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A busy year for balancing management

The balancing management reform will boost the efficiency of Fingrid’s work in balancing electricity production and consumption. At the same time, several new tools and methods will be introduced, so customers will have a wider range of opportunities to participate in the electricity market.

Although electricity market parties plan to balance their consumption and production in advance, it must be possible to balance deviations occurring during operations.

The measures taken to maintain the balance between production and consumption are called balancing management. The Nordic countries are currently in a phased transition to a new balancing model with new tools and methods.

Reform approaching the finish line

The single price model was introduced in 2021. Since then, the Nordic automatic Frequency Restoration Reserve (aFRR) capacity market was opened along with the Finnish manual Frequency Restoration Reserve (mFRR) capacity market. 

Fingrid’s balancing management reform is now in the home straight.

“The ultimate goal of the balancing management reform is to secure the future functionality of the power system. Expanding the balancing markets will increase the reserves available to stabilise the power system quantitatively, regionally and geographically,” says Karri Mäkelä, Senior Expert at Fingrid.

He says the reform will enable Fingrid’s customers to participate more diversely in the electricity market.

“End users will see the increase in competition in their electricity bills.”

Power balance in 15-minute periods

The emerge of renewable energy generation has led to a decrease in conventional flexible production resources. Consequently, the one-hour power balancing period has become too long.

The transition to a 15-minute trading and imbalance settlement period will increase the precision of forecasts and plans and improve balancing management. The 15-minute period was introduced in Nordic balance management, energy metering and the Datahub in spring 2023.

The system will transition to imbalance pricing in 15-minute periods once the balancing power price is determined in 15-minute intervals and intraday cross-border trading in the Nordic countries switches to a 15-minute resolution.

Capacity market before the energy market

Fingrid maintains the Nordic balancing markets with the other Nordic transmission system operators. The capacity market should ensure adequate balancing capacity to maintain a power balance and operational reliability in the grid.

“Trading in the capacity market occurs by auction one day before the energy is delivered and before the rounds of trading on the power exchange,” Mäkelä says.

If an operator submits a bid to the capacity market and the bid is accepted, the operator undertakes to submit a corresponding bid to the energy market. The bidder can also trade in reserves directly in the energy market.

PICASSO and aFRR energy markets

PICASSO is the pan-European marketplace for aFRR energy. Fingrid is joining PICASSO in phases.

First, an aFRR energy market was established in Finland. In 2024, Fingrid will join PICASSO nationally, and the Nordic countries will join together in 2026.

Cross-border trading will become possible when either the Swedish or Estonian transmission system operator joins PICASSO.

Fingrid’s customers will not need to take any further action to establish PICASSO connections after the introduction of the Finnish aFRR energy market.

The mFRR capacity market expands

A national mFRR capacity market was introduced in Finland in autumn 2022. The mFFR capacity market will expand to a common market covering Sweden and Denmark in November 2024.

In practice, Fingrid will transfer its mFFR capacity market to a Nordic IT platform. Fingrid’s customers participating in the capacity market will also need to update their IT systems to operate on it.

“The expansion of the mFRR capacity market will increase the transmission of balancing power and capacity between countries and enhance competition,” Mäkelä says.

The Nordic mFRR energy market goes from one hour to 15 minutes

The joint mFRR energy market already in use in the Nordic countries will change when its market time unit switches from 60 minutes to 15 minutes in late 2024.

After the change, mFRR energy bids will be submitted, selected and activated in 15-minute periods.

The Nordic transition to the 15-minute market time unit will bring the connection to MARI, the European mFRR energy marketplace, one step closer. However, the change and process coordination still require major alterations to the market process and information systems.

The transition to a 15-minute market time unit in the mFRR energy market will improve the forecasting of consumption and production and the cost-effectiveness of power balancing in the grid.

A 15-minute wholesale electricity market

The day-ahead and intraday markets are gradually transitioning to a 15-minute resolution. In Finland, trading in 15-minute local products on the intraday market began in spring 2023.

Intraday cross-border trading on the Nordic countries will be possible on 15-minute resolution in early 2025 after the mFRR energy market goes live.

“The change enables balancing close to the moment of consumption”,” says Marja Eronen, Senior Expert at Fingrid.

“The 15-minute market time unit will be introduced in the day-ahead market throughout Europe in early 2025. After that, all market parties trading on the electricity exchange will be able to submit bids accurate to 15 or 60 minutes.”

However, spot prices will be calculated and published in a 15-minute resolution.

Introducing the flow-based capacity calculation method in the Nordic countries

The flow-based capacity calculation method optimises the electricity transmission capacity. It will be implemented in the Nordic countries in October 2024.

The flow-based capacity calculation method facilitates the management of the production and consumption fluctuations inherent in a clean energy system. It takes into account the constraints imposed by the transmission network in the entire market area and allocates transmission capacity primarily where it yields the greatest economic benefit.

“The new calculation method is expected to increase the transmission capacity and trading opportunities between bidding zones. For example, the method may enable more electricity to be exported from Finland to Southern Sweden,” says Meri Viikari, Senior Expert at Fingrid.

The flow-based method will be introduced initially in the day-ahead market in the Nordic countries. Later, it will also be used in the intraday market and in long-term capacity calculations.

Information system updated and tested

Kemira  Chemicals’ factory in Äetsä, Sastamala, manufactures industrial chemicals. Petri Kopi, the company’s Electricity Manager, appreciates the aims of the balance management reform.

“A well-functioning grid benefits all market parties. That is why it is important to participate in the electricity market and receive compensation for it.”

According to Kopi, the Äetsä plant’s processes can easily be made to react to changes in the electricity market. However, the test protocols required before entering the reserve market have proven laborious.

“We have already participated manually in the mFRR capacity market. We will need to update and test our information systems before the transition to the 15-minute market time unit and Nordic trading.”

More activity, closer cooperation

Oulu Energia has worked hard to adapt to the changes in the electricity market, including the balancing management reform.

“We have intensified our activities and cooperation with our partners. Nevertheless, the future electricity market is bound to surprise us somehow,” says Marko Lehto, Portfolio Manager.

The changes to the aFRR will mainly be visible for Oulu Energia on prices. The transition from a 60-minute market time unit to a 15-minute one in the mFRR energy market will affect the company’s practical activities the most.

Lehto states that reacting to fast-paced changes in consumption or production requires systems to support people.

“However, our power plants are well suited to a more active electricity market.”


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