cross-border electricity trading

• Given the increasing fluctuation of prices and persisting client

preferences, further development of financial electricity market instruments should remain a priority for TSOs

• Right time for a comprehensive review on the EU/Non-EU

border mechanism, including an introduction of dynamic export-import tariff taking into account Baltic and Finnish experience

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