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Electricity Market Expanding Further to the Baltic Countries

Fingrid and Elering, the electricity transmission system operators in Finland and Estonia respectively, signed today an agreement concerning the construction of a second direct current link, EstLink 2, between the two countries. The submarine cable costing 320 million euros plays an important role in the enhancement of the electricity market in the Baltic Sea region. Opening the market in Latvia and Lithuania together with the reinforcement of the electricity transmission connections from the Baltic countries to Sweden and Poland will be the next steps in the expansion of the market.

The EstLink 2 transmission connection, which has been planned for several years, will feature a transmission capacity of 650 megawatts. Together with the existing transmission connection of 350 megawatts, the electricity transmission capacity between Finland and Estonia will rise to 1,000 megawatts. The goal is that the new link will be brought to commercial operation at the beginning of 2014.

The preparations of the submarine cable are well in progress, and the co-operation agreement between the transmission system operators Fingrid and Elering concerning the execution of the project was signed today. The permits pertaining to the project are expected from the authorities during this year, and the processing of the main contracts of the project is in progress. The goal is to sign the contracts with the suppliers in 2010.
EstLink 2 is one of the reinforcements in the electricity transmission system suggested by the transmission system operators in the Baltic Sea region. The Commission of the European Union also considers the transmission connection between Finland and Estonia as very important in view of market development and security of supply in the region, which is why it has granted an investment subsidy of 100 million euros for the project. The first installment has already been paid to Fingrid and Elering.

“The second submarine cable between Finland and Estonia is a good example of a project where co-operation between political decision-makers, authorities, transmission system operators, electricity exchange and market parties promotes the electricity market and improves system security within a swift schedule,” said Fingrid’s President and CEO Jukka Ruusunen in commenting on the project.

“During the next month and a half, all the necessary preparatory work to get the construction of EstLink 2 underway will be completed, and from the beginning of 2011, we can start with the actual construction work. The EstLink 2 cable is a practical example of a project that is based on demand created by the energy market. Higher transmission capacity facilitates electricity trade across national borders, and this allows us to utilise production resources across national economies,” commented Taavi Veskimägi, the CEO of Elering.

The Nordic electricity exchange expanded to Estonia at the beginning of April. The subsequent market developments have been rapid. By the autumn of 2010, the entire capacity of the Estlink 1 transmission connection between Finland and Estonia has been made available to the market, and the price area Estlink became the price area of Estonia in October. Intra-day Elbas trade, which supplements the daily market, also started recently in October. In the Elbas market, the market players can buy and sell electricity up until the market closes one hour before the specific hour.

More connections planned
The next objective of the transmission system operators in the Baltic Sea region and of the Nordic electricity exchange is to integrate the electricity markets in Latvia and Lithuania to Nord Pool Spot’s trading system. To this end, a discussion on the development of the electricity market in the Baltic Sea region will be arranged in Helsinki on Tuesday 2 November. The participants include senior management from the transmission system operators in Latvia, Lithuania, Estonia, Sweden and Finland.

In addition to the submarine cable between Finland and Estonia, there are plans for transmission connections from the Baltic countries to Poland and Sweden. The submarine cable between Lithuania and Sweden is due to be commissioned in 2016. Moreover, a transmission connection between Poland and Lithuania at the end of this decade is also included in the plans.

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