Analytics, Baltic, Construction, Energy, Energy Market, EU – Baltic States, Markets and Companies, Modern EU

International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 01:59

“Integrating” energy sector: improving Baltic’s energy security with the EU’s grants

Eugene Eteris, European Studies Faculty, RSU, BC International Editor, Copenhagen, 24.10.2016.Print version
Gas interconnector between Finland and Estonia will boost security of supply and bringing economic lift to the region. When the gas starts flowing in 2020, the project will unite the Eastern Baltic Sea region with the rest of the EU energy market. This and other project are parts of the EU’s energy union and aim at building missing energy links, improving supply and ending the energy isolation of the Baltic States.

In the second part of 2015, a first step in the integration of the gas markets of the Baltic Sea region within the EU was made: Poland and the Baltic States agreed to build the pipeline known as GIPL connecting Poland and Lithuania.

 

A year after came the second step: the signature of the agreement for the construction of the gas pipeline linking Finland and Estonia: the Balticconnector, which will, for the first time, link the gas markets of Finland and Estonia.

 

This “truly unifying project” with exceptional benefits is supported by the EU budget with a grant of € 187 million. The project will be finalized in 2020 and will unite the Eastern Baltic Sea region with the rest of the EU energy market.

 

The Balticconnector

 

 As part of the EU's Energy Union strategy, the EU is committed to building missing energy infrastructure links and ensuring that every Member State has access to at least three different sources of gas. Integrating the Baltic Sea region with the rest of the EU is a priority for the Commission.\

 

The Balticconnector pipeline will consist of three sections: 22 km Finnish onshore, 80 km offshore and 50 km Estonian onshore. It enables the transport of 7.2 million cubic metres of gas per day with flows running in both directions. Alongside the Gas Interconnector Poland–Lithuania (GIPL), it will contribute to increasing energy security and solidarity in the region.

Currently, Finland is largely dependent on gas flows from a single supplier. And until recently, the three Baltic States also had to rely on gas imports from a single gas source. When completed, the Balticconnector and the gas pipeline between Poland and Lithuania, will allow Finland and the Baltic States to diversify their gas sources and routes, safeguarding them against possible supply disruptions in the future.

 

Leaders’ opinion

 

European Commission President Jean-Claude Juncker said, the “connector” was more than “simply linking the gas systems of two countries: it brings people and states in the region closer together”. It is part of the EU energy union strategy aimed at building missing energy links, uniting markets, improving security of supply and increasing competition by providing alternative supply channels. This “truly unifying project” with exceptional benefits is supported by the EU budget with a grant of € 187 million.

 

However, he added “more importantly we are ending the energy isolation of the member states with a preference for pipelines: hence the Balticconnector is a common European project that unites European countries and European interests”.

Source: http://europa.eu/rapid/press-release_SPEECH-16-3497_en.htm?locale=en.

 

Advantages

 

First, gas interconnector between Finland and Estonia will end the long lasting gas isolation of Finland and help, boosting security of supply and bringing an economic lift to the region.


European Commission President Jean-Claude Juncker, the Prime Minister of Estonia Taavi Rõivas and the Prime Minister of Finland Juha Sipilä have signed a €187 million investment in the Balticconnector – the first gas pipeline connecting Finland and Estonia.

 

Second, gas interconnector will end the energy isolation of Finland which is largely dependent on a single supplier. When the gas starts flowing by 2020, this project will unite the Eastern Baltic Sea region with the rest of the EU energy market.

 

President Juncker welcomed the investment saying that the project was the result of close cooperation and a proof of true European solidarity: “it is more than linking gas systems of two countries -we are bringing people and member states in the region closer together by building a pipeline that unites European countries”. The project is an integral part of the EU’s energy union and aims at building missing energy links, uniting markets, improving security of supply and ending the energy isolation of EU states.

 

Prime Minister of Estonia Taavi Rõivas said: "Balticconnector signifies a key development for Nordic-Baltic energy market integration, for region's security and diversity of supply and for consumer benefit. Regional co-operation and EU's contribution allows for a change from entirely closed to one of the most diversified and open regional energy markets in the Union with further prospects in upcoming years."

 

Prime Minister of Finland Juha Sipilä added: "Balticconnector is an important milestone in helping to complete EU wide energy market and improving the security of supply in Baltic Sea region".

 

Till 2020 a total of €5.35 billion will be invested in European priority projects under the Connecting Europe Facility (CEF). When completed, the projects will enhance security of supply and contribute to market integration. The grant was awarded under Connecting Europe and covers 75% of the construction costs, the maximum co-financing level permitted.

