Energy Forum: Tectonic shifts to affect energy future of Lithuania

Discussion gas related issues at the  Energy Forum Vilnius   Photo © Ludo Segers @ The Lithuania Tribune

In his opening remarks, Robert Juodka of the Estonian Chamber said that we were living through an energy revolution with tectonic shifts. Mr. Robert Juodka also pointed to the fact that Lithuania had been transformed in a few years from a 100% energy dependent country to one which is almost independent and even exporting energy to neighbouring countries. During the same time, the country has gone from paying one of the highest gas and energy price in the region to almost the opposite.

Mr. Juodka said: “Technology will not only continue to evolve, but will possibly act as a disrupter where households will first reduce their dependency, possibly becoming fully autonomous, and for some even to sell their surplus energy to the grid.”

He added: “There are increasingly interdependent links with mobile LNG producers and consumers on the horizon.”

Daivis Virbickas, Chairman of Litgrid board, echoed Mr. Juodka’s remarks as he spoke about how interdependence is evolving from conventional energy to supporting various renewable sources. Storage of renewable energy is making progress and it will take an important place in the supply chain of the future.

Several of the speakers pointed out that there are still a good number of challenges for ensuring a well functioning energy market in the Baltics and Lithuania. The speakers had a number of ideas and some advice for leaders and policy makers.

The present environment of low energy prices offers opportunities but also challenges. There are few that see oil prices going back to the levels of just two years ago and this impacts all other energy prices, including coal, which has run into environmental and pricing issues.

The latter was also the view of Jekaterina Rojaka, chief economist of Economic Research Department of DNB Bank, who gave some insights into the macro-economic state of affairs, including global political and economic transition that is driving demand for energy.

Although oil prices have slowly increased and stabilised, they are still substantially lower than two years ago. Few expect the price of oil, gas and coal to recover in the near future, if ever. This brings a number of challenges as some of the alternative energy sources meet serious financial obstacles in being viable.

Professor Juozas Augutis demonstrated how Lithuania has become more stable because of the presence of the Independence LNG terminal. Through various academic models, he provided insights as to how energy security and the links to Polish gas and Swedish electricity grids have contributed substantially to Lithuania’s energy security.

Efficiency has increased but remains poor compared to a number of well-developed EU countries such as Germany. He pointed especially to the low energy efficiency of the housing stock.

Building a robust infrastructure is a high priority, several speakers noted. Pär Nuder, former Minister of Finance of Sweden, suggested that Lithuania should allow pension funds to tap into investing in the energy sector and these funds could lighten the burden of global governments.

Mr. Nuder also addressed the phasing out of nuclear energy. He spoke about political challenges in several ‘dysfunctional’ governments in Europe and warned that this may affect the continent’s energy situation. He also pointed out that Sweden thrives in a deregulated energy environment, but there are challenges in nuclear energy.

Estonian Ambassador Kukk, speaking to the Lithuania Tribune, pointed out that there were still a number of issues for ensuring a stable and cost-efficient energy supply in his country. Links to Finland and Latvia are now materialising and that should provide for a more stable environment.

Still, Ando Leppiman from the Estonian Ministry of Economic Affairs and Communications said that the EU internal market faced challenges from within but that the ultimate goal for the regions was to desynchronise completely from the Russian electricity system by 2025.

Energy projects are always time-consuming, explained Karolis Sankovski, director of Infrastructure Development at Litgrid. The average time to bring such large projects to fruition is around 10 years, as projects always face a number of technological factors and financial burdens, as well as various environmental challenges, in addition to dealing with legal aspects and landownership of the indented trajectories.

Mr. Sankovski traced the plans to have energy links between Poland and Lithuania to 1992. All of these plans would be impossible without substantial EU contributions, often in the neighbourhood of 50% of a project’s cost.

There were few of these challenges when the interconnection between Lithuania and Sweden was built, except the Russian fleet manoeuvring in the Baltic Sea during the cable laying works.

Eglė Čiužaitė of Lithuania’s national electricity producer spoke about the challenges that electricity-producing company faced after deregulation in January of this year. Conventional power plants are now swing producers, complementing peak needs at competitive price levels.

After lunch, Robert Juodka returned as moderator, introducing a number of presentations on renewable energy. Gustav Melin, President of the European Biomass Association, showed some practical solution of turning waste into energy.

Sweden tows waste from the Baltics, including Lithuania, to fuel its biomass plants. In Sweden, bio-power is meeting close to 7% of total consumption. Negative pricing is becoming an issue, but the closure of nuclear power plants that still produce 34% of power in Sweden may offer a way out to more profitability. Almost 1 out of 5 buses drive on biomass in Stockholm. There is now also such plant in Klaipėda producing energy from the city’s waste.

The last part of the day focused on gas. Moderator was Haroldas Nausėda, Director of Commerce at Lietuvos Dujų Tiekimas, Lithuania’s gas provider. He introduced Saulius Bilys, CEO of Amber Grid, the natural gas transmission system operator in Lithuania. Mr. Bilys argued for a more customer-focused approach and what the future might entail as the country was becoming increasingly gas independent.

Reinis Āboltiņš, a consultant at the European Affairs Committee, spoke about how changes in Latvia are affecting the regional gas market in the Baltics. Mr. Āboltiņš singled the EU out as the most important actor affecting the market. Latvia has been relegated to a trading role in a complex environment.

Giedrė Kurmė, CEO of GET Baltic, gave some insights into the hubs for gas trading. Finally Kalle Kukk, strategy manager of Estonia’s electricity and gas transmission system operator, Elering, demonstrated how new technologies allow for better indication of supplies and prices in a deregulated environment.

Such Forums always require many partners. Here it was the Estonian Embassy in Vilnius, collaborating with the Latvian, Swedish and Polish Embassies as well as Polish-Lithuanian Chamber of Commerce and Lithuanian Confederation of Industrialists. The event was sponsored by Enefit UAB, Amber Grid AB, Nordica, Lexus Vilnius, the Trade and Investment Promotion Section of the Embassy of the Republic of Poland in Vilnius, Business Residence “Narbuto 5” and Kempinski Hotel Cathedral Square. This paper was a media sponsor together with Gravitas Partners UAB CEE Legal Matters.​

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