1.7 Electricity market
The average market price of spot electricity on the electricity exchange (Nordic system price) was EUR 38.94 (43.99) per megawatt hour. The wholesale prices of electricity were slightly lower than in the previous year in both Finland and the other Nordic countries. The decline in the prices was impacted by the improved precipitation in the Nordics compared to 2018. At times, the availability of wind power had a clear impact on the area price of electricity in Finland. The prices of emissions rights remained at the level they had reached in 2018.
Fingrid’s congestion income from cross-border transmission lines totalled EUR 73.0 (29.6) million, of which the cross-border transmission lines between Finland and Sweden accounted for EUR 65.5 (28.2) million. EUR 15.0 (18.9) million of this was accrued during the first half of the year and EUR 50.5 (9.3) million during the second half of the year. The links between Finland and Estonia generated EUR 7.5 (1.4) million in congestion income. Fingrid’s congestion income has been used, in accordance with regulations, for the Forest Line connection’s network investment and for the Alapitkä capacitor investment. EUR 72.4 million in accrued congestion income was left unused and will be used for future investments to improve the functioning of the electricity market.
|Nordic system price, average €/MWh||38.94||43.99||36.70||49.07|
|Area price Finland, average €/MWh||44.04||46.80||45.63||51.55|
|Congestion income between Finland and Sweden, € million*||131.0||56.5||101.0||18.6|
|Congestion hours between Finland and Sweden %**||40.1||20.6||54.4||19.0|
|Congestion income between Finland and Estonia, € million*||15.0||2.8||4.0||2.0|
|Congestion hours between Finland and Estonia %||11.8||5.4||10.4||7.9|
|* The congestion income between Finland and Sweden and between Finland and Estonia is divided equally between the relevant TSOs. The income and costs of the transmission connections are presented in the tables under ‘Financial result’. Congestion income is used for investments aimed at eliminating the cause of congestion.|
|** The calculation of a congestion hour between Finland and Sweden refers to an hour during which Finland’s day-ahead area price differs from Sweden’s SE1 or SE3 area price.|
Through Fingrid’s transmission grid and the cross-border transmission lines, market participants gain access to and can reap the benefits of an open European electricity market. The market is provided with the highest possible transmission capacity, which enables effective trading for the market participants. In 2019, the reliability of Estonia’s DC connections was weaker than in previous peak years, but despite the challenging situations, the connections were efficiently restored for use by the markets. The usability and reliability of Sweden’s DC connections have been at an excellent level.
In summer 2019, competition was enabled between power exchanges in Central Europe. Since then, electricity sellers and buyers have been able to choose their preferred power exchange. In December 2019, Fingrid, together with the other Nordic and Baltic TSOs that hold shares in Nord Pool Holding AS, entered into a binding agreement to sell the majority of the company’s shares to Euronext Nordics Holding AS, a Norwegian company fully owned by Euronext N.V. The transaction was completed in January 2020.
In June 2019, Fingrid announced that it would enable intraday trading within Finland until the start of the delivery hour. Finnish market participants have expressed a preference for having a possibility to trade closer to real time. The exact schedule depends on the decisions made by the power exchanges active in Finland to offer their customers a possibility to trade until the start of the delivery hour (Nord Pool implemented 0 minutes intraday gate closure time in Finland on 14 January 2020.)
During 2019, Fingrid actively developed the electricity markets as part of the Nordic imbalance settlement project and participated in European joint development work in ENTSO-E, the European Network of Transmission System Operators of Electricity. In addition, Fingrid has implemented measures to promote the electricity market in Finland.
The Nordic imbalance settlement project automates the power system’s imbalance settlement, in other words the real-time balancing of electricity production and consumption. The project also develops new Nordic marketplaces for automatic and manual frequency restoration reserves.
Following the imbalance settlement project, the Nordic countries will implement a shorter imbalance settlement period enabling 15-minute trading and a new imbalance power model. The Nordic project’s updated roadmap was published in November 2019.
Finland is the only Nordic country to publish real-time balancing power pricing data. In 2019, Fingrid started to publish the price of the last activated balancing power bid whenever Finland is decoupled into a separate regulation area.
On 14 May 2019, the Danish TSO Energinet and the imbalance settlement company eSett’s current owners Fingrid, Svenska kraftnät and Statnett signed an agreement according to which Energinet joined the Nordic Balance Settlement by becoming a co-owner of eSett Oy. Each party owns 25 per cent of the company. The Danish market participants will join the Nordic Balance Settlement in the fourth quarter of 2020 once the regulating authorities approve the new market processes.
In autumn 2019, Fingrid launched a pilot where the minimum bid size in the balancing energy market was lowered from five to one MW. The goal of the pilot is to ease entry to the balancing energy market and the transition towards the European balancing markets.
The EU-financed flexible market platform project INTERRFACE continued during the year under review. The project is part of the broad-ranging Horizon 2020 programme, and it involves testing a flexible market platform in Finland, Estonia and Latvia.
The European Commission granted Project of Common Interest status to the preparations for the CrossFlex flexible resource project in October 2019. CrossFlex is a project proposal by Fingrid and the TSOs of Estonia and Åland with the aim of promoting the large-scale utilisation of the flexibility provided by distributed decentralised resources locally, nationally and between Finland and Åland as well as between Finland and Estonia.
Fingrid has been testing aggregation models in the balancing energy market and launched an independent aggregator pilot in the balancing energy market in 2019. The aim is to allow reserve providers to collect or aggregate decentralised flexible resources out of the balances of other electricity market participants. This enables new kinds of business models and makes it easier for new participants or resources to enter the reserve market.
Fingrid is building a centralised information exchange system for electricity retail markets, Datahub, which will contain data from about 3.7 million electricity metering points. In 2019, it became apparent that some distribution system operators and retailers will not be able to implement the necessary changes in their own customer and metering data management systems to reach Datahub readiness in time. The new go-live date was confirmed in a Government Decree that entered into force in early December. According to the decree, the Datahub will go live on 21 February 2022.