 

More information through the following links: -Fact sheet: Balticconnector – gas pipeline: Questions and Answers’;

 -Innovation & Networks Executive Agency (INEA): http://inea.ec.europa.eu;

-Energy Union website: http://ec.europa.eu/priorities/energy-union/index_en.htm;

-BEMIP project: http://ec.europa.eu/energy/en/topics/infrastructure/baltic-energy-market-interconnection-plan;

-DG Energy website:  http://ec.europa.eu/energy/en/topics/infrastructure

Reference: http://europa.eu/rapid/press-release_IP-16-3470_en.htm?locale=en; Brussels, 21 October 2016.

 

Detailed description

 

Balticconnector is the first gas pipeline connecting Finland with Estonia and the Continental European Network.

 

It is one of the energy infrastructure projects that benefits from the status of a Project of Common Interest (PCI). These projects are critical to establishing the European internal energy market and to achieving the objectives of the Commission's Energy Union strategy to provide for secure, affordable and sustainable energy.

 

Under the Connecting Europe Facility programme the Commission might provide financial support to projects of common interest that are commercially non-viable within the regulatory framework and provide significant externalities (e.g. security of supply, solidarity, innovation).

The Connecting Europe Facility budget amounts to €5.35 billion for the 2014 – 2020 period. Part of this investment will take the form of financial instruments aiming to leverage private funding for infrastructure development. The bulk of this EU support fund will be used to provide support to commercially non-viable projects in the form of grants like the one signed today.

 

The Commission is committed to improving energy links in the Baltic Sea region. Gas and electricity infrastructure in the region is not sufficiently interlinked, energy isolation in the region must end and the region must be integrated with the rest of the EU's energy systems.

 

To improve this, the Commission agreed to an Action Plan and Memorandum of Understanding strengthening the Baltic Energy Market Interconnection Plan (BEMIP) which was signed by the Commissioner for Energy and Climate, Miguel Arias Cañete, and Energy Ministers of the participating EU states on 8 June 2015.

 

The project will integrate the Finnish gas system with the rest of the internal EU gas market in line with the European Commission's Energy Security Strategy to ensure that no region in Europe remains isolated. It is the result of a close regional cooperation facilitated by the Commission under the Baltic Energy Market Interconnection Plan (BEMIP).

 

Balticconnector’s priorities

 

Three main priorities are envisaged: - to end gas isolation of Finland by connecting it to the Continental European Network; - to increase the security of gas supply and solidarity in the region; and to enhance competition and reduce wholesale gas prices.

 

Furthermore, Balticconnector will bring concrete socio-economic benefits to the Baltic States and Finland. Once completed, Balticconnector, together with a gas link between Poland and Lithuania (GIPL) will allow Finland and the Baltic States to diversify their gas sources, routes and counterparts, helping them to effectively deal with possible supply shortages in the future.

 

The total construction costs of the project are about €250 million. Already in 2014, the project “Balticconnector” obtained a €5.4 million grant for studies under the Connecting Europe Facility (CEF).

 

In 2016 Balticconnector obtained a €187 million grant for works under the Connecting Europe Facility. This amounts to 75% of the construction costs – the highest co-financing rate possible under the Connecting Europe Facility, which can only be allocated to a project when the added value of ending the energy isolation is exceptionally high.

 

Some other technical features

 

Balticconnector will consist of three sections: 22 km Finnish onshore; 80 km offshore and

50 km Estonian onshore lines.

 

In addition, two compressor stations in Inkoo, Finland and Paldiski, Estonia, will be constructed as well as a pressure reduction station in Kiili, Estonia.

 

The total capacity of the pipeline will be 7.2 million cubic meters of gas per day.

 

Energy projects in the Baltic Sea region

 

In addition to Balticconnector, several other gas projects have obtained the PCI status in the region, including the Gas Interconnector Poland-Lithuania (GIPL) and the Karksi project – the Estonia-Latvia interconnector, to which the Commission allocated in 2016 a grant of €18.6 million.

 

Other projects include the strengthening of the transmission network between Lithuania and Latvia, the interconnector between Poland and Denmark (Baltic Pipe) and the expansion of the LNG terminal in Świnoujście, Poland. These projects are central to establishing a well operating gas market in the Baltic Sea region.

 

Source: European Commission, Fact Sheet in:

http://europa.eu/rapid/press-release_MEMO-16-3476_en.htm?locale=en






Search site