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As Lithuania is intensively resolving issues of energy sector that will be likely to occur after the shutdown of Ignalina Nuclear Power Plant, it is more and more likely to hear proposals to purchase cheap electric energy from the neighbours. Economic crisis in the country is a kind of smoke curtain that forces politicians to forget energy independence.

 

 

Electricity Market Development Plan for Lithuania, approved by the Government this summer, establishes gradual shift of the entire national electric energy economy to the free electricity trading market. Therefore, from 2015 all the Lithuanian electricity consumers will be free to choose electricity supplier. This would be an ideal optimistic option. In practice, existence of real competition in the market requires electricity connections with the neighbouring countries, namely Poland and Sweden.

Energy specialists predict that before that moment the market will have a Lithuanian power plant in Elektrėnai generating very expensive electric power, heat and power plants, which are capable of meeting 15-18 % of the national demand, and several foreign importers.

It is estimated, that the next year Lithuania will be likely to consume 9.1 billion kilowatt-hours of electric energy. Following the Resolution of the Government, half of the abovementioned quantity, i.e. 4.5 billion kilowatt-hours, will be purchased from local producers.

Presently, 35 % of electricity demand in Lithuania derives from unregulated consumers, i.e. largest industrial plants, usually directly connected to high voltage wires. The remaining part is divided among the following electricity producers: 3 billion kilowatt-hours to Elektrėnai Power Plant, 1.15 billion kilowatt-hours to heat and power plants and around 0.35 billion kilowatt-hours to hydroelectric and wind power plants.

 

Russian energy operators and their representative players aim at establishing themselves in the Lithuanian market by excluding the local energy producers. The fact that Russia has cheap electricity and is able to sell it as much as Lithuania requires, is a myth.

The Russian daily Komersant published an article that read that, having desire to augment the extent of its electricity sales, Russia would be obliged to construct new power plants because the current capacities were too few. One of the projects, which would lead to most rapid implementation, would be the new gas-fired block of Khabarovsk Thermal Power Plant with the capacity reaching 400-500 megawatts. Moreover, the facts given in the mentioned articles prove that after conquering foreign markets the Russians are likely to artificially reduce prices of electric energy they sell.

Pursuant to the information published in the newspaper, price of megawatt-hour of electricity supplied to China equals around 82 litas, whereas the average price in the market of Russian Ural zone is around 125 litas. Please be reminded that the average electricity price in the European part of Russia is even higher, i.e. an average of 155 litas per megawatt-hour. Moreover, price of electric energy in Russia rises by around 10 % on an annual basis.

During stable operation of Ignalina Nuclear Power Plant, price of electricity during the Lithuanian auction would reach only 70 litas per megawatt-hour. How the price changes after the shutdown of Ignalina Nuclear Power Plant may be predicted by considering the Lithuanian auction price for electricity for June of this year. At that time Ignalina Nuclear Power Plant was not running temporarily due to planned repair works. Price of electric power rocketed up to 180 litas per megawatt-hour.

The above facts allow drawing a conclusion that Russia will be likely to artificially dump prices seeking for the conclusion of long-term agreements for electricity supply with Lithuania. Moreover, Russians will expand the capacity of their energy production so that the country would be likely to gain benefit from electricity export to a much greater extent. The same will be done also at the expense of Lithuania, which from January will have no producer of cheap electric power, i.e. Ignalina Nuclear Power Plant.

In the given context it was weird to hear statements of some politicians that Lithuania could do without a new combined heat and power plant in Kaunas that should be constructed after four years. Modern combined heat and power plants is one of the cheapest and most efficient sources for energy (both heat and electricity) generation.

 

“Combined heat and power plants are beneficial when there is the need to produce both electricity and heat by means of efficient usage of fuel. Such power plants running in Lithuania allow Vilnius and Kaunas residents paying less for heating”, spoke Anzelmas Bačauskas, Associate Professor at Kaunas University of Technology, about the advantages of modern thermal power plants.

