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Negotiations over the Service for Tertiary Power Reserve for 2017 Completed
2016-12-28

Negotiations over the Service for Tertiary Power Reserve for 2017 Completed

With the aim of concluding service agreements on tertiary power reserve for 2017, Litgrid invited potential service providers to direct negotiations over the optimal service price. All Lithuanian electricity producers meeting the technical requirements for the provision of the tertiary power reserve service took part in the negotiations held on 27 December 2016: Kaunas combined heat and power plant (CHP), Mažeikiai CHP, Panevėžys CHP, and Lietuvos elektrinė (Lithuanian power plant). 
 
The tertiary power reserve service for 2017 will be provided by Lithuanian power plant. The service will be provided for € 32 million. 
 
“The auction encouraged the producers of electricity to look for more effective solutions. The participants did prepare for the negotiations, some of them managed to decrease the original price offers substantially, which allowed to achieve a good ratio between the price and the service scope”, says Daivis Virbickas, CEO of Ligrid, the electricity transmission system operator.
 
The use of the tertiary reserve service is limited to the cases of emergency or another serious disruption, its amount is set with regard to the key element operating within the system, i.e. a potential sudden disruption which would cause the highest energy deficit.
 
“Although the tertiary power reserve was last activated in 2013, it must be available at any time. It is our responsibility to ensure the reliable operation of the power system and the transmission of electricity to customers in any conditions. At the same time, we must meet our obligations under other agreements with partners, contractors and financial institutions”, says D. Virbickas while recognising that keeping within the limits of the tertiary reserve price set by the Commission was a real challenge.
 
A 484 megawatt (MW) tertiary power reserve has been set for 2017, with the maximum spending for the purchase of the tertiary power reserve set at € 32 million. This amount is set on an annual basis by the National Commission for Energy Control and Prices for the next 12-month period. 
 
The first auction on tertiary power reserve held on 13 December 2016 ended without results. A bid submitted by one participant was rejected due to non-compliance with the auction regulations, whereas the aggregated amount of tertiary power reserve offered by other participants was smaller than the necessary reserve.
 
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