5. ELECTRICITY

Network balancing

As the nation’s TSO and network service provider, Elering AS is responsible for ensuring the operation of the Estonian electricity system. Pursuant to the Electricity Market Act and the Electricity Market Network Code, every market participant is responsible for its balance, either through contract with a supplier or a balance provider, while Elering AS is responsible for the overall balancing of the national network. In 2018, there were eight balance providers in Estonia, the biggest of which was Eesti Energia AS. The methodology for calculating the price for balance energy and standard terms and conditions for balance contracts concluded by Elering AS are approved by the Competition Authority ex ante. In the formation of the balance energy price, Elering AS is obliged to buy or sell balance energy at the most favourable price possible, with prices published on its public website. Looking to the future, the 2017 EU regulation on establishing a guideline on electricity balancing (EU 2017/2195) will eventually result in an integrated European balancing market.

The balance of the Estonian power system is ensured through co-ordination with other transmission system operators’ control centres that belong to the BRELL system, as well as with the Finnish transmission system operator’s control centre due to DC interconnectors between Estonia and Finland.

Elering AS activates balancing reserves and emergency reserves in real time and can use reserve capacity to compensate for any intra-hour deviations from the balance caused by network disruption or changes in planned generation or consumption. Emergency reserves and regulation agreements are agreed upon between Elering AS and power plants and neighboring TSOs; however, as a rule, Elering AS only buys balancing reserves in cases where the reserve capacity from Elering’s Kiisa emergency reserve power stations are not sufficient (Elering, 2018b).

On 1 January 2018, the three Baltic TSOs launched a common Baltic balancing market for Estonia, Latvia and Lithuania. These three systems are viewed as a common balance area and one of the Baltic TSOs is responsible for balancing the summarised balance (rotated on a quarterly basis). The objective of the co-ordinated balance area is to improve the cost efficiency of the electricity system management, and particularly to reduce the imbalance of the Baltic system. Additionaly, all three Balctic TSOs are members of the Manually Activated Reserves Initiative (MARI), a European implementation project for the creation of a European platform for the exchange of balancing energy from frequency restoration reserves with manual activation. Under MARI, 19 European TSOs are collaborating on finding technical solutions to pending issues related to the establishment of such a platform as soon as possible (ENTOS-E, 2019).

Electricity security

The Electricity Market Act provides the statutory powers for the Estonian government to implement emergency measures necessary to maintain the security of supply. These measures may include imposing an obligation to procure and store reserves of primary energy sources required for power generation, placing restrictions on all market participants, limiting or interrupting electricity supply to individual market participants, and modifying the obligation to provide network services. In a crisis, a supervisory committee under the direction of the minister, and including the TSO (Elering AS) and the largest electricity supplier (Eesti Energia AS), would be formed to co-ordinate crisis response and communications.

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5. ELECTRICITY

Table 5.2 Projected electricity-generating capacity and peak load (GW)

Notes: Installed net capacity includes all power plants connected to the system, including micro producers and emergency reserve power plants. Utilisable capacity includes import capacity and excludes capacities mothballed, in maintenance/scheduled repair, and under other limitations for meeting peak load.

Source: Competition Authority (2018), Electricity and Gas Markets in Estonia, p.50.

According to Elering’s report, the generation reserve is sufficient for statisfying domestic electricity consumption over the period to 2028 – even factoring in an additional 10% margin on peak demand for extraordinarily cold winters. This takes into account not only domestic generation capacity, but also the ability to import electricity. The report notes that from 2024 there could be a shortage of domestic capacity to cover peak load. The report concludes that, considering the investments in the interconnections with neighbouring countries’ electricity systems and the production capacity in the regional electricity market, the production capacity is sufficient to cover peak load. In addition to the capacities available in emergency situations, it is also possible to use Elering AS’ 250 MW emergency reserve power station (Competition Authority, 2018). From 2023, the security of supply will thus be ensured by the concurrence of the production and transmission capacity.

Estonia’s policy is for new electricity generation capacities to be developed in line with the conditions of the electricity market: where the government intervenes only to ensure fulfilment of the generation capacity criterion or to help innovative new technologies enter the market. The new electricity generation capacities in Estonia must be competitive in the open electricity market without additional subsidies from the state or consumers. The support schemes for the establishment of new generation capacities are specified in the Electricity Market Act and are directed primarily towards renewable energy and cogeneration, as well as towards satisfying the criterion of available local generation capacities. Upon application, the need for support is assessed in light of the trends in the electricity market and in comparison to other measures for reducing greenhouse gas emissions (MEAC, 2017).

Reliability of electricity supplies

Estonia has improved the reliability of its transmission network in recent years through upgrades of its transmission lines and interconnections. According to Elering, there were 86 outages in 2018, compared to 117 in 2017, and a 10-year average of 174, with 18.5 MWh of electricity not served, compared to a 145 MWh average (Elering, 2018c).

Nevertheless, one of Estonia’s main challenges associated with its distribution grids is reducing the number of failures. Given its climate, weather-proofing grids is a substantial part of reducing outages. According to the largest distribution network operator, Elektrilevi OÜ, 35% of faults in its grid in 2016 were caused by weather conditions. Estonia plans to weather-proof up to 75-80% of all distribution grids by 2030, compared to 37% in 2016.

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