Closed consultations from April 2021 until August 2022

The Finnish and Estonian Transmission System Operators (the TSOs), Gasgrid Finland Oy and Elering AS, organize the public consultation concerning Balticconnector capacity allocation mechanism – consultation is open until 23rd of August

Gas market on the Finnish-Baltic region has faced major changes in terms of gas importing routes, but also in terms of gas commodity price levels and quite uncertain operating environment. Also, new Floating LNG Terminal will be connected to the regional infrastructure increasing the entry capacity to serve the regional gas market participants and end consumers. Due to these factors, the operation environment of the market participants is changed.

Balticconnector interconnection point plays important role what comes to gas deliveries between Finland and Baltic States. Gasgrid Finland and Elering have made an assessment on the two possible capacity allocation mechanims which can be applied at Balticconnector – currently applicable Implicit Capacity Allocation (ICA) mechanism based on confirmed nominations and Auction mechanism according to the principles defIned by the EU Regulation (Commission Regulation (EU) 2017/459 of 16 March 2017 establishing a network code on capacity allocation mechanisms in gas transmission systems, ”Capacity Network Code, CAM NC”).

The assessment made by the TSOs can be found here.

The TSOs invite market participants to provide opinions which capacity allocation mechanism option is the preferred one from their operation point of view. The TSOs recommend to take a look on the assessment material prepared by the TSOs which may provide food for thoughts. The TSOs also add some questions to which the TSOs are requesting the market participants to touch upon in their opinions.

• What is the preferred option: Implicit Capacity Allocation mechansim or Auction mechansim, and why?
• How do the market participants, especially shippers and potential Floating LNG terminal users evaluate the risk of congestion at Balticconnector and its possible impacts on their decisions on utilizing the terminal?
• Which option is more cost-effective for the gas consumers: auction may lead to smaller risk premium than the ICA, but increased transmission charges and may lead to challenges for the operation of the common entry tariff zone where one of the fundamentals is that there are no tariffs at internal interconnection point. On the other hand, ICA may lead to increased risk premium, but smaller transmission costs?

Gasgrid Finland and Elering will be pleased to receive written opinions to the following e-mail addresses: customerservice@gasgrid.fi and erkki.sapp@elering.ee.

Parties providing comments must separately notify whether their comment or part of it is confidential information that may not be published on the websites of the TSOs. The TSOs have the right to send opinions given to the relevant national regulatory authories (NRAs). Please provide your written opinions in English.

The opinions shall be submitted by Tuesday 23rd of August at 23:59 EEST.

For further information, please contact:
Esa Hallivuori, Head of Gas Market Unit of Gasgrid Fnland Oy, esa.hallivuori@gasgrid.fi
Erkki Sapp, Head of Energy Market Department of Elering AS, erkki.sapp@elering.ee

Results of the public consultation on amendments to the balancing rules of the Estonia-Latvia balancing area

On 16th September this year, the public consultation on the amendments to the Estonian-Latvian Joint Balancing Area Balancing Rules (hereinafter - the draft amendments) closed, during which several proposals and comments were received.

As a result of the public consultation, the Estonian transmission system operator Elering AS and the common system operator for natural gas transmission and storage Conexus Baltic Grid AS summarised the proposals and comments received and adjusted the draft Amendments.

Summary of the proposals and comments on the draft amendments submitted for public consultation and the updated draft amendments submitted to the Public Utilities Regulatory Commission and the Estonian Competition Council for approval on 22nd September 2022 can be found attached below.
 

This consultation concerns an proposal developed by Elering AS and Fingrid Oy on bilateral methodology for determining and splitting the long-term cross-zonal capacity for the purpose of allocating long-term transmission rights on the Finnish–Estonian bidding zone border (BMS).

This online consultation is open for a period of 2 weeks starting from 13th of June. Stakeholders are invited to express their opinion on the developed methodology by 26 June 2022 by sending your opinion to the e-mail address: Airi Noor (Airi.Noor@elering.ee) and/or Antti Raininko (Antti. Raininko@fingrid.fi).

Elering and Fingrid will evaluate the feedback provided during the public consultation and will take this into account when finalizing the BMS for submission to Finnish and Estonian NRAs in July 2022.

To participate in the consultation please fill in the questionnaire and forward it to the following recipients by 30th of January 2022.

• Elering: margus.matkur@elering.ee
• Grant Thornton Baltic: erik.suits@ee.gt.com

AS "Augstsprieguma tīkls" and Elering AS jointly developed Methodology on cross-zonal capacity calculation and allocation with Russia (hereinafter - the Methodology).

