Norway and Estonia to Launch Power Exchange on April 1

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Researched by Industrial Info Resources (Sugar Land, Texas)--Nord Pool Spot AS (NPS) (Oslo, Norway), the Nordic electricity exchange, and Estonian grid operator Elering (Tallinn, Estonia) agreed on December 29 in Helsinki, Finland, to a plan that aims to launch an electricity exchange in conjunction with the 35% partial opening of the Estonian electricity market.

Although the Estonian parliament has not yet finalized the amendments to the Electricity Market Act, NPS and Elering will go ahead with their plan. Elering has stated that it will provide additional guarantees to the organizer of the power exchange to ensure that the exchange is launched on the specified date of April 1, 2010.

The final arrangements for the joint venture between NPS and Elering will be detailed as part of a framework agreement, setting out the principles of cooperation between the two companies.

The Estonian plan is a part of the Baltic Energy Market Interconnection Plan (BEMIP), an initiative of the European Commission to enable better power connections between the Baltic States of Estonia, Latvia and Lithuania and the wider energy markets in the European Union.

The Baltic States signed a memorandum of understanding regarding the BEMIP on June 17 last year, after nine months of intensive negotiations. BEMIP covers three main areas: the integration of the electricity market, electricity generation, and interconnections and infrastructure.

The design of BEMIP is based on the NPS system and covers such topics as the removal of tariffs and cross-border restrictions, the establishment of common reserves, the opening of the retail market, and the establishment of a common power exchange for physical trading in the Baltic and Nordic areas.

Elering is also partnering with the Finnish national electricity transmission grid operator Fingrid Oyj (Helsinki, Finland) in negotiations with the owners of the Estlink 1 power cable to allow transmission operators to lease their capacities via the cable, making their power available on the exchange.

Estlink 1 is operated by AS Nordic Energy Link (Tallinn), a subsidiary of Estonian national power company Estee Energia AS (Tallin, Estonia), which holds a 39.9% share; the national power company of Lithuania, Lietuvos Energija AB (Vilnius, Lithuania) (25%); the national power company of Latvia, Latvenergo (Riga, Latvia) (25%); and Finnish power companies Pohjolan Voima Oy (Helsinki) and Helsingin Energia (Helsinki), which together hold the remaining 10.1%.

The bi-directional, 350-megawatt (MW) high-voltage direct current (HVDC) cable runs a total of 105 kilometers between Finland and Estonia, with 74 kilometers undersea at a maximum depth of 100 meters. Electricity is transmitted at +/- 150 kilovolts and is converted to alternating current at the land-based substations in Espoo in Finland and Harku in Estonia.

Plans are also under way for other submarine cable projects within the Nord Pool region. The 165-kilometer Estlink 2 cable is proposed to be completed by 2014 and will provide a second link between Finland and Estonia, with a transmission capacity of 650 MW. Another important cable project is the 570-kilometer, 1,400-MW HVDC NorGer submarine cable, which is valued at $1.44 billion and will run between Norway and Germany. The NorGer cable is scheduled to become operational in 2014.

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