There is a thermal power plant in Kaunas too. After several years it will be replaced by a new modern combined heat and power plant. A billion-worth project will be implemented by the company Kauno elektrinė.

“Kaunas thermal power plant generates both heat and electric power. Such production is stimulated in Lithuania. City requires heat. This is the most efficient and economical solution because Kaunas is in the need of heat. Any place, which has district heating system, requires a thermal power plant”, spoke Vladas Paškevičius, the President of the Lithuanian Electricity Association, about the advantages of such power plants.

 

Head of Kauno elektrinė Rimandas Stonys is sure that producer within the boundaries of the country is safer than import and that is why local producers should be stimulated.

“Currently, combined heat and power technology is the most modern technology, when electricity and heat are generated simultaneously. The State should promote its own production. Currently, energy import tax is much lower than that of the export. It would be desirable to welcome greater attention and support from public institutions. After all, the project is socially sensible and important not only to Kaunas, but to Lithuania too. After the construction of a new power plant heat would become cheaper to Kaunas residents”, said Mr Stonys.

According to Mr Stonys, once Ignalina Nuclear Power Plant is closed the problem would not relate to the supply of electricity, but its price instead. Offered quantity of electric energy will be greater than it will be needed to the Lithuanian consumers. Thus, all producers and importers will be forced to compete with each other.

“Price of electricity, generated at the Lithuanian power plant in Elektrėnai, cannot compete with that of the combined heat and power plants. It is required to ensure stability of the Lithuanian electric energy system, whereas the quantity of electricity that may be produced is an arguable issue. We do not oppose other participants of electricity market and believe that all of us may be equivalent competitors”, expressed his strong opinion the Head of Kauno elektrinė.

 

 

“As it plans the future of its energy sector, Lithuania may not rely on the Russian sources of energy. Import from Russia caused troubles to Finland. In winter of 2005-2006 export of the Russian electric power was limited to Finland. It is predicted that around 2016 Russia will be forced to limit the consumption of electric energy because the recent construction works of new power plants are not carried out at considerable rapidness, whereas the industry of the country shows huge potential for its growth”, explained the energy expert Mr Bačauskas.

Former manager of Lietuvos energija stressed that in case Lithuania only bought electricity from elsewhere instead of generating it by itself, country’s power plants would be likely to go bankrupt: “It may happen that we will not have where to buy electric power from and in such a case we would need to bring our power plants into operation, whereas they would be “dead”. Market of energy sector is especially dynamic and situation may change within one year. What today seems economically beneficial it may be useless after half a year”.

 

 

Except for Russia, neighbouring countries may also supply electricity to Lithuania. Latvia may offer us electric energy during the spring and autumn seasons when there are tides and hydroelectric power plants generate a lot of surplus energy. Estonia and Belarus will hardly compete with unduly cheap Russian electric power. Company Energijos realizacijos centras, representing the interests of the Russian energy company Inter RAO JES, will remain the major importer of the Russian energy.

According to Mr Bačauskas, Lithuanian power plant in Elektrėnai will be the major means for the fight with unreasonably low prices of the Russian electric power. Thus, it is essential that the power plant generated enough electric power to hold down. Even though the equipment of the power plant is out of date, it is still running.

Ministry of Energy is planning that from the coming year not less than 75 % of electricity in Elektrėnai will be generated by making use of fuel oil, which is considered as an alternative to gas. However, presently a new block of the power plant is being constructed in Elektrėnai that would use gas as fuel. It is estimated that the new block will use less fuel by 30 %. Therefore, less energy, used for heating the lake, will be spared.

According to Vladas Paškevičius, the President of the Lithuanian Electricity Association, after the shutdown of Ignalina Nuclear Power Plant, supply of electric energy will exceed the demand because, apart from producers, it will be the merit of import from Russia, Belarus, Estonia and Ukraine too. This will bring no changes in the extent of production of the thermal power plants because these power plants are running according to the schedule. However, electricity quantity, generated in Elektrėnai, will depend on them.

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