Approaching the moment when operation of power plants could be subject to episodic interruptions

End 2022, Latvian electricity transmission system operator AS “Augstsprieguma tīkls” (AST) publicly urged consumers to “save electricity to the extent possible during peak hours” due to insufficient generation capacity in the Baltic region and Scandinavia. The present legal framework makes energy users count on energy supply limitations during energy crisis, too. Nevertheless, it seems that we are inevitably approaching a spot from which on, rather than imposing restrictions on consumers, operations of electricity producers would have to be interrupted.

In the upcoming years the heightened construction of wind parks and installation of solar panels will bring about significant changes to the rural landscape of Latvia. The first large-scale offshore wind farms at the Baltic Sea coast are expected in relatively near future. [1] The approaching changes will affect not only the obvious but also some hidden aspects – starting with the statistical indicators disclosing the share of renewable energy sources in gross electricity consumption to a purely practical need to adjust the transmission and distribution system to the new power generation tendencies.

The comparatively recent amendments to the Energy Market Law introducing a capacity reservation fee [2] also speak of already ongoing changes in power generation and outline specific challenges that are associated therewith.

According to a recent publication of the distribution system operator AS “Sadales tīkls” as for today there are solar energy construction projects under development with the total planned capacity to be connected to the distribution grid of around 900 MW (according to the operator’s estimates, the total consumption capacity in summer, what is the peak season for solar power production, ranges from 550 to1,100 MW)[3].

Moreover the transmission system operator AS “Augstsprieguma tīkls” (AST) noted that already in mid-2022 the transmission capacity reserved by power generators exceeded 3,500 MW at Latvia’s winter season load of around 1,400 MW.[4] It is presumed that the operator’s data do not contain the system’s capacity that will be required for the planned large-scale offshore wind parks in the future. Besides, it seems that the introduced capacity reservation fee has not left any significant impact on the reserved capacity volumes as the development of the majority of the started projects in ongoing.

By experiencing a sharp increase in electricity generated from renewables significantly exceeding the national electricity needs there should be a ready-made plan of what to do with the “surplus”. Producers of renewable energy and the representatives of the newly established Ministry of Climate and Energy treat these figures as an opportunity and are optimistic about Latvia becoming an electricity exporter.[5] Specifically in terms of development of offshore wind parks, this is a quite realistic perspective – on the condition that the Baltic Sea capacity interconnection plan connecting Finland and Germany would be implemented [6], making it possible for the Latvia’s offshore electricity to “travel” to other EU Member States.

Meanwhile system operators have to come up with practical local solutions and adjusted legal framework that will allow coping with the possibility of Latvia’ s wind and solar energy plants producing more power than can be absorbed by the grid. In the workshop intended for developers of solar and wind parks that was organized by AST earlier this year the operator brought attention to a term that is rather unknown for the local energy sector – redispatching. What does it mean?

In short, redispatching means that the transmission system operator may alter the power generation plans of a power producer in terms of the amount of power to be generated and fed to the grid.

In wider terms, redispatching is a concept used for markets with high saturation of wind and solar power plants, e.g., Germany. Namely, if we talk about the so-called conventional power plants, the operation planning (dispatching) is based on power generation price and market price correlation at a specific period. For illustration, a power generator, based on natural gas and power price forecasts for a specific period may decide to produce power at the thermal power plant or not. To a significant extent this gives the power producer the freedom of planning the operation of the plant in most effective (i.e., most profitable) way possible.

The operation of solar parks and wind farms, in its turn, is highly affected by weather conditions – the plant should operate when it is sunny or windy. Unreasonable idling in suitable weather conditions will commonly imply the plant is operated inefficiently and thus is not achieving its maximum yield potential. This will remain the logic behind solar and wind park operation at least for so long while batteries and hydrogen technologies are still awaiting their breakthrough.

And this is when the system operator arrives at the point when redispatching should be applied. If the weather conditions at a specific day are such that the planned amount of solar and/or wind energy to be produced and fed in the grid could potentially harm the grid, the system operator might have to interfere. In case of redispatching, such interference might be expressed as the operator’s order to a specific power company to temporarily curtail or stay power generation by compensating the power generator for the damages caused herewith.

Nevertheless, according to the Regulation (EU) 2019/943[7], redispatching should only be used as the ultimate measure when no other alternative for maintaining safe operation of the system is available. Namely, every situation should be possibly regulated by market-based mechanisms and system operator’s interference through redispatching is admissible only in case it is impossible.

As mentioned earlier, redispatching involves financial support to the affected power generator, with the exception of power generators that have connection agreements with the system operator that do not guarantee stable power supply. According to the Regulation (EU) 2019/943 the amount of the compensation should cover the net revenues earned by the power generator in case no redispatching would be required. The compensation should also include the costs of any additional required measures to be taken by the affected power generator to satisfy the redispatching request.

At the current stage it seems unrealistic that the increase in power capacity generated by solar and wind power plants could reach a level which, at certain circumstances, could jeopardize safety of the grid. At the same time statistical data reveal that the number of wind and solar power plant projects and their planned capacity is rather significant, and the future might be closer than expected. This is also supported by a recent announcement of AST to temporarily suspend issuing technical requirements for the connection of new power plants to the transmission system if reconstruction of its 330 kV network is required for this purpose.[8] In its statement AST also indicates that the Ministry of Climate and Energy is working on a regulation “to target optimization of power plant capacities connected to the grid [and] effective use of the transmission network [to avoid] the overload.”

The developers of solar and wind power plants should keep track of the drafting and approval of the redispatching regulations by the Ministry of Climate and Energy. The enforcement of such regulation will certainly catch the attention of potential investors and is likely to affect funding and implementation of certain projects.

[1] See, e.g., https://elwindoffshore.eu/ (viewed 13.07.2023); Four applications by private individuals on setting sea borders for the construction of offshore wind parks are awaiting the decision of the Cabinet of Ministers.

[2] Amendments to the Electricity Market Law of 14 July 2022; https://likumi.lv/ta/id/334349 (viewed 13.07.2023.).

[3] AS Sadales tikls: Elektroapgādes report, January – March 2023 (https://prezi.com/i/view/9U8YnTyEBGYB6acFmEF3/), viewed 24.08.2023.

[4] See https://www.ast.lv/lv/content/pieslegumi-parvades-sistemai (viewed 13.07.2023.); the current reserved capacity amount could probably differ, inter alia due to the impact of the introduced capacity reservation fee.

[5] See, e.g., discussion panel at the wind energy conference “WindWorks. Moving Energy” https://www.windworks.lv/livestream (viewed 13.07.2023.).

[6] See, for example, https://www.ikem.de/en/projekt/baltic-integrid/ (viewed 13.07.2023.).

[7] Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity https://eur-lex.europa.eu/eli/reg/2019/943/oj/?locale=LV (viewed 13.07.2023.).

[8] See: https://ast.lv/lv/events/augstsprieguma-tikls-uz-laiku-partrauc-izsniegt-tehniskas-prasibas-jaunu-elektrostaciju (viewed 24.08.2023.)