Elering and Eesti Energia agree on provision of regulation service

Elering and Eesti Energia entered into an agreement on provision of regulation service. Eesti Energia will use its production equipment and consumption portfolio to perform the agreement.

Under the agreement, regulation service is not provided based only on generating equipment but also consumption units. Among other things, the sedimentation basin pumps at the Estonia mine are being used for this purpose. Elering accepted the Eesti Energia regulation offer for the first time late on Wednesday night, when, over the course of two hours, the system administrator used 1 megawatt of upward regulation.

“I consider it very important that consumption-based regulation service is being introduced to the regulation market, as it will increase the liquidity of the Baltic regulation market and thereby create additional possibilities for balancing the electrical system, in addition to the potential of traditional power plants,” said the chairman of the Elering management board, Taavi Veskimägi.

According to chairman of the management board of Eesti Energia, Hando Sutter, Eesti Energia already has many ways of supporting the system administrators in Estonia and the Baltics in offering competing possibilities for balancing and regulation service. “As Estonia’s company with the largest array of production equipment and customer portfolio, we have the capability of offering services necessary for functioning of the system, including services related to balancing and maintaining frequency. I am very glad about the contract concluded with Elering and that the first transaction has now been executed,” said Sutter.

The transparent procurement of system services in market conditions ensures that services are purchased for the best possible price for customers. The market introduction of consumption-side regulation capacities also supports the ambition to create an electronic regulation market. “We hope that the balancing and frequency market will soon transcend borders, which would enable access to the Nordics’ market as well,” added Sutter.

According to the contract, offers can be extended hour by hour to Eesti Energia for the Baltic regulation market, determining the volume in megawatt-hours and price of the service to be supplied. The service provider can modify its offer 45 minutes before the start of the relevant trading hour. The smallest potential volume of service is one megawatt-hour.

The function of the system administrator, among other things, is to be responsible for maintaining the frequency of the electrical system. In a situation where consumption is uneven and there is more and more non-controllable electricity generating equipment, such as wind and solar plants, administering the system becomes more complicated. Traditionally, the frequency of the electricity system has been maintained by large controlled power plants, but from the standpoint of the electricity market’s development, it is also important to embrace the possibilities offered by consumption management.

Elering, along with other Baltic states, uses regulation service to balance the Baltic electricity system and for distributing regulation service to other neighbouring system administrators, such as the Finnish system administrator.