Estonia’s transition into the Continental European synchronous grid and full participation in European balancing platforms marked a historic milestone. But few expected the intensity of the price shifts that followed. Reserve power prices spiked to 4000 €/MWh in tens of hours, far exceeding market forecasts.
Elering, Estonia’s TSO, was forced to activate its Kiisa backup power plant, typically reserved for emergencies. In just three months, almost half of the annual frequency reserve budget was already consumed.
What changed?
With the desynchronization from the Russian IPS/UPS system, Estonia gained access to four new market balancing products for the first time:
- mFRR capacity
- mFRR energy
- aFRR capacity
- aFRR energy
- FCR capacity
These products, previously managed by TSO internally and centrally, are now traded competitively — opening the door for new participants such as battery storage, demand-side aggregators, and fast-ramping generation.
Additionally, Estonia formally joined PICASSO, the Europe-wide automatic frequency restoration reserve (aFRR) platform. This transition brings greater harmonization but also requires faster, automated response capabilities, something only well-prepared, digitally integrated assets can deliver.
Price volatility reflects underlying system strain
The high prices seen in Q1 weren’t just anomalies—they signaled structural stress. A limited pool of flexible assets meant the system had to rely on costly last-resort capacity.
Grid support is becoming a real business case
Flexible technologies like BESS (Battery Energy Storage Systems) are now essential, not optional. A well-designed and properly operated storage asset can capture significant new revenue from ancillary services.
The cost of imbalance is under review
Due to the high costs experienced in Q1, Estonia’s TSO is now evaluating new cost allocation models that could shift more responsibility to producers—especially intermittent generators like solar and wind. That makes forecast accuracy, dispatchability, and grid interaction capabilities more important than ever.
These developments signal a turning point in the Baltic energy landscape. Power producers, developers, and investors must now treat grid services and flexibility not as compliance item -but as core components of their revenue strategy.
The developments in Q1 underscore a pivotal shift in the Baltic energy landscape. For power producers, developers, and investors, grid services and flexibility are no longer optional, they’re essential components of a robust revenue strategy.
