After leaving the BRELL, the Baltic States do not let go of high electricity prices

Since February 9, when the Baltic countries left the energy ring with Russia and Belarus and synchronized with the EU energy system, wholesale electricity prices in the region have been kept at the maximum level. The average monthly price is second only to the indicators of 2022, when the peak of the energy crisis occurred in the European Union. The main reason is the drop in green energy capacity due to windlessness. Baltic operators, however, fear something else. On the one hand, without BRELL, countries had to create their own balancing capacity market, which supports the energy system in case of shortage. On the other hand, in the coming weeks, restrictions on supplies from Poland and Sweden.

8-9 February Lithuania, Latvia and Estonia has left the BRELL energy ring and synchronized with the European energy system. The historic event of a complete energy break with Russia coincided with a jump in wholesale electricity prices.

So, according to the Nord Pool exchange, on February 9, the average daily price was 128 euros per MWh, and during peak hours — 325 euros. On February 12, prices have already risen to 230 and 483 euros, respectively. As of February 13, the average daily cost will be 169-289 euros per MWh, and during peak hours — 400 euros.

Such a high price has already led to the fact that the average monthly quotations have increased by more than 60% compared to January - up to 142-144 euros per MWh. And they are the highest since 2022, when the average annual price was 192-230 euros.

The joy of disconnecting from Russia to Baltic politicians was spoiled by the weather. Cold weather and calm reduced the capacity of wind farms.

"Low temperatures are recorded, which leads to an increase in electricity consumption. In addition, wind farms produce little throughout the region, so electricity prices have increased not only in the Baltic states, but also in Poland, Germany and the Nordic countries," said Aiste Krasauskene, head of the market development department of the Lithuanian operator Litgrid.

According to her, after leaving BRELL, the company is worried about something else.

"The most important changes related to synchronization in the electricity market are the new balancing capacity market, which began operating in the Baltic States last week, and restrictions on commercial trade with Sweden and Poland, which will come into force in the coming weeks," said the representative of Litgrid.

The Baltic countries do not import electricity from Russia from 2022. However, if earlier balancing and frequency were provided by the BRELL energy ring, where Russia and Belarus have no shortage of capacity, now the Baltic countries have to worry about it on their own, booking and buying back spare capacity. This is especially true because of green power plants, whose capacity may drop sharply due to the weather. This is happening both in the Baltic States and the Scandinavian countries, which provide the region with supplies by 39%.

"It is estimated that by 2025 the total demand for balancing capacity in the Baltic states will reach about 1,500 MW. The demand for balancing capacities is expected to increase along with an increase in renewable energy production and an increase in production consumption," the Estonian operator Elering reported.

Most of the population of the Baltic countries receives electricity at fixed tariffs and stock market jumps hit enterprises and businesses. Obviously, the coming months will show the effect of a complete energy rupture of the Baltic States with Russia.