Stakeholders are invited to express their opinion on the developed methodology by 23 September 2021 by sending your opinion to the e-mail address: consultations@ast.lv or erkki.sapp@elering.ee.

Documents: 1) Methodology project (in English); 2) Explanatory document.

In order to align the publication principles used in the Baltic-Finnish market area the Transmission system operators (TSOs) of the market area have developed a descriptive document to clarify, align and communicate the current principles used prior and when disclosing the infrastructure and service based transparency and inside information to the market participants. This document is intended as a set of guidelines to the market participants to elaborate the principles, timelines and methodologies used, as well as to explain the information already disclosed.

The aim of the Document is to consult information transparency principles which will be taken into account by TSOs as a best practice guideline.

The outcome of this public consultation is used to determine the best practices between all TSOs in common Finnish-Baltic market area and use the feedback in the review process of the relevant market rules and TSO-TSO contracts. Public consultation is open at all Baltic-Finnish market area TSOs until 06.09.2021. Public consultation document can be found below. Feedback can be provided to any of the contacts listed below under specific TSO:

AmberGrid:

Contact: J.Cerniauskas@ambergrid.lt

Conexus Baltic Grid:

Contact: Janis.Akmens@conexus.lv or capacity@conexus.lv

GasGrid Finland:

Contact: Mika.Myotyri@gasgrid.fi

Elering:

Contact: Veiko.Aunapuu@elering.ee

Latvian gas transmission system operator AS “Conexus Baltic Grid” and Estonian gas transmission system operator Elering AS jointly start this public consultation on the amendments to the “Common Regulations for the Natural Gas Balancing of Transmission System”, as coordinated by and between the Public Utilities Commission of Latvia (Decision of the Board No. 164, dated October 28, 2019) and Estonian Competition Authority (Decision No. 7-10/2019-007 30.09.2019) (hereinafter – draft Amendments). The aim of this consultation is to inform and ascertain the opinion of stakeholders regarding the proposed draft Amendments.

Please submit your proposals and comments on the draft Amendments (in English) till 09.07.2021 by sending them (electronically) to the e-mail addresses specified in the consultation document.

The amendments to the Common Regulations for the Natural Gas Balancing of Transmission System are intended to enter into force 30 days after coordinated decision by the Public Utilities Commission of Latvia and Estonian Competition Authority. Until the date of entry into force of the draft Amendments, current version of the Common Regulations for the Natural Gas Balancing of Transmission System shall apply.

Consultation document (draft Amendments), feedback and TSO comments to feedback can be found below.

The Baltic TSOs submit to public consultation Baltic CoBA Imbalance Settlement Rules, which includes an update on the Baltic common imbalance price calculation methodology. The reason for updating the Baltic common imbalance price calculation methodology arises from the requirements defined in the “All TSOs’ proposal to further specify and harmonize imbalance settlement in accordance with Article 52(2) of the Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing”.

When submitting your feedback to the public consultation, please use the questionnaire form that has been included in the public consultation materials.

Please provide your answers to the questions (in English) until 20.08.2021 by email to kristofer.vare@elering.ee.

After the end of the public consultation, the Baltic TSOs shall commonly review all the feedback received, and propose final document, which shall be the basis for implementing changes in each Baltic area’s national terms & conditions/methodologies, which shall be approved by the respective NRA of each country.

The materials submitted to the public consultation could be found attached below.

Results of the public consultation on the market study of the electricity balancing reserves

On March 12, 2021, AS "Augstsprieguma tīkls", together with other Baltic TSOs, - Estonia 's "Elering and Lithuania 's "Litgrid" published a jointly developed electricity balancing reserve market study "Baltic Reserve Capacity Market Study" (hereinafter – the Study). Public consultation was launched inviting electricity market participants to express their views regarding the electricity balancing reserve market study.

The study is based on the request of the Baltic national regulatory authorities (Regulators) to allow the Regulators to decide on investment requests for the second stage of synchronization of the Baltic electricity grid, which includes the installation of battery storage systems for provision of reserves.

Under the framework of the study possibilities to ensure the required amount of balancing reserves were modelled and evaluated for each country separately and for the Baltic States together in the single market, as well as for scenarios when the resources of neighbouring countries have been attracted after connecting to synchronous work with the networks of continental Europe.

A total of five electricity market participants provided feedback during the public consultation, and the Baltic TSOs received 21 comments and questions on the Study. The Baltic TSOs have evaluated all the comments and questions received, prepared answers and made respective amendments to the Study.

