'Baltic Energy Market' takes shape [fr] [de]
Eight Baltic Sea states last week (17 June) launched an action plan to connect Lithuania, Latvia and Estonia to EU energy networks, providing a signpost for the Swedish Presidency's agenda for the Baltic Sea region.
Background
On 10 June, the European Commission tabled a wide-ranging strategy for the Baltic region, focusing on an environmental clean-up of sea and energy interconnections (EurActiv 11/06/09). Sweden has made implementing the strategy a priority of its six-month rotating EU presidency, which starts in July.
As part of the strategy, the Commission plans to implement a number of energy infrastructure and market restructuring projects indentified in the Baltic Energy Market Interconnection Plan (BEMIP). BEMIP was originally floated by European Commission President José Manuel Barroso in October 2008.
In November 2008, the European Commission tabled its Second Strategic Energy Review. The policy document seeks to address security of energy supply and sets out policy priorities in the energy field for the next Commission. It listed effective interconnection of the Baltic region as one of six priority projects (EurActiv 14/11/08).
The problem of the Baltic States' isolation from European energy networks became a pressing topic again in early 2009, when the gas dispute between Ukraine and Russia caused severe supply disruptions to Eastern European countries (EurActiv 22/01/09).
The Baltic Energy Interconnection Plan responds to calls for a more integrated electricity market in the Baltic region, as highlighted by the European Commission's Second Strategic Energy Review in November 2008.
Sweden is expected to drive the plan's implementation forward during the second half of the year, after having declared the development of the Baltic Sea region one of the priorities of its EU presidency.
The plan aims to extend the liberalised Nordic electricity market model to the Baltic states as the basis for a regional market there. This could then be integrated into the Nordic one, the Commission said.
Removing regulated tariffs and cross-border restrictions, separating the activities of Transmissions System Operators (TSOs) and opening the retail market fully are identified as steps to an integrated market that comply with the rules for the future EU internal market (EurActiv 25/03/09).
Infrastructure projects
The plan covers a number of electricity infrastructure projects to link the Baltic states and Poland with the Nordic countries, and reinforce the electricity grid between the three Baltic states. A second set of projects establish interconnections between Nordic countries, including the Fenno-Skan II between Finland and Sweden.
A separate set of electricity interconnections is envisaged between Poland and Germany in order to reduce "loop flows" resulting from wind generation in the North rather than in view of market integration.
Moreover, the Baltic Sea states aim to enhance their energy security by diversifying gas routes and sources. Potential projects include new interconnections and upgrades to existing ones to allow reverse flow, and the development of LNG facilities and gas storages.
Support from stimulus funds
Energy infrastructure projects in the region could receive over half a billion euros of additional support, as many of the proposed projects are earmarked for money from the European Economic Recovery Programme (EurActiv 07/05/09), the Commission says.
"Ending the effective isolation of the Baltic States, which still form an energy island, is an urgent task to deal with. Looking at the actions and projects the plan contains and which are now endorsed by the countries of the region, I am now confident that this objective can be achieved in a mid-term perspective," said Energy Commissioner Andris Piebalgs.
Nevertheless, Kristian Kjaer, chief executive of the European Wind Energy Association (EWEA), pointed out that the projects had already been in the pipeline for the respective TSOs for some time. He said more ambitious pan-European plans were needed to move to a "truly integrated European energy market".
"An upgrade of the existing Poland-Sweden cable should be included in future plans," he argued.
Positions
European Commission President José Manuel Barroso thanked the high-level working group from the eight Baltic Sea states for their work on the action plan. "The signature of the Memorandum of Understanding reflects the solidarity which has driven work between the Commission and member states on this. Since we met last October, we have agreed on a number of steps to improve energy security for the Baltic Sea region," he said.
The European Wind Energy Association (EWEA) welcomed the Baltic Energy Market Interconnection Plan as a first step towards a pan-European electricity grid in the Baltic Sea region.
"The European energy market currently looks a bit like an unfinished 'join the dots' picture, with some small sections that are detached from the rest," said Christian Kjaer, EWEA chief executive. "It is crucial that we join up all areas to achieve a completely interlinked internal electricity market. Only then will investors be exposed to the true risk of coal and gas, which will make wind, which avoids fuel price volatility, the most cost-effective and low-risk power source to invest in," he added.
Next Steps
- Second half of 2009: Swedish Presidency of the European Union.
- Sept. 2009: Swedish EU Presidency conference on Baltic Sea region.
- Oct. 2009: EU summit to adopt the strategy and action plan.
- By end 2009: Baltic Energy Market Interconnection Plan (BEMIP) to establish a list of priority projects to connect the Baltic states to regional energy networks.
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