Security of supply guaranteed even upon closure of old units of Narva Power Plants

According to Elering’s security of supply report for 2018, regional production and net capacities are sufficient to ensure Estonia’s security of supply in all situations until 2025 and most likely also after that. However, an accurate assessment with the potential necessary means can only be given in the security of supply report for the following year after reaching an agreement regarding the technical solution for desynchronisation from the power system of Russia.

“The main systemic risk of the operation of Estonia’s power system and the corresponding risk to the security of supply of consumers is related to the fact that the Baltic countries are part of the integrated power system of Russia. In recent years, we have worked hard at activities to mitigate this risk and the technical solution for separation from Russia’s power system should, in principle, be available later this year,” said Taavi Veskimägi, Elering’s Chairman of the Board.

At present, the goal is to achieve the separation of the power systems of the Baltic countries by the end of 2025. Mr. Veskimägi went on to explain, “The latest analyses indicate that desynchronisation will not result in increased network charges for consumers. On the contrary, our plan is to include a significant amount of resources from the Connecting Europe Facility to execute the synchronisation project in cooperation with our Latvian and Lithuanian colleagues.”

For the first time ever, this year’s security of supply assessment involves Finnish power system operator Fingrid in addition to system operators from Estonia and the Baltic countries in order to achieve advanced security of supply for the region as a whole. The joint analysis shows that security of supply in the region is guaranteed in compliance with very conservative prerequisites, which foresee the premature closure of several existing power stations, including the old units of Narva Power Plants, and a delay in investments in new production capacities.

“Although security of supply is guaranteed without doubt until 2025, we cannot wait for the development of the electricity market if we want to ensure accurate price signals for future investments into production and consumption management. From the perspective of security of supply, there is enough time to design the electricity market so as to determine the right investment signals,” said Mr. Veskimägi.

Having a functional regional electricity market is the most cost-effective way to ensure security of supply. Based on public consultations with market participants, Elering has renewed the vision for the development of the electricity market. It proposes market-based solutions for disposal of subsidies and other administrative measures, for inclusion of consumers in the electricity market and for increasing the efficacy of price instruments for different periods.

“No Estonian-based administrative solution to increase production capacity will be successful until Estonia sees its place in the wider synchronous area and the electricity market of the European Union. Administrative solutions which are paid for directly by the consumers should be implemented only as a last resort in the event that we are unable to apply market-based measures or such measures fail to have the expected impact,” explained Mr. Veskimägi.

Elering’s annual security of supply report