Price of Balancing Electricity Decreases by 43 Per Cent in January

In January, the price of balancing electricity decreased by 43 per cent compared with the previous year. This slump occurred due to the establishment of a regional joint balancing area by the electricity transmission system operators of the Baltics.

In January, the average import price for open supply in the Estonian power system was 58.2 euros per megawatt-hour, which was 43 per cent lower compared to January 2014. The average export price for open supply was 16.47 euros per megawatt-hour. A year ago the same indicator was 17.9 euros per megawatt-hour.

The reason for the price slump is the joint balancing area that was created on 1 January 2015. Instead of the separate contracts that have existed until now, system operators Elering, Augstsprieguma tikls and Litgrid signed a joint open supply contract, which cut the prices of balancing energy by reorganizing the Baltic balancing area.

The new joint balancing area allows the sharing of costs and also balances power system prices between the three countries. As a result, domestic balancing energy hourly rates are brought closer to the electricity market price in the region, significantly lowering the high peak prices for balancing energy.

The joint Baltic balancing area is the first step towards creating a unified balancing market for trading Nordic-Baltic electricity, in addition to the existing joint day-ahead and intraday electricity markets.