Fingrid customer story

Fingrid buys long-term price hedging

Fingrid is responsible for power transmission in the Finnish electricity transmission grid. Transmission inevitably results in some energy loss, which must be compensated by buying electricity. Gasum Portfolio Services hedges long term against the price of this electricity.

What does loss electricity mean?

Losses occur in electricity transmission. Fingrid buys the loss energy originating in the transmission grid on the day-ahead and intraday markets. Procurement of loss power seeks to predict costs and manage cost risks to hedge against sudden movements in market price and the ensuing financial risks. The price risks of loss electricity are hedged against in good time in advance by hedging procurement in full on the financial markets. We buy loss electricity hedging portfolio management from Gasum Portfolio Services.

What is the cost to Fingrid of loss electricity?

Annual grid losses amount to around 1-1.4 TWh a year, which equates to around 1.5% of Finland’s total electricity consumption. Fingrid’s annual loss power costs are around €50 million. Long-term price stability of loss power is paramount for Fingrid since it ensures the price predictability of transmission in the grid for our customers.

How has the price hedging of loss electricity been arranged?

Gasum managed the price hedging of Fingrid’s loss electricity also during the previous contact term, which meant we were able to continue with confidence after Gasum won competitive bidding in the spring. Gasum manages hedging independently within the framework we set. We have been very pleased with the cooperation and have every confidence in Gasum’s expertise.

How will the breakthrough in the energy market affect the procurement of loss electricity?

Power loss will always occur in the grid, which means price hedging will continue to be needed going forward. The markets will change in the transition to a cleaner energy system. Together with Gasum, we will monitor the impacts of the changing market on price hedging and respond to the changes were needed