Green Nordic Energy System: TSOs Publish Strategy and Solutions Report

The Nordic energy sector is at a crossroads as it prepares for the transition towards a net-zero system. At the top level, political efforts such as the 2021 Climate Change Conference (COP26), European Union (EU) Green Deal and Fit-for-55 as well as national decarbonisation ambitions are the key drivers. The bottom-up efforts of customers for green electrification are also gaining momentum. As a result, the four Nordic TSOs—Energinet (Denmark), Fingrid (Finland), Statnett (Norway) and Svenska Kraftnät (Sweden)—are facing a growing demand for grid capacity and connections to meet the need for more clean electricity towards 2030 and beyond.

Given that electrification will be based on weather-dependent clean energy sources, the Nordic electricity systems face challenges relating to power balance, generation adequacy, grid capacity, system flexibility as well as issues caused by decrease in inertia and frequency quality in the power system.

In this context, the TSOs recently published the Solutions Report 2022 – Solutions for a Green Nordic Energy System, in continuation to the previous solutions reports prepared biennially since 2018. The report aims to address the challenges and describes the work on solutions and presents the Nordic TSO strategy towards 2030 focusing on onshore and offshore wind development and sector integration (with other sectors that use electricity such as transport, heating and hydrogen production). The Nordic TSO strategy is a new element in the 2022 solutions report. The vision of the Nordic TSO strategy is to have clean and competitive electricity that enables a climate-neutral, secure and integrated energy system.

The Nordic TSO strategy highlights are centred on the key issues of broad cooperation across all energy sectors; development and maintenance of adequate infrastructure by TSOs; requirement of all sources of flexibility for balancing and congestion management; easy and equal market access and proper incentives for all energy resources to provide adequacy, flexibility and system services; optimisation of the entire energy system through holistic power system planning; and streamlined processes to make the grid capacity and grid connections available in time.

In addition to the solutions report, the Nordic TSOs also published the strategy implementation plan as an annex. It presents the prioritised measures under the selected strategic themes that the Nordic TSOs plan to initiate working on to achieve the strategy goals. Its progress will be monitored and updated at least on an annual basis.

To integrate the growing amount of wind generation into the electricity system and create economic signals and incentives for flexibility and energy sector integration, the TSOs are working on specific projects. Among them is the Nordic balancing model (NBM) programme, which will introduce a 15-minute imbalance settlement period and markets supporting it [through the implementation of automatic frequency restoration reserve (aFRR) and manual frequency restoration reserve (mFRR) capacity markets, a single price model and mFRR energy activation markets]. It will then finally enable participation in the harmonised European balancing market platforms – mFRR-Platform (MARI) and aFRR-Platform (PICASSO) – between May 2023 and July 2024.

Additionally, the increased coordination of operational planning among the Nordic TSOs through the Nordic Regional Coordination Centre (RCC) and the new coordinated capacity calculation will benefit the region through improved utilisation of the Nordic transmission network. These innovations will not only bring about better and more automated power system operations but also provide more accurate price signals to the markets.

Further, the Nordic TSOs are planning to invest over EUR25 billion over the next decade to reduce bottlenecks in the power system and enable electrification and the integration of large amounts of new renewable generation, particularly wind power. They also publish a common Nordic Grid Development Perspective (NGDP) every second year to communicate a common Nordic view on the development of the future power system, and the status of ongoing and planned investments of Nordic significance. Also, the Nordic scenarios for electricity demand (which takes into account demand from other sectors that use electricity, such as transportation, heating and hydrogen production) form the basis of long-term system planning.

The first stage of flexibility markets has been started with ongoing pilots to introduce additional flexibility to the energy system. To support frequency containment reserve for disturbances (FCR-D) in times of low inertia, the Nordic TSOs have implemented a new reserve product Fast Frequency Reserve (FFR). The plan is to conduct a feasibility study on FFR and FCR market design and integrated Nordic market; define reserve needs and create good visibility and transparency to build capability; and introduce a solution for including wind and solar power to the various ancillary services markets.

Broadly, the solutions report has identified three key action areas. Firstly, adequate infrastructure is needed including in the Baltic and North Sea regions. On the one hand, the TSOs have to speed up connection to the grid and on the other hand, they have to ensure optimal utilisation and performance of the existing grid. In effect, they have to make sure to use the full transmission technology mix for further grid expansion. Secondly, there is a need to provide a secure system and integrated market. Market access and financial incentives for all energy resources to provide adequacy, flexibility and ancillary services must be ensured. Further, there is a need to introduce offshore bidding zones and integrate offshore solutions in the electricity market to efficiently integrate the growing amounts of offshore wind into the energy system. Finally, holistic energy system planning must be undertaken and the ambitious wind power and electrification scenarios should be incorporated in system planning to optimise energy infrastructure. The implementation of joint activities is being organised by various Nordic committees (refer Table 1).

Nordic TSOs are expected to play a critical role in paving the way for sector and wind power integration in the region. With the rapidly progressing energy transition, this needs to happen at an unprecedented pace, while simultaneously ensuring security of supply at all times. Recent developments indicate greater collaboration both in operational and planning aspects among the TSOs to achieve the Nordic region’s clean energy goals.