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Fingrid Current: Simo Nurmi, Director General of Energy Authority of Finland, Energiavirasto

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How do the Nordic Regulators see the future of the Nordic (Baltic Sea) Electricity Markets?

Miten pohjoismaiden viranomaiset näkevät itämeren sähkömarkkinoiden tulevaisuuden?

Presentation by Simo Nurmi, Director General of Energy Authority of Finland, Energiavirasto

In Fingrid Current 10.3.3030

Published in: Engineering
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Fingrid Current: Simo Nurmi, Director General of Energy Authority of Finland, Energiavirasto

  1. 1. How do the Nordic Regulators see the Future of the Nordic (Baltic Sea) Electricity Markets 1 SIMO NURMI Director General of Energy Authority of Finland, Energiavirasto Chair of NordREG 2020 11th March 2019
  2. 2. NordREG 2 • An organisation based on a voluntary cooperation between the Nordic energy regulators – Finland, Energiavirasto – Norway, Reguleringsmyndigheten for energi – Sweden, Energimarknadsinspektionen – Denmark, Forsyningstilsynet – Iceland, Orkustofnun • The basis for the cooperation within NordREG is to identify areas of work where cooperation can take the following forms – Exchange of views – Working together to map and analyse energy market issues – Producing reports and statements – Taking common action to influence the development of the Nordic and the European energy markets • Nowadays also a platform for a formal and legally binding cooperation – E.g. implementation of European network codes and guidelines in the Nordic area
  3. 3. Mission and Vision of NordREG 3 • Mission In cooperation, we actively promote legal and institutional framework and conditions necessary for developing the Nordic and European electricity markets • Vision Actively promoting efficient and advanced energy markets, for the benefit of consumers towards a decarbonized society
  4. 4. An overview of the Nordic electricity market 4 • The Nordic power system is a mixture of generation sources, where hydro, nuclear, wind and bio mass are the main sources of power • The Nordic region has a plenty of energy intensive industry and a large share of electricity heated houses – Therefore the electricity consumption and the share of electricity of total power use is higher than in the rest of the EU • The Nordic countries have a higher share of renewable electricity production compared to the rest of EU – Net electricity generation 400 TWh » 54 % hydropower, 10 % wind energy, 6 % bio mass and 22 % nuclear energy* – 70 % of the electricity production is renewable and more than 90 % carbon neutral • The Nordic electricity market has been a real success story over the past years – economy, technology, environment etc. – We must ensure that the success story continues *Source: ENTSO-E Statistical Factsheet 2018
  5. 5. Nordic Regulators are fully committed to the ‘Ollila’s vision’ 5 • Some of the key visionary elements for developing the Nordic electricity market are written down in the ‘Ollila’s report’ from the year 2017 – E.g. establishing annual Nordic Electricity Market Forum • 2030 vision for the Nordic electricity market by the Nordic Council of Ministers – In 2030, the Nordics have the world’s most competitive, innovative, and consumer-oriented electricity market, that contributes to reaching the ambitious Nordic climate goals  A society characterized by digitalization, automatization and electrification is backed by a highly reliable electricity supply  The electricity market brings increasing benefits to the society as it enables consumers and new market players to contribute to the energy transition with innovative solutions  The grid infrastructure is smartly operated, cost-efficient, robust and without undue constraints, being optimized from a regional perspective  The Nordic electricity market is a positive driving force in the European electricity market integration, market development and in the effort towards reaching ambitious climate goals • Nordic Regulators are in close cooperation aiming towards this common Nordic vision
  6. 6. 3 strategic principles of the Nordic cooperation 6 • The following 3 principles are the main drivers when the Nordic Regulators are promoting Nordic and European (and also Baltic Sea) electricity markets 1. Correct price signals – Cross border trade of electricity should not be restricted – Capacity of interconnectors provided to the market should be based on common and coordinated principles to ensure transparent and reliable information – Capacity mechanisms should be eliminated through a well-functioning energy-only market – Possible adequacy challenges should be handled by efficient investments and/or amending the existing market design – Promote a Nordic market design that is fit for future challenges such as increased need for flexibility
  7. 7. 3 strategic principles of the Nordic cooperation 7 2. Active consumers – Competitive retail markets with low entry barriers – Access to transparent relevant and accessible information to make well-informed decisions – Trustable markets – monitoring compliance with the regulation will increase trust in the retail markets and increase activity for suppliers and consumers – Consumers own their own data and flexibility, and are empowered to make informed decisions – Facilitate efficient solutions to handle challenges and opportunities of new technology 3. Dynamic framework enabling advanced energy markets – Markets where possible, and efficient regulation of natural monopolies – Cost-reflective grid tariffs and connection fees that improve efficiency and provide fair distribution of grid costs – Market based procurement of distributed flexibility resources – Promote digitalization to ensure efficient solutions
  8. 8. Enhanced electricity network integration and harmonization of electricity markets 8 • Main driver is the implementation of the European regulation • Implementation of the Clean Energy Package regulation and ensuring a common, harmonized understanding and application of the rules, e.g. – Recommendation from NordREG on Nordic implementation guide for articles 10, 12, 14 and 18 – Recommendation from NordREG on common Nordic regulatory framework for independent aggregators • Continue effective implementation of European network codes and guidelines, e.g. – Implementation of common cross-zonal capacity calculation methodology (CCM) – Establishment of the Nordic Regional Coordination Centre (RCC) – Implementation of the TSOs’ Nordic Balancing Model (NBM) • Continue cooperation and coordination of the work regarding the common Nordic end-user market and market conditions for customers in the Nordic retail markets for electricity – Harmonized and common market rules instead of set of different national rules
  9. 9. Enhanced electricity network integration and harmonization of electricity markets 9 • Transition of the energy system to a carbon neutral system – EU 2050, Finland 2035 – Wind power (both onshore and offshore), nuclear energy (in Finland) and inevitable also solar energy – Marked based drivers should play essential role, e.g. EU emissions trading system • Integration of the networks and harmonization of the market rules will be continuously deeper in the Nordic and European level – Electricity trade between the Nordic and the Central European countries (+ UK) will grow – Electricity consumption in the Nordic countries will grow due to the electrification of transportation and heating – and probably also due to the industry – Sector integration and other advanced technologies make the role of electricity even more essential • The regulation must guide, encourage and adapt to the changes of system and markets – It is up to politicians and ministries to make the necessary changes of legislation – Regulators must strictly follow the legislation when executing it  Also bear in mind the consequances of executing • Guiding principle should be common Nordic/European benefit instead of national interests
  10. 10. Thank You for Your Attention! More information Simo Nurmi simo.nurmi@energiavirasto.fi +358 29 5050 011

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