Loss energy

Some energy loss occurs in electricity transmission. Grid losses mainly consist of the loss of heat from power lines and, in certain weather conditions, so-called corona power losses on the conductor surface.

The volume of grid losses equals 1,5 TWh per year, which accounts for under 2 per cent of Finland’s electricity consumption. The dissipation power varies between 80 MW and 350 MW depending on the grid’s transmission situation, electricity consumption and the volume of corona power losses.
Fingrid’s annual loss power costs are estimated at EUR 50 million depending on the market price of electricity.

Procurement of grid’s loss power

Fingrid procures the loss power created in the grid from the electricity markets. The purpose of procuring loss power is the predictability of costs and management of expense risks by hedging against sudden changes in market price and against the resulting financial risks. Electricity is procured from the electricity exchange’s day-ahead market. Before the hour of consumption, the loss power balance is adjusted based on more specific forecasts and actual volumes by buying or selling electricity on the intraday market.

Fingrid hedges against loss power price risks well ahead of time. Hedging is based on the predicted volume of loss power.

Price and area price hedging

Only Futures and DS Futures products listed on Nasdaq, as well as corresponding OTC products, can be used for price hedging. Price hedging is carried out against the system price.
Price hedging is begun three to four years before the delivery year. Hedging is implemented by purchasing agreed products. During the delivery year, hedging is adjusted based on forecasts. Price hedging is carried out based on the system price.

Annual and quarterly EPAD products listed on Nasdaq, as well as corresponding OTC products, can be used for area price hedging.

Area price hedging is begun three to four years before the delivery year.

The implementation of price hedging and area price hedging has been assigned to an external portfolio manager subject to public bidding. Fingrid does not carry out hedging directly on the stock exchange or with market parties. The portfolio manager carries out hedging according to the instructions provided by Fingrid in advance. Fingrid does not take a stand, at any point, on the details of how the hedging is carried out.