Sign In
Published: 4/17/2020. Updated:

NERC: The green light has been given to the Baltic Synchronization Project Phase II


The National Energy Regulatory Council (NERC) has coordinated Lithuania's share of the investments in the project of common interestBaltic Synchronization Project Phase II – equal to 474,01 million Eur.

The total costs for Lithuania, Latvia, Estonia and Poland are 1 219,86 million EUR, of which investments in Poland are estimated to 535,76 million EUR, in Estonia – 110,60 million Eur, in Latvia – 99,50 million Eur.

The national energy regulatory authorities (in Lithuania – NERC) take coordinated decisions on the allocation of investment costs to be borne by each system operator for the project as well as their inclusion in tariffs.

The joint agreement on cross-border cost allocation decision for Baltic Synchronization Project Phase II will have to be signed by Lithuanian, Latvian, Estonian and Polish energy regulators by the end of April, 2020.

The entire synchronization project is being implemented in III stages (the investments of the I stage were coordinated by the Lithuanian energy regulator on 31 August, 2018, this project has been granted the financial support by the European Commission).

The synchronization project consists of investments in the electricity transmission systems of the Baltic States, upgrades and strengthening of the control systems required for synchronization, which are necessary regardless of the chosen synchronization scenario.

In Lithuania, the synchronization project is being implemented by the transmission system operator Litgrid AB. Phase II in Lithuania envisages the construction of a new offshore connection Poland-Lithuania and the construction of the Darbėnai 330 kV substation, reconstruction of the existing transmission line and construction of a new 330 kV section to the Darbėnai substation, as well as construction of additional 2 synchronous compensators, renewal and installation of control systems ensuring the stability of the system, the required electricity flows and the readiness to operate in synchronous mode with the Continental European network.

In the Phase II of the synchronization project Lithuanian and Latvian transmission system operators also included investments for the Battery Energy Storage System (BESS) for the frequency regulation. Having assessed the EU regulations on the market of such services and in order to create an interconnected internal energy market and an objective, non-discriminatory, transparent market for system services, NERC coordinated that Litgrid AB has to agree with other Baltic TSOs on future frequency maintenance reserves and automatic frequency restoration reserves market model and with national regulatory authorities – on the terms of the market test to determine the scope of the service and potential service providers to develop, operate or manage facilities for frequency maintenance reserves and automatic frequency restoration reserves services in a cost-effective and timely manner.

Based on the results of the cost-benefit analysis performed by the Baltic and Polish transmission system operators, each of the Baltic States and Poland receives a positive net benefit, so the investment costs of each country are covered by the respective Baltic or Polish transmission system operator.

For the financial assistance for the implementation of this project, transmission system operators of Lithuania, Latvia, Estonia and Poland will submit a joint application to the European Commission under the Connecting Europe Facility (CEF), with a maximum possible support intensity of up to 75%.

If the project were not financed by EU funds, the impact of the planned investments would be, compared to the regulated electricity price cap for electricity transmission service set for Litgrid AB in 2020, equal to 0,814 ct/kWh, in 2026–2045 on average to increase by 28,32%. Transmission tariff in Latvia in 2026-2045 on average would increase by 15,3%, in Estonia – 8,5%.

In Lithuania, the transmission price in the final electricity tariff (average undifferentiated price) is about 6,4 percent.

In Lithuania, the synchronization project is planned to be implemented by 2025.

NEXT STAGES OF THE SYNCHRONIZATION PROJECT (PHASE II) IMPLEMENTATION:

Until 21 April - energy regulators of Lithuania, Latvia, Estonia and Poland are expected to sign a joint agreement on cross-border cost allocation decision.

Until 22 April - national decisions of Estonian, Latvian and Polish energy regulators are expected.

Until 23 April - the joint agreement on cross-border cost allocation decision of Lithuanian, Latvian, Estonian and Polish regulators and the related national decisions will be sent to the transmission system operators to apply to the European Commission for funding under the Connecting Europe Facility (CEF).

Until 27 May - transmission system operators’ application to CEF.

You can get acquainted with the Phase II investments of the synchronization project here.