Is Lithuania’s energy independence realistic?

By Živilė Marija Vaicekauskaitė

In the context of discussions and plans concerning construction of a new nuclear power plant (NPP) in Visaginas the following question arises: is Lithuania’s energy independence realistic and what measures or actions could guarantee Lithuania’s sovereignty?

The decommissioning of the Ignalina Nuclear Power Plant was finished by the end of 2009. From energy-exporting state Lithuania has become energy importing state (mostly from Russia). The decommissioning of Ignalina NPP was the price for the EU membership. The EU should have become an oasis of independence for Lithuania, but it made the country even more (energy) dependent (though one of the articles on EU integration stipulated that energy of new member states will be integrated in the European energy area). Who shall take the responsibility for a problematic Lithuania’s energy situation?
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During the EU accession period everybody was aware of the necessity to close Ignalina NPP. Lithuania tried to negotiate better decommissioning terms and conditions but its efforts fell flat. After closing NPP Lithuania experienced a real energy shock: it was necessary to buy the missing amount of energy. Today we can only guess who shall take the responsibility for Lithuania’s unpreparedness for energy reforms. Was it lack of political will or inability to strategically plan and anticipate consequences?

Recently the Government adopted a long-term National Energy Strategy. It is a serious step toward defining energy policy trends and demonopolizing the energy sector. The main objective of the strategy is to ensure Lithuania’s energy independence until the year 2020. Five major energy projects are foreseen in pursuance of this goal: completion of Lithuanian-Polish power bridge LitPol Link, construction of Lithuanian-Swedish electrical power connection NordBalt, construction of Visaginas NPP, implementation of the Third Energy Package and construction of a liquid natural gas terminal in Klaipeda. Realization of these projects would mean liberalization of the Lithuanian energy sector and integration into European power grids.  Are these projects realistic?

The paradox is that the most doubtful of these projects is the one in which national authorities have no doubts, i.e. the construction of Visaginas NPP. LEO LT, the national energy company was established in 2004 but it was dissolved after handing power to a new government. The search for a national investor was unsuccessful as well. The plans to construct Kaliningrad and Belarusian NPP close to the Lithuanian border also complicated the situation. Lithuania expressed dissatisfaction to the EU and appeared in a really difficult situation: how to make the neighbors refuse NPP construction plans and retain own plans?

Another issue requiring the art of negotiations is realization of the Third Energy Package in Lithuania which would fully free Lithuania from the dictate of the Russian concern Gazprom. The energy package supported by the EU stipulates (in legal terms) the principle of unbundling in gas and energy production/distribution sectors. From the three possible separation models Lithuania has chosen the principle of full unbundling. Its realization would allow separating a gas supply company from the control of gas delivery/distribution infrastructure. Although the EU supports this project, liberalization of Lithuanian gas market is hardly possible without reaching the agreement with Gazprom on implementation of the Third Energy Package. Liberalization of the gas market monopoly is unfavorable to Gazprom since it would be forced to give part of the controlled gas pipelines under supervision of other states.

Other strategic projects seem more realistic. Lithuania and Poland still cannot make an agreement, but the EU supports LitPol Link project and the power bridge should start operations by 2015. Sweden also promised to continue construction of a power bridge between Lithuania and Sweden and pursue Lithuania’s integration into the Northern European energy market. Construction of a liquid natural gas terminal in Klaipeda has become more realistic after Lithuanian President paid a visit to Norway. Norway highlighted its intentions to cooperate with Lithuania in gas sector.

The analysis of main strategic projects and their realization possibilities revealed a possible future vision. Although some strategic projects (e.g. Polish-Lithuanian or Swedish-Lithuanian power bridges) are gaining momentum, it is too early to speak about full energy independence.  Construction of Visaginas NPP is considerably delayed; implementation of the Third Energy Package would hardly be implemented in Lithuania even with the EU support.  Thus it is too early to speak about energy independence by 2020. The most important thing is that Lithuania’s energy policy objectives comply with the EU objectives, thus we can expect both financial and political EU support. But will we be able to use this support properly?