Finnish Power Imports From Russia Plunge to Zero for First Time

Finnish power imports from Russia dropped to zero for the first time as electricity shipments to the Nordic country became unprofitable.

Finland imported nothing from Russia on a 1,400-megawatt link that connects the countries from 8 a.m. to 10 a.m. Helsinki time today, the first time since high-voltage links were put in place between the countries in 1981, grid operator Fingrid’s data showed.

Russia levies a capacity tariff of about 25 euros ($32.60) megawatt-hour on power exports at times of peak demand in mornings and afternoons, according to Fingrid. The tariff, introduced in 2006 to secure revenues for owners and builders of power-plant capacity, hurts Russian power export monopoly OAO Inter Rao UES (IRAO)’s ability to compete with Nordic generators.

“We would lose money from buying electricity on the Russian market and shipping it to Finland during peakload hours,” said Marja Rasi-Kurronen, the Helsinki-based head of cross-border trading RAO Nordic Oy, a subsidiary of Inter Rao. She declined to comment on specific prices.

Finland’s share of Russian power exports fell to 3.8 terawatt-hours last year, or 21 percent of Russia’s total exports, from a 56 percent share in 2010, according to data on Inter Rao’s website.

Viable Exports

“Today, power on the Russian spot market costs roughly 1,000 rubles ($32.60) per megawatt-hour, while power sold in Finland costs 41 euros,” Risto Lindroos, who works on power market development at Fingrid, said today by phone from Helsinki. “That means the combination of cross-border fees and the Russian capacity payment are enough to kill the viability of exporting power to Finland.”

Finnish imports from Russia at times of peak demand are likely to remain subdued at least through the end of May, as rising temperatures and the spring thaw boost Nordic hydropower production and push down prices, said Jussi Huttunen, who works on cross-border power transmission at Fingrid.

“Power exports from Russia follow a regular pattern, where it is viable to export to Finland during baseload night and weekend hours, and less profitable or even loss-making during daytime peakload hours, when the capacity tariff is levied,” RAO Nordic’s Rasi-Kurronen said.

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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