Electricity import/export in Baltic electricity market. 25. September Jaanus Arukaevu

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1 Electricity import/export in Baltic electricity market 25. September 2008 Jaanus Arukaevu

2 Prerequisits of Baltic wholesale market 1. Physical connections between countries 2. Congestion management principles and procedures at place 3. Right to conduct import and export activities 4. Possiobility to use electricity you have imported/exported or exported

3 Congestion management principles and procedures Currently regulators have stated that congestion management principles not needed due to enough physical connection between countries See latest ERGEG document "Regulation 1228/2003 Compliance Monitoring Second Report. currently under public consultation (see page 28); Implementation of CM practice actuall needed. Last year there was at least one instance when export from Lithuania was limited by TSO due to congestions - but limitations were not imposed equally to all market participants CM practice is urgently needed before due to increase in cross-border trade after closure of Ignalina National regulators should make steps needed before the light will turn to read?

4 Import and export activities: ESTONIA Present Future Import license needed Allowed import of electricity produced in power stations under EU terms License will be issued partially based on data actually unavailable and unrelated to the aim (TSO should assure that there are transmission capacities) No procedures of control at place Nord Pool Spot has proposed to change licensing regulation in order to make it possible to establish spot market in the Baltics Estonian Ministry is seriously considering changes?

5 Import and export activities: LATVIA Present Future No limitations to import and export Currently unequal treatment of Latvenergo and other traders in CB trade: Latvenergo has the only open supply agreement over Latvian border, instead of TSO. No other trader has right to do so Balancing energy price will be actually set by Latvenergo, not TSO Spread of balancing energy has become enormous Latvenergo do not have imbalance, other traders have no right to avoid imbalance with the same means Current regulation should be changed in order to provide equal access to the network service to all market participants?

6 Import and export activities: LITHUANIA Present Future Import and export permit needed; there is some confusion how to get permit, and there is no clear procedure how to conduct import and export Mandatory auctioning of electricity imported or exported by traders. The methodology of weighted average price with the right of TSO to adjust price if needed does not give for importer or exporter any quarantee that they will get the electricity they have sold to the auction for the price they have sold it. Mandatory auctioning is the main obstacle to sell electricity produced in EU to Lithuania There is a plan to clarify import and export procedures The initiative needs support and some revision Issuing permit should not be related to the TSO estimation about availability of CB capacities as actual availability of CB capacity should be arranged via congestion management procedures Mandatory auctioning of imported and exported electricity under weighted average price methodology should be removed as it is restricting electricity trade within EU Exporter or importer should not be subject of transmission fee?

7 THANK YOU!

8 Balancing energy pre-set price for september 2008 NB! imbalance price spread is up to 60,5 EUR/MWh! And TSO can procure it only from Latvenergo! (1 LV = 1,41 EUR)