Elering: A more effectively operating regional electricity market is needed to ensure security of supply for Estonian consumers

According to Elering’s recently published annual report on security of supply, a better functioning regional electricity market is needed to ensure future security of electricity supply.

According to chairman of the Elering board Taavi Veskimägi, the European Union’s clean energy package is a move in the right direction – more market and less subsidisation – but in order to get the electricity market into a position where in the future it would ensure at all times a balance between production and consumption in the electricity system, even more radical changes in the organisation of the electricity market are necessary.

“Market-distorting state involvement through subsidies and price controls must be eliminated. The cost of electricity production must be reflected in the electricity price in the retail market. Essentially, with the same money that today goes to the support schemes, a consumer should be able to buy electricity from the market. This would make the consumption price more sensitive and would in the best way make production more so and consumption less so in competition. The best electricity is unconsumed electricity,” said Veskimägi.

While electricity is currently predominantly traded on the day-ahead market, in the future the market will have to be based more in real time. For this, the digitalisation of energy systems creates opportunities. “Estonia must take a much more active attitude on this issue. The clean energy issue to be dealt with during the Estonian presidency offers good opportunities to introduce solutions already established in Estonia, such as the energy consumption data exchange platform Estfeed,” explained Veskimägi.

Consumers and producers who are ready to manage their respective consumption and production in real time must be properly remunerated. Such market organisation creates preconditions for investors to set up new power plants with planned operational cycles.

Changes to market organisation need to be done not on a national level, but at a regional level. “No Estonian-based administrative solution to increase production capacity will work until we are at least in a single Baltic synchronised area and part of the EU electricity market. Estonia as a separate entity could never finance construction of production capacity to cover the potential capacity deficit in a regional market ten times larger. Only an efficiently organised regional market can provide an adequate response,” explained Veskimägi on the importance of the regional vision.