Baltics solve dispute over cross-border power flows in Nord Pool

TALLINN - The European Union’s three Baltic states agreed on terms for managing international flows of electricity, settling a dispute that threatened to delay their final integration to the Nordic power exchange in June.
National grid operators Litgrid AB (LGD1L) of Lithuania, Elering AS of Estonia and Augstsprieguma Tikls AS of Latvia in Vilnius signed an agreement on the calculation and allocation of cross-border capacity, the three companies said in a joint statement. Allocation will be managed by Nord Pool Spot AS from June 3, when the exchange opens a Latvia price area, they said.

Nord Pool Spot has 370 member companies from 20 countries who trade power in the Nordic and Baltic regions, and in the U.K., with 316 terawatt-hours bought and sold last year.
Connecting the Baltics to power markets and networks in neighboring EU countries is a priority for the European Commission. Estonia and Lithuania objected in January to a Latvian plan to give Russia import preference, which they said would worsen summer overloads on the Estonian-Latvian border and lead to more Russian imports of power to the region. “Agreed rules of the capacity allocation with third countries give ability to maximize energy flows on the Estonian- Latvian border for the local market participants,” Taavi Veskimagi, chief executive officer of the Estonian transmission system operator, said in the statement.

Until Latvia starts trading day-ahead power on the exchange, Lithuania is isolated as it only has cross-border connections to the Russian enclave of Kaliningrad and Belarus, and none to the Nordic or EU power markets. Lithuania has largely relied on Russian electricity since closing its Soviet- era Ignalina nuclear plant in late 2009.
Now Lithuania will be able to import more Estonian and Finnish electricity, Lithuanian electricity transmission system operator Litgrid CEO Virgilijus Poderys said in the statement that was published on the websites of all three grid operators.

“Over the past nine months, Estonian electricity imports into Lithuania have clearly increased. Upon turning over all possible capacities to trade in the Baltic market, we will be able to import more Estonian and Finnish electricity. In the near future, all three Baltic countries will be able to take advantage of the electricity interconnections between Estonia and Finland more efficiently,” says Poderys.

“As a result of three years hard work, the Baltic transmission system operators have reached a remarkable agreement. The process has been supported by the Nord Pool Spot’s decision to open Latvian price area that is the final step in completion of the common Nordic-Baltic electricity market. Agreed rules of the capacity allocation with third countries enable to maximize energy flows on the Estonian-Latvian border for the local market participants,” adds Estonian electricity transmission system operator Elering CEO Taavi Veskimagi.

“The common Baltic TSOs decision provides background for transparent cross-border power trade and rules for common treatment of trade with of non-EEZ countries,” says Latvian electricity transmission system operator AST CEO Varis Boks.

Previously, each transmission system operator used the separate or bilaterally agreed methodologies and principles for calculation and allocation of the cross-border capacities at its borders. New principles are agreed among all three TSOs and will be implemented together with Nord Pool Spot price area opening in Latvia – on 3rd of June. From this date the allocation of the capacities will be managed by Nord Pool Spot using on the Baltic borders the implicit auction method and on the third countries border the capacity optimization method.

The cross-border capacity is the ability to transmit a certain amount of electricity between two countries via high voltage power transmission lines. The higher the capacity, the more electricity can be transmitted. Baltic power trader Inter RAO Lietuva AB (IRL), which sells electricity supplied by Russian state-controlled OAO Inter RAO UES, its majority owner, said in January that there was enough transmission capacity in the region for all interested parties.