Finland to Test First Power Exports to Russia Next Year

Finland may for the first time test electricity exports into Russia next year, Finnish grid company Fingrid Oyj said.

“Early next year, we may carry out technical tests to make sure exports function via the Vyborg station” that connects the Finnish and Russian power networks, with dates and details still to be confirmed, Juha Kekkonen, Fingrid’s executive vice president, said yesterday in an interview in Helsinki.

Since high-voltage 400 kilovolt electricity transmission from Russia to Finland started in 1982, the Nordic country has imported more than 10 percent of its annual needs via four converter stations of 350 megawatts each in Vyborg. The station has never been used to ship electricity in the other direction, due to technical restrictions.

One of the 350 megawatt units has been modified to make Finnish power exports to Russia technically possible, while “we still need to agree on commercial terms, the principles and mechanisms for trading, capacity allocation and information exchange, and it will take time for Russia to modify its regulations and rules accordingly,” Kekkonen said.

Asymmetrical Regulation

Russia levies a capacity tariff of about 25 euros {$33) a megawatt-hour for power exports during morning and afternoon peak demand, which restricts shipments to Finland, and it may also limit power flows in the other direction if two-way electricity trading eventually happens, according to Fingrid.

“If Finland does not receive a capacity payment, if and when it one day sells power to Russia, there will be a dead zone where exports are unviable due to asymmetrical regulation,” Kekkonen said.

Russian power for baseload delivery today cost 844.57 rubles ($27) a megawatt-hour in the Central, Ural and South Hubs, according to data compiled by Bloomberg. That compares with 61.43 euros ($80) in Finland, according to data from the Nord Pool Spot AS exchange.

Jussi Maekelae, senior analyst at SKM Market Predictor AS, said Russia’s capacity payment is poised to hamper trade in either direction.

“There will be a threshold of more than 20 euros for it to become viable for either country to sell power to the other, as a result of the capacity payment in addition to cross-border tariffs,” he said today by phone from Helsinki.

To contact the reporter on this story: Torsten Fagerholm in Helsinki at tfagerholm@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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