Editor's note
International Internet Magazine. Baltic States news & analytics
Friday, 26.04.2024, 17:35
Energy for the Baltics: EU policies and national actions
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The Lisbon Treaty introduced from 2010 a new legal basis in the area of European energy (art. 194), which notably enables the EU institutions to lay out general energy policy goals, to clarify the member states’ actions and to take steps ensuring smooth functioning of the energy market, energy supply and security, as well as to promote energy efficiency and interconnection of the energy networks.
Presently, two European Commissioners are responsible for energy issues: Maroš Sefčovič, Vice-President for Energy Union and Miguel Arias Cañete, Commissioner for Climate and Energy Action. Besides, several other commissioners take part in energy-economy “combination” united in the main EU’s policy –“Energy union & climate”.
http://ec.europa.eu/priorities/energy-union/fully-integrated-internal-energy-market/index_en.htm
According to Commission’s accounts, about 50-70% of European citizens support the idea of EU-28 common energy policy with its three main priorities: sustainable, reliable (both externally and internally) and affordable energy for European businesses and citizens.
The “task force” set up in mid-2015 by the European Commission and the European Investment Bank’s (EIB) has already picked out 2000 eligible projects; about third of which is devoted to energy issues.
All 3 Baltic States have already achieved most of their EU-2020 targets; see, for example:
Baltic States’ steps: Latvia
Latvian Energy Efficiency Association (LATEA) presented at the Baltic Energy Forum- 2015 the country’s active involvement in the Nord Stream-2 project. The concept of Baltic Energy Alliance (BEA) as a potential center for excellence in energy is being developed by the LATEA.
Maris Sproga, an author of BEA’s concept and a member of the board in LATEA, mentioned that Nord Stream-2 was a project that would impact Latvia and the Baltics in the context of common EU energy policy.
BEA is planning to facilitate the
implementation of the energy policy for business within the Baltic States,
especially Latvia. Nord Stream-2,
as well as the potentials of LNG, energy infrastructure, market and business
issues are among the main BEA’s priorities.
The chairman of LATEA, Raimonds Keirans mentioned that BEA is important to assist the EU to promote and clarify its energy strategies as well as to discuss the energy policy among the Baltic States. It is vital to provide the society with clear and consistent information regarding energy issues and, especially, issues concerning electricity and gas market liberalization.
BEA also can be seen as a real instrument to support the execution of BEMIP (Baltic Energy Market Interconnection Plan), removing cross-border restrictions to trade in energy, regulated energy tariffs as well as developing LNG facilities, new interconnectors and gas storage issues.
Renewables in Estonia
The total production of renewable energy in 2015 is reaching 300 GWh; the share of renewables in the general energy mix was 16.2%, which exceeds by 2% the same period last year.
Wind power accounted for about 40% of the total production of renewable energy and the amount of electricity produced (108 GWh) was around the same as a year ago. Amounts paid for the state support of wind energy grew by 7% reaching € 5.2 million.
Renewable energy production from biomass, biogas and waste formed 60% of all renewable energy production. From this source about 167 GWh of electricity was produced; electricity produced from biomass, biogas and waste received € 7.8 million of subsidies.
Hydro-energy production reached 2 GWh and € 58,000 euros in subsidies.
The number of recipients of subsidies for producing solar energy has increased twice within a year and exceeded 400. About 648 MWh of solar power was channeled into the national electricity grid and got subsidies in the third quarter, by 2.5 times more than a year ago. Since micro-producers consume the majority of solar energy their produce, the general amount of electricity produced with solar panels is an estimated 4-5 times bigger.
Elering provided renewable energy support for a total of 245 GWh. In monetary terms, the amount of subsidies for renewable energy grew by 3% to €13.1 million.
About € 540,000 of efficient cogeneration subsidy provided in 2015, i. e. a bit more than at the same time last year. The amount of electricity reached 17 GWH.
Source: Renewable energy formed 14% of Estonian total consumption in Q3
Latvian gas supply company’s restructuring
Latvian economy minister said that Latvia's largest gas consumer, joint-stock power supply company Latvenergo, has been offered to purchase liquefied natural gas from Lithuania for a lower price than what LG is offering. According to minister, having alternative gas suppliers has two advantages – security and price. From a security point, it is important to have alternative suppliers, so that a similar situation like in Ukraine would not take place, i.e. when one side decides to switch off the gas flow.
Furthermore, competition is an important aspect in gas prices: the more players are in the market, the more competition, leading to lower prices.
Russian gas company Gazprom is using its monopoly status in Latvia and the country has been always overpaying for. For example, Valmiera Fiberglass Company pays 28% more for gas than a similar factory in Germany.
Latvia’s Parliamentary Economic, Agricultural, Environmental and Regional Policy Committee decided to submit amendments to the Energy Law on the break-up of joint-stock Latvian gas company Latvijas Gaze, which was approved in the first reading.
