EnergyWatch

Danmark and Finland veto Swedish exemption

The Danish Utility Regulator and Finnish counterpart Energiavirasto both protest Swedish TSO Svenska Kraftnät's application for exemption from EU rules.

Carsten Smidt, adm. direktør for Forsyningstilsynet, der altså ikke vil godkende Svenska kraftnäts ansøgning om dispensation i år. | Photo: Stine Bidstrup/ERH

It seems that the third time is not the charm for Swedish transmission system operator Svenska Kraftnät, which in 2019 and 2020 applied for exemption from EU regulation requiring 70 percent transmission capacity on the open market for transnational interconnectors.

The Danish Utility Regulator (Forsyningstilsynet) has now vetoed the Swedish request. Energiavirasto did the same earlier in the month.

A decision now rests with the Swedish regulator, Swedish Energy Markets Inspectorate (Ei), which will make its judgment later this week. If Ei chooses to approve the Swedish request, it will then be down to the EU’s regulator, Acer, to decide whether derogation should be allowed.

The Swedish TSO stated in its request: “The lack of remedies means Svenska Kraftnät is not able to meed Acer’s 70 percent requirement in 2022 without jeopardizing operational security.”

But the argument has not gone down well with either the Finns or the Danes.

The Danish regulator said in its response to the consultation: “Forsyningstilsynet formally disagrees with derogation from the 70 percent requirement for Svenska Kraftnät.”

No from the Finns

The Swedish inability to meet the EU requirement mainly stems from a bottleneck in the West Corridor. But the Finns have also been hit by a bottleneck further north. For the first time, Svenska Kraftnät has added the link between SE3 and Finland to its request for derogation.

The Finnish regulator is having none of it.

It flatly rejects Svenska Kraftnät’s request. “Energiavirasto regards Svenska Kraftnät’s continuing failure and obvious misuse of legal derogations to avoid a key aspect of energy regulation as requiring action from European institutions.”

Lack of improvement

This is a U-turn by Forsyningstilsynet, which otherwise rewarded the progress of the Swedes in 2020 with the approval of the request for derogation. Svenska Kraftnät pointed out that the number of weeks where capacity was less than the statutory 70 percent for Denmark, had decreased from 36 to 28 percent.

And it stated then: “Forsyningstilsynet concludes that Svenska Kraftnät is meeting the requirement for a one-year extension of its position, since the scope of the position has been significantly reduced since last year."

Svenska Kraftnät could not achieve the same improvement this year, when periods with less than 70 percent transmission capacity on the connection from Sweden to Denmark and vice versa increased compared to 2020. Hence the veto from the Danes now.

“Forsyningstilsynet is of the view that the above observations clearly show that the derogations granted to Svenska Kraftnät have not given Svenska Kraftnät an incentive to move closer to meeting the 70 percent requirement. In fact, the development in available cross-zone capacity shows that it seems to be going the wrong way,” according to Forsyningstilsynet.

Danes pleased

The lack of capacity has particularly affected transmission capacity in Denmark, where the bottlenecks of the West Corridor this year have been going on for a decade. Lobby organization Danish Energy has increasingly called on Forsyningstilsynet to put an end to the Swedes’ requests for derogation. It says the Swedish transmission system operator has simply copied its requests year on year without the prospect of any real improvement.

“Therefore, we are pleased that the Supply Inspectorate is now putting its foot down and wading,” says Danish Energy Executive, Carsten Chachah.

Danish Energy says the Swedes now have only one opportunity to meet Acer’s requirements.

“Price ranges do not reflect the bottlenecks and network expansion is happening too slowly. So counter-action is required,” says Carsten Chachah.

Ei expects to publish its response later in the week.

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