Montel Magazine 4 2021 - Nordic power spat - Page 15

“ I am speechless [ about ] what ’ s happening in the
Nordic power market ” he says , pointing to the recent criticism of Svenska Kraftnat by the energy regulators in Denmark , Norway and Finland . The rift has also elevated to the EU level , because all three countries now object to the Swedish TSO ’ s requests for another one-year exemption from EU rules requiring grid operators to always allocate at least 70 % of the capacity between countries and bidding zones to the market . It was given such exemptions both in 2020 and 2021 .
Granting Svenska Kraftnat another year of exemption would only discourage the company from improving , the Danish energy regulator said last month , noting that available capacity from Sweden to Denmark ’ s DK1 bidding zone dropped from 71 % of all hours in 2020 to just 49 % in 2021 . It also criticised Sweden for failing to fully develop measures – such as counter trading or redispatch – to help balance supply and demand instead of cutting cross-zonal capacity . Finland ’ s energy regulator also slammed the Swedish TSO , saying it failed to prepare in time for a nuclear phase-out in southern Sweden and new interconnectors between Norway and the EU .
Yet Svenska Kraftnat has defended its position , saying it has no alternative but to continue restricting cross-border flows to maintain an acceptable balance of supply and demand at home . It argues that grid development takes time and , therefore , it will not be able to lift all restrictions before 2030 . “ But it is not right to say we are holding back capacity . We are allocating as much capacity that is possible without risking supply security ,” Marten Bergman , head of Svenska Kraftnat ’ s transmission and power market unit , told Montel ’ s Swedish Energy Day on 2 December .
About a decade ago , Sweden made plans for a major upgrade of the grid between northern and southern parts of the country . At that time there were several nuclear power reactors providing baseload in the south and many hydropower plants generating power in the north . Since then , four nuclear reactors with a combined capacity of 2.9 GW have been decommissioned in the south , while the installation of many wind farms in the north has contributed to an oversupply of power there .
The cross-border dynamics between Sweden and its neighbours have changed over the past decade too . For instance , southern Norway is now drawing more power from Sweden due to new links to Germany ( 1.4 GW ) in 2020 and the UK ( 1.4 GW ) in 2021 , creating unusual east-west flows that will likely increase when Finland ’ s 1.6 GW Olkiluoto nuclear reactor opens next year . “ Our system is designed to handle power flows from northern Sweden to southern Sweden , not from the east to the west ,” said Bergman , adding the changes had created new bottlenecks in the grid that made it challenging to reach the EU ’ s 70 % target . “ Longterm we may have to reconfigure our price area design to better reflect the new situation ,” he said .
Sweden ’ s energy regulator will now decide whether to back Svenska Kraftnat for another exemption from the 70 % rule . But if the neighbouring regulators object -- what appears to be a likely scenario -- the final decision will be left to EU regulatory agency Acer . Denmark ’ s energy association , which has long criticised Svenska Kraftnat ’ s crossborder capacity allocation , is glad Norway and Finland are now voicing concern . “ I have been wondering for some time why Svenska Kraftnat over a long time has been allowed to put large restrictions on crossborder capacity without implementing mechanisms that EU legislation requires them to do . The bottlenecks in Sweden will last for many years , which is unsustainable ,” says Carsten Chachah , chief consultant at the lobby group .
Denmark had its own share of cross-border disputes in the past , most notably with Germany and the Dutch / German TSO Tennet . After Tennet restricted import capacity from Denmark for several years at times of high wind power supply in northern Germany , it agreed in 2018 to offer more capacity to the market and instead pay Danish producers to reduce output when grids where congested . Tennet reached the deal under pressure from the European Commision following Danish complaints .
“ Svenska Kraftnat has to signal to the market that it requests mitigating measures , then operators will come up with capacity [ that can be used for counter trading ],” Chachah adds . n
Montel Magazine 4 – 2021