The Energy Authority is purchasing 729 MW as reserve capacity
The Energy Authority has decided to purchase a total of 729 megawatts as peak load reserve capacity for the period 1 July 2017 - 30 June 2020. Four power plants and two sites capable of providing demand response capacity were selected in a tendering process in which the total economy was the decisive criterion. The cost-effective reserve capacity now purchased will substantially strengthen the security of Finland's power supply during the coming winters.
The following four power plants (total capacity 707 MW) were selected:
· Naantali 1 (coal), 110 MW, Turun Seudun Energiantuotanto Oy
· Naistenlahti 1 (natural gas), 129 MW, Tampereen Sähkölaitos Oy
· Meri-Pori (coal), 308 MW, Fortum Power and Heat Oy
· Haapavesi (oil), 160 MW, Kanteleen Voima Oy.
The Energy Authority also added the following sites (22 MW) to the capacity reserve to provide a demand response capacity for three winters (1 Dec 2017 – 28 Feb 2018, 1 Dec 2018 – 28 Feb 2019 and 1 Dec 2019 – 28 Feb 2020):
· Suomenoja heat pump plant, 10 MW, Fortum Power and Heat Oy
· Katri Vala heat pump plant, 12 MW, Helen Oy.
The Energy Authority received 18 tenders for reserve capacity (two demand response suppliers and 16 power plants with a total capacity of 1922 MW). Five of the tenders (72 MW) were rejected.
The operators accepted into the capacity reserve will generate annual fixed costs of about 14 million euros (totalling about 41.3 million euros for the three-year purchasing period). The average fixed cost of the capacity now purchased is about 18 900 euros per megawatt each year.
The reserve capacity available until the end of June stands at 299 MW and the costs arising from it amount to about seven million euros each year.
About the reserve capacity
The power plants included in the reserve capacity are activated in the day-ahead market if market-based demand and supply do not meet. The demand response capacity is activated in the regulating power market after market-based offers. When the power plants are operational, their available capacity is offered in the regulating power market. The price ceiling (EUR 3000/MWh) in the electricity exchange is also the reserve capacity activation price in the day-ahead market. In the regulating power market, at least the same price or the highest market-based tender (price ceiling 5000 EUR/MWh) is used as the activation price.
The system is financed with a separate charge based on electricity consumption in the winter months (weekdays between 07:00 and 21:00 in the period Dec 1 – 28 Feb). Any profits arising from the activation of the system will be considered when the charges are collected. The reserve capacity operators will not be paid the market price as they will be compensated in accordance with the costs that they have actually incurred.
During the winter months, the power plants must be in 12-hour readiness and outside this period, in one-month readiness. In the regulating power market, the demand response capacity is provided for the entire winter season and the readiness is ten minutes.
Reserve capacity purchasing decision 20 February 2017 (Decision in Finnish)
For more information, please contact: Ville Väre, tel. +358 29 5050 092, ville.vare[at]energiavirasto.fi; Antti Paananen, tel. +358 29 5050 013, antti.paananen[at]energiavirasto.fi; and Simo Nurmi, tel. +358 29 5050 011, simo.nurmi[at]energiavirasto.fi.