What is an open electricity market?

The reason for opening the electricity market is to allow competition in as many parts of the electricity supply chain as possible. The opening of the market will create new opportunities for market participants and encourage competition in electricity production and trading, but at the same time network infrastructure and system functions will remain under monopoly control.

As the electricity market opens, the trading price of electricity will not be regulated but will be set by supply and demand in market competition. The electricity price will be kept transparent by the power exchange, which will provide a forum for buying and selling electricity beyond bilateral agreements.

The market will give producers a place to sell the energy they produce. A fully functioning market with transparent pricing will in turn give investors and producers a basis for their long-term investment decisions.

The market will allow consumers to buy electricity not only with bilateral contracts but also from the power exchange. As a rule, individual consumers do not go directly to the power exchange to trade but use the services of brokers. For Elering as a Transmission System Operator (TSO) the opening of the electricity market means working hard to integrate the Estonian marketplace with other markets in the Baltic and Nordic regions, which above all means taking decisions about building new international connections and carrying out our duties as TSO. The main significance of the market opening for us is that it allows us to use market-based solutions for our system services such as regulation and purchase of reserves.

The Estonian electricity market is 35 % open

Since 1 April 2010, 35% of the Estonian market has been open for large consumers, or open consumers. An open consumer is a company that uses more than 2 GWh of electricity a year through one connection point. This gives the open consumer the right and the obligation to choose their own electricity seller. This can be done through bilateral contracts, direct purchase or through a broker in the Nordic power exchange Nord Pool Spot’s Estonia price area.

The law foresees that the electricity market will be opened fully for all consumers from 2013.