Who could have thought? Germans give us a brigade, we give them electricity

Rokas Masiulis, the Head of the electricity transmission operator Litgrid, was one of the energy experts who, at the outbreak of the war in Ukraine, calmly and even optimistically looked to the future: Lithuania would handle the crisis of energy resources and prices, Raigardas Musnickas states in lrytas.lt  And so it happened. Moreover, the time is not far off when Lithuania can produce enough electricity to export the surplus to other countries.

Lithuania will be able to export to Germany, Poland

“Every shock is also a step forward because humans can always adapt and find a solution if they are looking for one. Stressful situations and tensions encourage people to act faster and to make decisions faster. As history shows, people always find solutions,” explained Masiulis.

He recalls that the war started in February, and the big electricity price hike was in summer. However, the energy industry knew the facts and the actual situation regarding numbers.

“Summer is always the most difficult time for energy workers for several reasons: one is that there is less hydropower in the summer due to dried up or significantly reduced water reservoirs; in the summer, thermal power plants do not work because there is no need for heat – nobody in our region produces heat”, he said in the Persona Grata programme on Žinių Radijas.

High gas prices are another reason electricity prices are rising, and Lithuania is facing a crisis of high prices.

In addition, repairs to power lines and power plants are routinely carried out in the summer, which reduces the supply on the market. However, all these circumstances did not frighten people, as it was known that after hard times came easy times. And so it was: autumn brought more wind and hydroelectric generation.

Renewable energy sources produce about 42% of Lithuania’s total needs. “The strategy foresees that by 2030, we should be independent, producing more electricity than we consume,” he assured.

The targets could be reached even earlier, given the pace of construction of solar and wind power plants.

If Lithuania will be able to produce enough electricity to supply the country’s needs in a few years, have people been building solar power plants for cheap prices for nothing?

Masiulis assured us that we would see both higher and lower prices. At the same time, he added that people adapt quickly and find solutions.

Prices are also predicted to start falling in the next few years. If this happens, more people will believe that electricity can be used to produce goods that add value to the country.

A surplus of electricity would allow some of the energy produced in Lithuania to be exported to Germany and Poland.

Why can Germany become Lithuania’s export partner? According to Mr Masiulis, the country’s industrial needs are enormous, and it is tough to install renewable energy points, so it is envisaged that electricity will be imported.

Electricity produced in Lithuania is expected to be exported to neighbouring Latvia or Estonia. Moreover, says Masiulis, Lithuanian entrepreneurs dive headfirst into a new niche, and it’s paying off. This is also the case with the development of renewable resources.

Electricity prices and supply should lead to the creation of new plants, such as the production and industrial use of hydrogen or methanol. Nevertheless, this should encourage Lithuanians to take a more active interest in purchasing electric cars.

“All other factories that use electricity will also benefit”, the energy expert added.

Why is Europe so slow?

According to Masiulis, each country has its own reasons for being so slow or not moving toward renewables at all.

“Maybe it is the Lithuanian nimbleness and the Lithuanian mentality that has led to the fact that if we see that there is a stagnation in the development of a solar plant or a wind power plant, we try to change the rules to make them more flexible and favourable,” he reflected on Lithuania’s progress.

For example, suppose a solar or wind power plant is built in Lithuania on Litgrid’s high-voltage grid. In that case, we grant a construction permit and specify how it has to be connected technically and what equipment needs to be installed. At the same time, the developer takes care of all the financing and the installation itself.

Meanwhile, in Estonia, the old system still needs to be put in place, where the grid owner takes care of the connection of the new facility, but this slows down the process and the developers’ appetite. “There is a requirement for the developer to pay 70% of the estimated cost of the work upfront,” the Head of Litgrid gave an example.

For entrepreneurs, freezing large sums of money for 3-4 years is unattractive, and for the grid operator, there is a risk that the developer will not build a new solar or wind farm.

In Latvia, however, the procedure is even different. The country’s energy operators estimate that 6 gigawatts of renewable energy can be connected to the national grid. Once they had 6 gigawatts, they stopped connecting to the grid.

As a result, some of the projects that have been launched will not be built, and the permits cannot be revoked.

But Lithuania, as Masiulis says, has taken a different path. Anyone can connect to the grid as long as they stay within the technical parameters of the grid. However, each developer has to take the risk that if they produce electricity when there is a surplus throughout Lithuania, Litgrid will have the option to disconnect the customer from the grid.

To wait or not to wait?

The radio host asks if a 10-kW solar power plant costs EUR 10,000 to install and whether prices can come down or even be given away for free.

“We have an extraordinary situation on the market, with a surplus of both solar power plants and the same batteries. It comes from China; China has invested heavily in solar panels and storage, anticipating very high growth worldwide”, he recalled.

He acknowledged that the country had overdone it and produced too much. At the time, the Americans introduced tariffs on Chinese goods, and now, Chinese electric cars and solar panels are more expensive and, therefore, in less demand. As a result, Chinese warehouses are full.

Rising interest rates worldwide impact projects in development, stalling or slowing them down. Masiulis also sees the bankruptcy of companies producing solar panels, as it is impossible to compete at these prices without state support. There is also already a surplus of car batteries, reflecting the declining demand for electric vehicles.

So, for now – for a year or two – the prices are reasonable for those willing to invest.

Speaking about the development of the EV fleet in Lithuania and globally, the Head of Litgrid stressed that he sees both a step forward and a step back in the field of electric vehicles. Currently, 16% of Lithuania’s car fleet is electric.

The former Minister recalls that supporters and opponents of electric vehicles came to the Ministry to discuss the issue. Which would be more beneficial for Lithuania? At the time, it was said that it would be helpful if there were support for purchasing an electric car – later, this happened, and today, support is available for those who want to switch to less polluting vehicles.

But there is another side to this: the charging station network needs to be expanded. “If we had a very large number of stations, the natural development would be faster,” the energy expert assured, citing Germany’s example, which has now withdrawn support for the purchase of electric cars.

The future of electric cars does not depend on support but on whether the technology is proven. In Masiulis’ opinion, it has worked – when you drive an electric vehicle in the city, you realise how good it is. However, it can be more difficult for those who want to cover longer distances.