Meanwhile, state joint stock power supply company Latvenergo announced in September 2015 that its intention to purchase a first batch of liquefied natural gas from Lithuania this year.
Latvijas Gaze will be split into two independent companies by April 3, 2017, of which one will be in charge of the gas transmission and storage system, and the other will be responsible for natural gas distribution and sale, according to amendments to the Energy Law that the government approved in September.
Poland-Lithuania energy cooperation: a step towards a single gas market
The agreement was signed by the representatives of the Lithuanian and Polish gas transmission system operators – Amber Grid (Lithuania) and Gaz-System (Poland) – and the Innovations & Networks Executive Agency responsible for financing strategic EU projects.
The signing ceremony was attended by European Commission President Jean-Claude Juncker, Lithuanian President Dalia Grybauskaite, Polish Prime Minister Ewa Kopacz, Latvian Prime Minister Laimdota Straujuma and Estonian Prime Minister Taavi Roivas.
The GIPL project aims at the integration of the Baltic region gas markets into a single EU gas market, at the diversification of gas supply sources and at the enhancement of the security of gas supplies. GIPL will bring socio-economic benefits to the three Baltic States and Finland (for the latter once the gas interconnector between Finland and Estonia is constructed).
The project is being implemented jointly with the Polish gas transmission system operator – Gaz-System S.A. The preparatory works for the GIPL project started in 2009, a GIPL business environment analysis was prepared in 2013, and a GIPL feasibility study was completed in 2013.
Gas pipeline (700 mm wide) will connect Lithuania's Jauniunai and Poland's Rembelszczyzna compressor stations. The pipeline will be 534 km long, 177 km of which will be laid in Lithuania. The cost of the GIPL’s project is € 558 million; of which € 422 million is for Poland and € 136 million for Lithuania. The GIPL’s launch is scheduled for the end of 2019.
The GIPL is one of the energy infrastructure projects that benefits “Common European Interest”; such projects are critical for completing of the European internal energy market and for the attainment of the Commission priority to establish an Energy Union to secure, affordable and sustainable energy.
Lithuania’s energy sector
The country’s prime minister, Butkevicius emphasised that the energy sector was key for guaranteeing Lithuania's economic stability and social security. He noted that after the completion of the Liquefied Natural Gas (LNG) terminal project, the construction of gas connection with the regional gas pipeline and the construction of electricity links with Poland and Sweden the country’s energy supply would be secured.
The prime minister said that electricity prices were reduced by around 13% in two years and heating price by nearly 20%. Next year the second stage of heating sector reform will commence – biofuels’ cogeneration power plants will be built in Vilnius and Kaunas, which will be the largest energy facilities to be built in the last 20 years. Once they are operational, heating prices for consumers will further decrease.
The PM noted that fiscal policy instruments have been included in the 2016 draft budget and will promote economic growth. Apart from European funds the state will allocate €1.23 billion.
Additional measures are foreseen to boost economic viability counterbalancing export decrease or temporary weakening of the economy. The domestic market and internal demand will be strengthened; however, this will not contradict sustainable growth and expenditure restraint applied in the euro area.
In order to reduce tax burden on the lowest earners and create progressive taxation, the maximum monthly tax-exempt income amount will be increased in 2016 by € 34, from € 166 to € 200. Whereas the fixed additional tax-exempt income amount per every child in a family will be doubled from € 60 to € 120. Other measures include larger minimum monthly wage in accordance to economic realities and wage growth in certain sectors.
According to Butkevicius, all three measures have synergic influence: they improve purchasing power which in turn promotes business development.
The prime minister said that the minimum monthly wage would grow from € 325 to €350 from the beginning of 2016. Meanwhile, salaries of employees in the arts sector will increase by € 71 on average – € 12 million will be allocated for this. Another € 12 million will be spent to improve remuneration for soldiers.
Estonia’s energy projects
Estonian Economy and Infrastructure Minister, Kristen Michal gave approval to three projects to be submitted to the Connecting Europe Facility (CEF) for the energy applications round including Balticconnector gas pipeline, Karksi compressor station and Paldiski liquefied natural gas (LNG) terminal.
The Paldiski LNG terminal application was submitted to the Ministry by OÜ Balti Gaas. The ministry said that building the liquefied natural gas terminal would bring to the region's gas market a new source of supply, thus increasing competition in the gas market and the security of energy supply.
In the terminal project, the money comes for Balticconnector, whose estimated cost is €250 million; Estonia's share is roughly €130 million. The pipeline's length is 47 kilometers on the Estonian shore, the underwater part of the pipeline is 81 km long and on the Finnish mainland, 20 kilometers long. The expected building period is 2016-2019; the owner and coordinator of the project is the state-owned Elering Gaas from the Estonian side and Baltic Connector OY from the Finnish side.
Estonia asks also for CEF funding support to building the Karksi compressor station, which is necessary to enable gas transit to Latvia.
