Next steps towards Baltic electricity market

1
Next steps towards Baltic electricity market
Karlis Mikelsons Chairman of the Board of
Latvenergo 26-27 January 2006,
Vilnius Development of Electricity Markets and
Security of Supply in the Baltic Sea Region
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Major generation facilities in Baltic
INSTALLED CAPACITY (MW)
PLANTS
Tallinn

ESTONIA
NARVA TPP BALTIA TPP TALLIN CHP
1615 1090 190 2895
ESTONIA
LATVIA
RIGA CHP-1 RIGA CHP-2 RIGA HPP KEGUMS
HPP PLAVINAS HPP
142 390 402 263 870 2067
LATVIA
2005

Riga
LITHUANIA
... 2010
LITHUANIA
KAUNAS HPP IGNALINA NPP KAUNAS CHP MAZEIKI
CHP LIETUVOS TPP VILNIAUS TPP KRUONIO HAPP
100 1300 178 194 1800 384 900 4856

Vilnius
Dependence on energy produced from natural gas
3
Annual power balance in Latvia, TWh
TWh
Import
Independent
HPP
CHP
Dependence on imported electricity
4
Production capacities in Baltic region
Estonia
Latvia

• Net exporter in next 10 years
• 95 generation based on oil shale
• Expected decrease of generation capacities in 2015

• Net importer in next 10 years
• Shortage of base load capacities
• High dependency on unpredictable hydro generation
  and imported gas

Lithuania
Russia

• Currently the biggest exporter in Baltic
• Will lose export potential after decommissioning
  of the 2nd reactor in Ignalina NPP
• Loss of nuclear energy will be mainly replaced by
  renovated Lithuanian TPP

• Power plants in north-west Russia are half-loaded
• Production capacity is largely outdated
• High influence on the Baltic energy market price
  development
• In long tern unpredictable export prices

Necessity for fuel diversification and new
generating units
5
Legislation of Latvian energy sector

• ENERGY LAW
• ELECTRICITY TRADING LAW (since June 2005)
• LAW ON REGULATORS OF PUBLIC SERVICES

PARLIAMENT

• REGULATION ON ELECTRICITY TRADE AND UTILIZATION
  (under approval)
• REGULATION ON COGENERATION (under approval)
• REGULATION ON RENEWABLE ENERGY
• REGULATION ON HEAT SUPPLY
• REGULATION ON GAS SUPPLY

GOVERNMENT

• METHODOLOGY FOR SETTING PUBLIC ELECTRICITY
  TARIFFS
• METHODOLOGY FOR SETTING PRICE CAPS OF
  TRANSMISSION AND DISTRIBUTION SERVICES
• OTHER REGULATIONS IN ENERGY SECTOR

REGULATOR
TSO

• GRID CODE (accepted by Regulator)

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Restructured and privatised national champions
Production
Transmission
Distribution/Supply
Eesti Energia
AS NARVA
ESTONIA LATVIA LITHUANIA
OÜ POHIVÖRK
OÜ JAOTUSVÖRK
AS KOHTLA-JÄRVE
Latvenergo
HYDRO POWER PLANTS (3) COMBINED HEAT POWER
PLANTS (2)
AS AUGSTSPRIEGUMA TIKLS
SADALES TIKLS
IGNALINA NPP
RYTU SKIRSTOMIEJI TINKLAI AB
LIETUVOS ELEKTRINE AB
KAUNAS HPP KRUONIS PSPP
VAKARU SKIRSTOMIEJI TINKLAI AB
Lietuvos Energija
- separate enterprises
Small differences in each country
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Current structure of Latvian electricity market
Competition (currently price not competitive)
Guaranteed purchase
30
70
Competition
Daugava HPP
Import
Supported generation (cogeneration, wind, small
hydro, etc.)
Thermal (condensing)
Generators
Public trader
Number of trading licenses issued
Traders
non-eligible customers
eligible customers
Customers
(currently none has qualified)
Regulated end tariffs slowing market opening
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Coordination of common tasks on Baltic level

• Adopting Resolutions and Recommendations for
  efficient, coordinated and safe operation of
  electrical energy markets in Baltic
• Development of Baltic Grid Code
• Coordination of planning of Baltic 330kV network
• Modelling of Baltic 330kV network
• Cooperation with energy companies of third
  countries
• Public relation activities related to Baltic
  energy system and electrical energy market
• Development of relations with other organizations
  and institutions worldwide

Non-commercial coordinating committee in Baltic
BALTSO
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Conclusions

• Diversification of energy and fuel resources
• after decommissioning of Ignalina NPP 2nd block
  Baltic countries in 2010 will become highly
  dependant on energy produced from natural gas
• construction of new base load / peak load power
  plants
• reasonable development of renewable energy
  sources
• New coordinating committee for Baltic - BALTSO
• harmonisation of liberalisation of electricity
  markets in the Baltic
• coordination in development of electricity market
  regulations
• development of new interconnections

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Thank you!