November 24, 2017 / 11:11 AM / in a year

Finland and Nordic neighbours struggling to agree power supply deal

* Finland won’t opt for majority-governed power balancing

* Parties must reach deal by January

* European Commission to decide as last resort

By Lefteris Karagiannopoulos

OSLO, Nov 24 (Reuters) - Nordic electricity grids are unlikely to agree on a new system to balance power supply and demand before a January deadline as Finland opposes a proposal by Norway, Sweden and Denmark, the head of the Finnish grid told Reuters.

Scandinavia and Finland trade power on the Nordic power market but on days with imbalances between booked supply and demand, the grids have to agree how to smooth things out by deciding unanimously where the power should be directed.

Earlier this year, Scandinavian grid operators proposed taking decisions by majority vote, a change they say will ensure the future reliability of supply as demand grows.

Finland opposes the plan, saying it is illegal. Talks have been continuing to try to resolve the situation by January.

Stripped of a veto, Finland is concerned it may have no say on who produces the balancing power, possibly favouring Scandinavian power plants, as Finnish ones tend to be costlier.

“There is a deadlock ... In our view it’s very clear,” said Jukka Ruusunen, chief executive of the Finnish grid Fingrid.

“They (Sweden, Denmark and Norway) would have majority every time something would be voted on. EU legislation says ... all decisions have to be unanimous. The proposal is illegal,” he said in an interview.

Around one third of electricity in Finland comes from combined heat and power plants, but many are due to reach the end of their lives in the coming years.

A new nuclear reactor, expected to boost domestic power output by the end of 2018, has also been delayed.

Finland can import up to a fifth of its total electricity consumption at times of peak winter demand.

Reliability of power supply is particularly crucial to Finland as its industrial sector, including pulp and paper makers such as UPM and Stora Enso, consumes a lot of power.

In 2014 the country of five million inhabitants consumed three times as much electricity per capita as Britain and its 65 million inhabitants, according to World Bank data. “Fingrid is not happy with the governance (proposal) - but hopefully ... we all can agree,” Peder Oestermark Andreasen, CEO of Danish grid, told Reuters., Sweden’s Svenska Kraftnat and Norway’s Statnett say this governance model is best able to take timely decisions and ensure security of supply.

“We have to develop the market to fit to the new challenges ... Otherwise we can’t control the imbalances,” Erik Ek, Svenska Krafnat’s head of operations, told Reuters.

If no agreement is reached, the European Union agency for energy regulators cooperation (ACER) would act as a mediator. If that fails, it could ask for the European Commission’s help to resolve the situation.

“(It is a) delicate situation. Because either they (the Finns) accept a proposal or they are alone,” said ACER’s head of electricity, Christophe Gence-Creux. (Editing by Keith Weir)

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