Gas market opening up - Five facts

The Finnish gas market will open up to competition at the start of 2020. As a result, the transmission of gas and sale of energy will be unbundled from each other and customers will have more options than at present. At the same time, the new Balticconnector gas pipeline will combine the Finnish, Estonian and Latvian gas markets.

The opening of the gas market has been preceded by the Natural Gas Market Act that entered into force at the start of 2018 and broad cooperation between different stakeholders to create new market roles. The following list compiles the main changes ushered in by the open gas market.

1. New connection to the Baltics

From January 1, 2020, of Finland, Estonia and Latvia will be part of the same gas market area. Finland currently uses natural gas imported from Russia and the only entry point is in Imatra. The Balticconnector pipeline to be opened between Finland and Estonia will diversify the sourcing of gas supplies and further improve domestic energy security. Finland is the largest gas market, consuming 23 TWh, followed by Latvia at 13 TWh and Estonia at 5 TWh.

2. Independent gas energy and transmission capacity

Looking ahead, total gas supply on open wholesale markets will be made up of two products: gas energy and transmission capacity. Gas energy refers to a certain volume of gas in kilowatt hours and transmission capacity refers to the right to transmit the energy obtained in the transmission grid.

3. Gasgrid Finland to become the TSO

From the beginning of 2020, Gasgrid Finland, a new company unbundled from Gasum, will be the transmission system operator (TSO) with transmission responsibility for gas transmission in Finland. Capacity is booked from Gasgrid Finland to gas entry and exit points, from where the gas flows into or out of the transmission system.

4. New market roles

Several new actors and service providers are expected to enter the market. In the new system, a gas supplier or shipper books transmission capacity from the TSO and delivers it to end users. An end user may be connected to either a transmission or a distribution system. Sellers, known as traders, trade in gas energy. Trading may be bilateral or take place on the gas exchange.

5. Many opportunities for end users

Looking ahead, an end user in a transmission system will be able to take on a more active role and itself operate as a shipper, trader or so-called shipper with balance responsibility, which is responsible for capacity management at the metering site. The choice is therefore of the more traditional role of just a gas consumer, in which case sourcing, balance management and capacity can be outsourced, or manager of the entire process. This means that the end user will also assume responsibility for any market risks. Different combinations will also be possible, so that, for example, gas transmission and a certain amount of gas come from one shipper and the remainder from the gas exchange or another shipper.

28.11.2019