In mid-March, Sweden, the largest electricity exporter in Northern Europe, announced that it may limit electricity exports to neighboring countries if the European Commission does not abandon a proposal requiring grid operators to allocate part of their congestion revenues to cross-border infrastructure projects supported by the European Union.

Looking at electricity prices on the Nord Pool exchange in recent days, it appears that evening and morning price peaks have been very high. For example, on Monday morning between 7:30 a.m. and 7:45 a.m., the price per megawatt-hour exceeded €800, and in the evening around 9 p.m., the price approached €400.

The cable between Poland and Sweden is officially under maintenance. However, during the day, cheap local wind and solar energy moves toward Sweden via the Lithuania–Sweden cable. From evening until morning, the Swedish grid operator has closed the cable, and no electricity flows from there to the Baltic region.

Elering: Temporary one-way restriction

ERR asked Estonia's TSO Elering if this indicates that Sweden has carried out its threat and begun restricting electricity exports.

Elering communications specialist Kätlin Klemmer said, according to a market notice, a temporary one-way restriction has been in place on the Lithuania–Sweden interconnection since March 28.

"This means that during the day, when there is a lot of solar energy in the Baltic states, Lithuania can export electricity to Sweden. During morning and evening hours, when market conditions would require energy to move in the opposite direction, this is not possible due to technical reasons," she said.

The reason for the restriction is maintenance work on a component of the electricity network in inland Sweden, as noted in the market notice, which also affects the transmission capacity of the cross-border connection.

Cold weather has pushed electricity prices up and put generation capacity to the test

Enefit: Demand and supply

Enefit communications adviser Mattias Kaiv pointed out that the high price spikes in the morning and evening are related to the dynamics of electricity market demand and supply.

Estonia's production and consumption graph shows that consumption rises significantly during morning and evening peak hours and remains lower during the day.

For example, on Monday, consumption stayed at around 800–900 megawatts during the day but jumped to around 1,200 megawatts in the morning hours.

"The production curve behaves oppositely due to increasing solar energy — in the middle of the day, when the sun is at its highest, production is greater. In the morning and evening, production is lower. Since the price of electricity is formed on the market through the interaction of demand and supply, this results in higher prices during morning and evening hours and lower prices in the middle of the day," Kaiv explained.

He added that wind power generation has been lower this week than last week, when prices remained very low because renewable energy accounted for 88 percent of production in the Baltic region.

"To cover the shortfall, more expensive power plants have to be brought online, which in turn raises electricity prices," the Enefit communications adviser added.

Ministry of Climate: Renewable energy keeps price down

Rein Vaks, head of the energy department at the Ministry of Climate, said thanks to added renewable energy, storage capacity and external connections, the final electricity price in Estonia is already below the regional average from the perspective of household consumers and small industries.

"Just three years ago, the average electricity price in Estonia was nearly €91 per megawatt-hour, but today it is already €80.4. For comparison, in March last year the price per megawatt-hour was about €90.2, while this March it was approximately €65," Vaks said.

He added that prices on the electricity exchange are formed using complex algorithms to ensure electricity availability at all times, while consumers on fixed-price packages are not affected by intra-day fluctuations in exchange prices.

"In Estonia, we need additional generation capacity, both dispatchable and renewable, as well as storage. We must move toward a system where the base is provided by low-cost renewable energy and imports when necessary, while peaks are cut by flexible gas plants and storage capacity," Vaks said.

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