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Lithuania promotes a more efficient electricity market

Lithuania has updated its Electricity Market Development and Implementation Plan which includes the liberalisation of the retail electricity supply market, the introduction of smart metering for electricity consumers, the development of an electricity consumption data collection and sharing platform, as well as the planned changes in the energy balancing market from 2025.

Already in April, the European Commission issued an official opinion about the acceptance of the electricity market development measures proposed in the Plan and providing recommendations to assess the possibilities of including additional measures to promote more efficient market development.

The updated plan contains revised provisions regarding the actions aimed at gradual phase-out of regulated electricity prices for households in three steps. The following actions have already been taken: consumers consuming 5000 kilowatts per hour (kWh) and more of electricity per year and qualifying the first stage, as of 1 January 2021, are going to have the opportunity to choose an independent electricity supplier.

Provisions on scarcity pricing that reflect the sudden shortage of supply in the market and encourage market participants to actively reduce market consumption by responding to market signals and to ensure capacity readiness when the market needs it most have also been revised. Such pricing would allow a more accurate reflection of the costs of balancing reserves in energy prices in the event of a sudden and severe shortage of supply in the market and would enable market participants to recoup costs incurred in the wholesale market and thus would reduce the scope of the adequacy problem.

Furthermore, a commitment to seek to form a single load frequency control block in the Baltic region prior to synchronisation with Continental Europe, thus saving costs for all Baltic countries, has been made. Also, Lithuania has pledged to take steps to enter into cooperation agreements with neighbouring transmission system operators of load and frequency control blocks, as well as to strive to establish a regional coordination centre together with the other Baltic States so as to ensure the efficient and reliable operation and maintenance of an increasingly integrated electricity system.

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