2025-11-07
Baltic electricity transmission operators announce plan to phase out balancing resources
The Baltic electricity transmission system operators – Litgrid in Lithuania, Elering in Estonia, and Augstsprieguma tīkls (AST) in Latvia – have announced a plan to discontinue the provision of demand reduction resources. In order to ensure the reliability of electricity system in the event of a lack of supply in the balancing market, Baltic operators were granted the right to consider their own resources or those of related service providers.
The plan is available here: Baltic TSO resource exit strategy
Currently, electricity transmission operators' resources are included in the reserve demand calculation as demand reduction resources. Reserves are procured from the market in the remaining amount necessary to cover reserve demand. Demand reduction resources reduce the total amount of balancing capacity that needs to be purchased. In Estonia and Latvia, electricity transmission system operators managing balancing resources, and in Lithuania, the electricity storage system operator Energy Cells, do not receive remuneration for these resources – resources are offered at zero price. The use of demand reduction resources ensures the adequacy of balancing resources and reduces the overall cost of balancing capacity.
To avoid excessive use of demand reduction resources and to provide clear guidance to market participants and other stakeholders, the Baltic electricity transmission system operators announce the principles for phasing out the related balancing resources. The volume and principles of demand reduction resources may be changed by decision of the national regulatory authority of each country.
In Lithuania, battery storage systems managed by Energy Cells are used as demand reduction resources. Their use for automatic frequency restoration services with a maximum capacity of 40 MW in both directions (up and down) is planned to be extended until 2026. Nevertheless, the market situation will be monitored continuously and the provision of services will be gradually reduced if the aFRR capacity of market-based storage facilities becomes sufficient to meet the needs of the system.
In Latvia, battery storage systems (BESS) operated by the electricity transmission operator AST are used as demand reduction resources. The plan is to use the BESS in the balancing market for three years no later than November 2028. The battery storage system will provide frequency containment reserve (FCR) services with a capacity of 8 MW and automatic frequency restoration services with a capacity of 32 MW in both directions (up and down). Use of AST BESS as a demand reduction is estimated to half the balancing capacity costs that are passed on to producers and consumers in Latvia. The Latvian national regulator may decide to reduce or suspend the use of BESS as a demand reduction reserve.
In Estonia, the Kiisa power plant, operated by the electricity transmission operator Elering, is used as demand reduction resource. The plan is for it to be used based on EU derogation for three years after synchronisation until November of 2028. By the end of this period, the Estonian government has authorized Elering to prepare sales process of Kiisa power plant. Until then, the power plant will provide manual frequency restoration service (mFRR up) with a capacity of 250 MW and manual frequency restoration service (mFRR down) with a capacity of 40 MW. The Estonian national energy regulatory authority may decide to reduce or suspend the provision of demand reduction reserve.
In the period from February till September, 2025 provision of Baltic TSOs' demand reduction reserve played a critical part in covering the balancing capacity needs in the Baltic region and reduced total balancing capacity costs eights times.
In addition, in the third quarter of 2026, the operators of Lithuania, Latvia, and Estonia plan to conduct and submit to the Baltic regulators an annual analysis of the provision of balancing services, including an assessment of the use of demand reduction resources, which is relevant for making decisions on resource reduction and abandonment.
The total demand for balancing capacity in the Baltic countries in 2026 will reach around 1,600 MW, of which the demand for frequency containment reserve (FCR) will reach 28 MW, automatic frequency restoration reserve (aFRR) – up to 96-120 MW upward direction and up to 104-120 MW downward direction, manual frequency restoration reserve (mFRR) – up to 580-604 MW upward activation direction and up to 675-691 MW downward activation direction.
