The future of the electricity balancing market

Cogeneration plants powered by natural gas, which have been despised and criticized for a long time in Latvia and were shut down as a result of the fight against OIK, can now be valuable asset of the electricity balancing market.

Unlike other technologies of energy resources, which require several hours for effective start-up and warm-up of the equipment, the start-up of low-power natural gas cogeneration plants requires much less time, for example, the requirement that set by the electricity market that such plants should be ready to work within 12 minutes is completely achievable.

Currently, several members of the association have started working on the operation of these co-generation stations that were closed again, participating in the electricity balancing market. Total installed capacity 20-25 MW. As is known, the three Baltic states plan to disconnect from the BRELL electricity transmission circuit shared by the Baltic states, Russia and Belarus in February 2025. Although Latvia and its two neighbor buys electricity from Russia and Belarus, this network provides a balancing service, so electricity still flows. To ensure electricity balancing services, the state is currently promoting three battery parks with a total capacity of 80 MW, but their commissioning is at the end of 2025, and disconnection from the BRELL network is scheduled for February 2025. Therefore, despite public announcements about the willingness of Latvia to disconnect from this network, it can be predicted that the mentioned process will still be relatively challenging and that the prices of the balancing service of the electricity market could rise rapidly. The situation is also not improved by the difficult possibility of obtaining new connection capacities for battery projects and defining them in regulatory actions. “High voltage network” itself estimates that the electrical capacity needed to balance the network in all three Baltic countries is 1500 MW – 900 MW of electrical capacity that is ready to switch when needed on and 600 MW of power that is ready to be turned off when needed. it is needed.

It should be said right away that price balance does not affect the final price of electricity for consumers. The balance of the electricity market is the responsibility of electricity producers and suppliers, who must answer for their inaccurate offers. For example, if an electricity producer has announced that it will transfer 100 MWh of electricity to the Nordpool network tomorrow, but only transfers 50, it has created a deficit of 50 MWh of network balancing capacity, so it is necessary be compensated by someone else who will have their equipment on and compensated for this deficiency. This could lead to a series of changes in the life of electricity producers – until now they had to work in a predictable market with fixed fees, and then this market is very dynamic and changing hourly, in the future – every 15 minutes. Given the details of the market, electricity producers participating in this market must be willing to turn their equipment on and off even several times a day. It also places great demands on the level of equipment and remote control.

As weather-dependent, renewable, but relatively unpredictable electricity capacities are developed, more future market capacity will be required to provide balancing service. However, it is absolutely clear that green energy is the future of Europe and Latvia, so it is necessary to prepare for it in time. “High Voltage Network” work and communication with manufacturers is appreciated.

The preparation is very active, the manufacturers are in different stages of the certification process, they are preparing to change the equipment. However, taking into account the current geopolitical conditions, one could ask – was it not possible to prepare for this process even earlier and give it more weight at the political level? Autumn has already begun and just now, a few months before the disconnection from BRELL, the certification process for balancing service providers is underway.