The destruction of the electric cable hits Estonia above all

For Estonians Breaking the Estlink 2 cable can be expensive.

The size of the Estonian electricity market is only about a tenth of Finland’s. This year, the peak electricity consumption in Estonia has been around 1,600 megawatts, while in Finland it was 15,000 megawatts.

Therefore, for Estonia and the other Baltic countries, cutting the 650 megawatt Estlink 2 cable has a big impact. Electricity will not run out in Estonia, but its price may rise even more.

Under normal circumstances electricity flows continuously from Finland to Estonia. It is because Finland and the other Nordic countries have plenty of emission-free and inexpensive electricity production.

Estonia is part of the European open electricity market. In the daily electricity auction, electricity from the Nordic countries is usually directed there.

“The transfer connection lowers Estonian and Baltic prices. It helps them integrate into the price of the Nordic electricity exchange,” says the manager of the portfolio management team at the energy company Helen Juho Kinni.

Still the stock market price of electricity has been significantly higher in Estonia than in Finland. This year, the average price in Estonia has been almost 90 percent more expensive than in Finland.

However, the Estlink 2 cable had failed for more than half of the year already. The cable had a short circuit at the end of January, and it was not put into use until the beginning of September. At that time, vandalism was not suspected.

Estlink 1, which has a capacity of about 350 megawatts, has been in continuous use. On Friday morning, the Estonian Navy sent the patrol vessel Raju to protect it.

In 2023, electricity in Estonia was about 60 percent more expensive than in Finland, even though all cables were working.

In Estonia there are a lot of combustion-based power plants producing electricity, according to a report by the grid company Elering, up to 1,800 megawatts. The old power plants that run on oil shale, i.e. burning rock, have been kept in working order, although they are used little.

Burning oil shale is polluting and expensive. In practice, Estonia imports almost half of the electricity it uses.

Electricity flows to the country from Finland through the 350 and 650 megawatt Estlink submarine cable connections. There is also a 700 megawatt connection between Lithuania and Sweden. In that too, the direction is usually from Sweden towards the Baltics.

Ferrule there are of course transmission connections to Russia as well. Electricity trade between the countries ended due to Russia’s war of aggression in Ukraine. However, the Baltic electricity grid is still synchronized with the frequency of the Russian grid, and Russia’s huge grid has practically kept it afloat.

Already at the beginning of next February, the Baltic countries plan to cut off the connection to the Russian network. After that, they synchronize with the Central European network.

Estonia has prepared for secession by, among other things, building three synchronous compensators with EU support. They slow down the changes in the frequency of the electrical network in the event of disturbances and support the stability of the network.

What What are the effects of the break of the Estlink cable on Finland?

According to Helenin Kinn, the disconnection of the link will probably lower the average price of electricity in Finland somewhat. When electricity cannot be exported, there is more of it available in the Nordic countries and Finland. It lowers the price of electricity.

“Under normal conditions, electricity flows from Finland to Estonia. It raises the prices a little in Finland.”

The exception is those moments when it is very cold in Finland and calm at the same time. Then the current of electricity often reverses.

“Then it’s not so much about the price. Electricity is then everywhere expensive. In those situations, it is about the need for peak power in Finland and how it is covered in Finland.”

With frost Estonia’s coal-fired power plants start up. The electricity produced by them has practically balanced Finland’s system as well.

For example, during the severe frosts at the beginning of last January, Estonia’s production power rose to 1,200 megawatts. Electricity flowed into Finland from time to time with a power of about 900 megawatts.

In the past year, the current has changed from time to time also because nuclear power plants have been out of use for one reason or another and at the same time there has been a lull. There have been moments like this in May and September, for example.

The real thing there is still probably no electricity shortage in Finland during the freezing winters, unless nuclear power plants fail at the same time. The lack of an import connection of 650 megawatts is not so important.

In its announcement, the grid company Fingrid estimates that “during a cold and windless period, as a result of the failure of the Estlink 2 connection, the power situation may become tighter than before”.

When the situation on the electricity market tightens, prices rise sharply. Usually then consumption also decreases, which helps. Part of the industry schedules processes that run on electricity according to price.

Already a third of consumers buy electricity at the exchange price and regulate their consumption to some extent according to the price.

“Consumption flexibility has already increased in normal times’ offer curves. This is clearly visible in the spot market. I have had to change my assumptions about the dynamics of flexibility myself,” says Kinni.

Spot market means the same as exchange electricity.

If the situation started to look very tense, Fingrid would probably make a fuss and electricity consumption would be reduced. That’s how it happened for example, on January 5, when the consumption was about a thousand megawatts lower than predicted.

On Friday afternoon, electricity flowed as usual from Finland to Estonia along the Estlink 1 cable with a full power of approximately 365 megawatts. In Finland, exchange electricity was almost free, 0.4 cents per kilowatt hour. In Estonia, the tax-free price was 10.7 cents.