Low Electricity Market Prices Endanger Future Security of Supply

Elering completed a report on the security of supply of the Estonian electricity system, which looks at the developments in the security of supply until 2031. The report found that consumers’ security of supply is ensured through a combination of local production capacity and cross-border interconnections, but a decrease in production capacities and in the security of supply can be seen in the Baltic Sea region in relation to the faster rate of closure of customary power plants than planned.

In Estonia, the Baltic States, and the Baltic Sea region as a whole, the security of supply reserve is falling, and Elering is actively working on developing the electricity market with other system operators in the region to forestall a possible deficit of production capacities at the end of the next decade.

“Along with liberalizing the electricity market, the position we are in regarding ensuring the security of supply has changed significantly in the whole Europe. In electricity management, we are moving away from a central planned system to an open market economy. The basis of a working market is to reduce state intervention in electricity production in order to avoid market distortions. In the short term, the low trade price at the moment may be favourable for the consumer, but the consequent investment climate might create a deficit in production capacity in the future. A situation like that might turn out to be costly – as we know, the most expensive electricity is that which we cannot use at the moment,” said Chairman of the Elering Board, Taavi Veskimägi.

According to the most likely consumption forecast scenarios, electricity consumption will increase 1.1 per cent per year on average, and will exceed 10 terawatt-hours by the year 2031. In the event that winters continue to be warmer, the peak load will increase more slowly in comparison with consumption, and might reach 1,700 megawatts by the year 2031.

The operational security of Estonia’s electricity transmission network was at all-time best in 2014. Last year, there were a total of 166 breakdowns in the network, which is almost 100 fewer than in 2013. The gross energy that was not passed on to end consumers remained at an all-time low – 28 megawatt-hours.

The newly published report on the security of supply in the Estonian electricity system can be seen here (in Estonian).