Cold weather and highly decreased gas energy prices increased the use of gas in the last week of February in Finland. Gas demand in energy production, industry and retail market customers was mainly covered by gas volumes transported through the Balticconnector interconnection point.
Balticconnector interconnection point was heavily congested towards entry direction from Estonia towards Finland during the last week of February. During several gas days there was strong indication that gas consumption would have resulted in a significantly higher level than imports to the Finnish gas system. As a transmission system operator with system responsibility (TSO), Gasgrid Finland performed balancing actions to control the physical and commercial balance of the Finnish gas system. The balancing actions successfully steered market participants to balance their balance positions. If the differences between entries and exits would have continued for a longer time, in a worst case scenario it could have resulted in a situation where gas supplies for the protected gas customers would have been compromised. As a preventive measure to reduce risks, the National Supply Security Agency (NESA) exceptionally decided to offer liquified natural gas (LNG) through the GET Baltic gas exchange to the Finnish gas market. During this time period, the entry capacity of Balticconnector was fully booked and the Hamina LNG terminal was not in use due to technical issues.
Last week temperatures were milder and the congestion at Balticconnector temporarily eased, but starting from the 6th of March, Balticconnector has been heavily congested again.
Control measures for balance gas unit prices on gas days February 20 and February 22
Balance Responsible Parties have basic obligation to minimize their imbalances. On Monday the 20th and Wednesday the 22nd of February, the imbalance of the Finnish gas system increased rapidly as imports to the Finnish gas system were significantly smaller than gas consumption. To manage likely significant imbalance, the TSO had to activate the Balancing Service Agreement for the balancing gas supply purpose at the Inkoo LNG entry point. The activation of the balancing service agreement increased the imbalance gas price to 163 €/MWh on gas days concerned.
By the balance management actions, the status of the transmission network was settled to moderate level after the market participants improved their balancing positions, and the Finnish gas system did not get to the alert level described in the security of supply regulation. In the alert level, the end use of gas would have had to be limited by order of the TSO addressed for the Balance Responsible Parties.
Congestion at Balticconnector interconnection point between 20 February – 27 February
At the Balticconnector interconnection point, capacity is allocated implicitly based on confirmed nominations. In the period of 20 – 27 February, nominations of the market participants were large and many market participants were intentionally nominating the maximum permissible amount with the aim of getting the maximum amount of Balticconnector capacity. Thus, Balticconnector was heavily congested to the direction of Estonia-Finland.
The aggregated nominations were up to 6-8 times bigger than the capacity allocated to the bilateral trading which equaled the capacity of 54 GWh/day. Because of such actions, it is reasonable to assume that the capacity is not distributed as targeted in the capacity allocation mechanism.
Balticconnector exit nominations on the gas days there were congestion to the entry direction
The end of week 8 was milder and gas consumption decreased from the highest consumption days in the middle of the week. Nevertheless, Balticconnector entry point was still congested due to large nominations. At the same time, Balticconnector nominations to exit direction from Finland to Estonia increased more than entry nominations of other entry points of Finnish gas system.
Based on this, it can be verified that quantities of gas have been imported into the Finnish gas system and exported from the Finnish gas system during the same gas day, which leads to inefficient use of the transmission capacity when Balticconnector is congested. Gasgrid Finland has a reason to suspect that the background of the harmful activity in terms of the overall operation of the market model is the arrangements used by some market participants with the aim to circumvent the Terms and Conditions of Balticconnector capacity allocation mechanism and the regulatory goals.
Actions of the Transmission System Operator with System Responsibility
Due to the large nominations that, in total, exceed Balticconnector technical capacity allocated for bilateral trading many times, as well as the significant exit nominations that took place during several gas days, Gasgrid Finland, as the TSO with System Responsibility, forwards all suspicious actions to the Finnish Energy Authority for evaluation to identify possible illegal market manipulation. Gasgrid Finland and the Energy Authority will also evaluate the adequacy of the Terms and Conditions of the Balticconnector capacity allocation mechanism from the perspective of the operation described above and assess the need to update the terms and conditions to secure operation in accordance with the legislation and market model objectives.
For further information, please contact:
Esa Hallivuori, Senior Vice President, Transmission Business: esa.hallivuori@gasgrid.fi
Mika Myötyri, Head of Market and Customers: mika.myotyri@gasgrid.fi
