Spausdinti

Trading in Electricity and Balancing Services

Spausdinti

Lietuvos Energijos Gamyba operates in the liberalized Lithuanian wholesale electricity market. It sells and purchases electricity and provides balancing service to public and independent suppliers.

Independent suppliers

Lietuvos Energijos Gamyba sells electricity and provides balancing service in accordance with a standard agreement on electricity sale, purchase and balancing service, which is signed with all independent electricity suppliers that meet the Company’s requirements. Under this agreement, all independent suppliers are subject to universal pricing standards (including the Company’s subsidiary Energijos Tiekimas UAB).

Prior to signing the standard agreement on electricity sale, purchase and balancing service with a supplier, the Company takes into consideration the following factors in order to reduce its financial risk:  

  • the size of the supplier’s consumer base (the amount of electricity purchased by the supplier should not be less than 10 MW per hour, or 7 440 MWh per month, or 87 600 MWh per year);
  • the financial capacity of the supplier (the supplier must have an adequate amount of capital and shall make a deposit before starting trading in electricity with Lietuvos Energijos Gamyba);
  • the creditworthiness and goodwill of the supplier.

Public supplier LESTO

The producer and wholesaler of electricity Lietuvos Energijos Gamyba sells electricity and provides electricity balancing services to the public electricity supplier LESTO under different terms than to independent suppliers. LESTO provides a mediation service by purchasing the required amount of electricity on the power exchange and selling electricity at power exchange prices. 

Price formation on power exchange

The power exchange is an anonymous market place for electricity trading where electricity producers place offers to sell electricity and independent suppliers place bids to buy electricity. The electricity price on the power exchange or the electricity market is set as the intersection of the aggregate supply curve (offers to sell) and the aggregate demand curve (bids to buy). All bids to buy electricity with a price higher than the market price are accepted and the rest are rejected. All offers to sell electricity with a price lower than the market price are accepted and the rest are rejected.

As supply and demand change all the time on the market so does the electricity price. However, lower electricity prices at the close of a trading session do not mean that a supplier could buy a bigger amount of electricity at a lower price. Conversely, higher electricity prices at the close of a trading session do not mean that a producer could sell a bigger amount of electricity at a higher price. The power exchange price is usually regarded as a reference price which is taken into account when negotiating contracts for electricity purchase and sale.