The electricity market is eroding the foundations of the electricity system

From the reader. The electricity market is structured in such a way that operators with the lowest marginal cost can most certainly sell their production. This market-based system worked well as long as there was no production dependent on the current weather conditions, but all forms of production were always available.

The marginal cost of wind power and solar power producers using “free fuel” is practically zero, so according to the current operating principle of the electricity market, they always get their production sold. This substantially weakens incentives to invest in controllable, weather-independent production.

Reliable operation is always available

However, in terms of the reliable operation of the electrical energy system, the different forms of production are not equal at all. Controllable production is always available when needed.

The current type of network based on alternating current can generally be formed and kept stable only on the basis of synchronous generators of controllable production. Wind and solar power connected to the grid via power electronics can only feed power into the already established grid.

Currently, the controllable production power that is definitely in use in Finland is about 12 gigawatts. There is about 10 gigawatts of randomly available production at the mercy of Säide. With the current annual electric energy consumption of 83 terawatt hours, the peak power demand of the electric energy system is about 15 gigawatts.

If there is no wind during peak power demand, the shortfall of three gigawatts in electricity production can just about be covered by imports from Sweden and Estonia, as the import capacity is slightly more than 4 gigawatts.

Industry wants continuous and steady production

Electricity storages are not helpful for power shortages lasting hours, because electricity cannot be stored in significant quantities. Industrial flexibility is often mentioned as a solution to fluctuations in production capacity. However, industrial production is generally wanted to be run smoothly and without disturbance, instead of being driven up and down depending on whether it is windy or not.

If we accept the small safety margins and do not believe that the Finnish economy will enter a strong growth career in the next twenty years, the current situation should be relatively good.

If, on the other hand, we assume and want society to become electrified and the Finnish national economy to move into a phase of strong growth, we should find out how the electricity market could be reformed in such a way that it would encourage market-based investments in controllable production.

Blacksmith Borenius

Ph.D., Aalto University, School of Electrical Engineering