The Study findings are as follows:

1. Considering market simulation data Estonian, Latvian and Lithuanian power systems individually are not able to maintain required reserve capacities: FCR, aFRR, mFRR downward, whereas only mFRR upward could be maintained. Must run generators are necessary to maintain FCR, aFRR and mFRR, however none of individual power systems can maintain all required reserves.
2. Technical potential to maintain FCR and mFRR required reserve capacities within common Baltic LFC block is feasible, however provision of aFRR capacity will not be ensured during all periods. Results of feasible options show that must run generation in each power system will be necessary with total annual generation reaching up to 2,4TWh and total annual costs of maintaining FCR and FRR reserves is expected up to 214MEUR (Low price scenario) or 295 MEUR (High price scenario). Indicative distribution of the costs among the individual Baltic TSOs in a low price scenario is as follows: Elering – 79 million EUR, AST – 38 million EUR, Litgrid – 99 million EUR. Indicative distribution of the costs among the individual Baltic TSOs in a high price scenario is as follows: Elering – 107 million EUR, AST – 56 million EUR, Litgrid – 132 million EUR. Aforementioned numbers represent 3rd scenario (“Baltic reserve market scenario”), which doesn't foresee integration of Baltic Balancing capacity market with neighbouring markets
3. Modelling results shows that available resources in market are not sufficient to ensure mFRR downward reserve capacity as last resort reserve resource provision from Kiisa power plant would be necessary to ensure required mFRR downward reserve capacity for 34 hours in average of 42.28 MW of reserve capacity.
4. Common Baltic LFC block reserve capacity market also allows to reduce must run cost from 104,6 MEUR in 2nd scenario of local markets down to 48.52 MEUR.
5. Considering that marginal pricing model will be used for common Baltic LFC reserve capacity market the most expensive bids from the must run generators with costs of 48.52 MEUR would increase the Total costs up to 148 MEUR from the market price level.
6. It is expected that BSPs would adjust the usage of assets in the energy market to provide offers for the reserve capacities, however the reserve capacity price additionally to operational and maintenance costs will also include the opportunity costs: not received income from the energy market. Therefore, it is expected that price for the maintaining reserve capacities could increase from the current reserve price level in Baltics to the price level in the other European countries reaching yearly average price up to 12 EUR/MW/h in low price scenario.
7. Necessity for must run generation to ensure mFRR downward reserve was observed only during nigh hours when market results included hydro pump storage units in pump mode. During these hours must run generation could be replaced by bids from hydro pump storage unit, however it will significantly reduce the pump mode possibility thus leading to reduction of generation mode during peak load hours and reduction of possibilities to provide aFRR reserve capacity.
8. Possible integration of reserve capacity markets with neighbouring areas Finland, Sweden, Poland to exchange reserves through the interconnections could ensure Baltic power system a technical capability to maintain all required reserves on the expense of reducing available interconnection capacity for day-ahead and intra-day energy trade and would significantly decrease the need of must run generation down to 0,6TWh for 4th scenario or 0,1TWh for 5th scenario, however marginal effect of the most expensive reserve bid which sets the marginal price would not be mitigated. Considering complex and uncertain nature integrating two or more regional markets there is a substantial risk that integration of the Baltic, Nordic and Polish reserve capacity markets might not be achieved by 2025.
9. Commissioning of new perspective projects concluded from the public consultation eliminates the need to activate must run generation and cover all the reserves required by the TSO.
10. Commissioning of new projects are necessary to provide reserves during all hours. Without these (3A scenario) there will still be reserve shortage even with must-run generation.
11. Operational logic behind BESS management could be a big unknown in this study. The management of BESS will determine the bid sizes, frequency of these bids and which reserve type they offer. In theory they could participate in all of the reserve offers with their maximum power, however, this is an unrealistic behaviour by the battery owner.
12. Future CO2 prices are difficult to predict. Significant price increases will also lead to a significant increase in reserve costs.
13. The market test study assumes that the Baltic States will be able to exchange and share reserves with each other without restriction. If restrictions are imposed on the use of cross-zonal capacity for the exchange and share of reserves, in accordance with the Commission Regulation (EU) 2017/2195, which will not allow the use of these cross-sections in sufficient quantities, there may be a shortage of reserves in some of the LFC area.
14. Sensitivity analysis of non-typical outage of single major reserve providing units shows that Baltic LFC block is highly dependent on availability of reserve resource providers. Unavailability of single reserve resource provider result in the insufficient or even absence of aFRR reserve capabilities in Baltic states.

For further details please refer to attached responses prepared by the Baltic TSOs, as well as the updated Study.

Documents:

Baltic reserve capacity market study

TSOs responses for public consultation feedback