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Lithuania urges trilateral agreement of Baltic States on electricity trading from third countries

In the middle of March, Lithuania’s State Defense Council ruled that it is necessary to reach as soon as possible an agreement on a trilateral methodology of the three Baltic countries that would effective boycott the import of electricity from Belarus’ Astravyets nuclear power plant to the markets of the Baltic countries.

“As long as there is no trilateral agreement between the Baltic States on the rules for trading electricity from third countries, not only our security suffers, but also the EU electricity market,” said Minister of Energy Dainius Kreivys after a teleconference with Ditte Juul Jørgensen, Director General of the European Commission’s DG Energy.

Lithuania says that the methodology that was drafted by the three Baltic countries last year and unilaterally approved by Latvia and Estonia fails to bar market access for Belarusian electricity. Therefore, Lithuania has not approved the methodology and proposed to adopt a new one instead.

Dainius Kreivys informed Ditte Juul Jørgensen that the unilateral methodology applied in Latvia and Estonia creates opportunities to artificially raise the electricity price in Lithuania.

“We have repeatedly said that the current methodology does not prevent electricity produced at the Belarusian nuclear power plant from entering the Baltic market,” the Minister said. “However, it is now clear that it pushes drives up the price of electricity in Lithuania and distorts the EU electricity market.”

Mr Kreivys informed that this is due to the difference between the actual and declared capacities of the Lithuanian-Latvian electricity connections. According to the above rules, declaring large volumes of imports from Russia to Latvia requires reserving the capacity of the Lithuanian-Latvian electricity interconnectors, which are not actually used. Electricity market monitoring data shows that, as a result, the electricity price differential between Lithuania and Latvia reached up to 20 euros/megawatt-hour (MWh) at certain times in March.

“This is intolerable both for consumers and for the transparency and competitiveness of the market,” said the Minister of Energy. “We need to reach a consensus on the methodology in time and we want the European Commission to play a more active role in the negotiations, as the current pace and content of the negotiations are not satisfactory.”

Lithuania has already submitted its proposal in the negotiations on the new methodology for trading electricity from third countries. On the Minister’s instructions, an official explanation from the Latvian electricity transmission system operator on the price difference will also be sought in the near future. The State Energy Regulatory Council has also been asked to assess the situation.

According to Mr Kreivys, the Lithuanian and Estonian energy market participants, who are experiencing losses in the Latvian trading zone due to the unilateral application of the methodology for trading electricity from third countries, have already contacted the relevant European regulatory authorities.

Dainius Kreivys and Ditte Juul Jørgensen also discussed the implementation of synchronisation and the development of renewable energy. Lithuania’s State Defense Council also urged to speed up the implementation of a project on the synchronisation of the countries’ electricity grids with those of continental Europe and to ramp up domestic power generation.

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