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Sunday 19.01.2020 | Name days: Alnis, Andulis

Expert: With Belarus electricity freezing Baltics’ solidarity, Moscow is over the moon

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A view of the first Belarusian nuclear power plant under construction near Astravyets

Linas Jegelevičius for the BNN

In a blow to Lithuania’s far-reaching plans, Latvia has announced it looks forward to buying electricity from a nuclear power plant in Belarus’ Astravyets under construction 50 kilometres away from Vilnius.

Previously, Latvia’s Spectrum Baltics, an independent electricity supplier, secured permit from Lithuania’s authority, the State Energy Regulation Council, VERT, to start electricity imports from the Russian enclave of Kaliningrad. Both were a smack in Lithuania’s face.

Which comes first: economics or politics?

To remind, Lithuania has outlawed Belarusian electricity from the Belarusian plant and has repeatedly said it wants to significantly reduce the dependence on Russian electricity. It seems both strivings are doomed and the culprit is Latvia that is embracing non-EU member states’ electrical power for an innocuous reason – it is often cheaper than that on the Nord Pool Spot, trading Nordic and Baltic electricity.

The bottom-line question is certainly this: which comes first for the Baltic states? Economics or politics? This is where the Baltics solidarity falls through – in energy issues, Lithuania has long put the latter first and Latvia sticks with the former.

Analyst: Latvians are very pragmatic

«Latvians are very pragmatic and do not politicise electricity trade and all energy issues like Lithuania. I can see now Lithuania ratcheting up the efforts to dissuade Latvia from buying Belarusian electricity, but I do not think Latvians will give in. What Lithuania wants is not in Latvia’s best interests,» – Vidmantas Jankauskas, former head of Lithuania’s Energy Pricing and Control Commission, VKEKK, told the Baltic News Network (BNN).

Latvia’s transmission system operator AST has clearly stated it made the decision on Astravyets purely out of economic calculations, i.e. to mitigate in a timely manner the risks of a possible decrease in electricity flow or negative tariff fluctuations.

 Latvia says it has consulted Lithuania, Estonia and the European Commission on the decision. Lithuania’s TSO Litgrid confirmed such consultations did take place, but there was no agreement with Latvia, it said.

Latvia’s domestic power output falling

In fact, Latvia is power hungry as never before. For the second consecutive year, Latvia is seeing a rapid fall in domestic electricity output. In 2018, power generation at Latvian hydropower plants plunged 44.1 per cent from a year before, according to information from Latvia’s Central Statistical Bureau.

During the first five months of the year, the drop was at 25.2 per cent, year-on-year, according to Augstsprieguma Tikls, the Latvian transmission system operator. Latvia currently has a 330-kilovolt interconnection with Russia, but has no power links with Belarus.

But there is more than that in ignoring Lithuania’s plead not to buy Astravyets electricity, Jankauskas says.

Bitter disappointments in the past

«Latvia must still feel bitter for Lithuania’s broke promise in the late 2000s to support its efforts to build a liquefied natural gas terminal near Riga,» he accentuated to BNN.

The little-known fact was recently brought up by Antanas Valionis, Lithuania’s former ambassador to Riga. «I had no serious arguments in defence of Lithuania’s policy. I do not know why it was decided not to fulfil the promises made to the Latvians,» he stated in his new book «In the Political Pendulum».

According to Valionis, it was agreed during former Latvian PM Valdis Dombrovskis’ visit to Lithuania in 2009 that a power cable with Sweden will be built from the Lithuanian seaport of Klaipėda and, in return, Lithuania will help the Latvians to obtain about 45 million euros from the EU for reinforcing their western electricity grid and that both neighbours will jointly build a regional liquefied natural gas terminal near Riga using Brussels’ money.

After Lithuania began to construct an LNG terminal in Klaipėda on its own, the-then Latvian government blamed Vilnius for thwarting Latvia’s LNG project. Latvia later blocked Lithuania’s efforts for the Klaipėda terminal, which was already operating, to be recognized as a regional project.

«So the disagreements between the two neighbours are deeply entrenched,» the analyst emphasised.

Kaliningrad has plenty of electricity to sell

Jankauskas also said that Spectrum Baltics’ resolve to import electricity from Kaliningrad «did make him a sense».

«With the 4 new power plants launched recently, Kaliningrad has a surplus of electricity, which it needs to get rid of. So Latvians are likely headed for a good business there. It is Lithuania that is ignoring economics and instead of buying cheaper electricity from third countries ends up paying more at the end,» Jankauskas underscored. «I am just surprised that the Lithuanian electricity trade authority, VERT, issued permit for Latvians,» he added.

Lithuania’s power imports on rise

Although Lithuania now aims long to significantly reduce power imports from Kaliningrad, they, as a matter of fact, are rising. INTER RAO, a Russian electricity trader importing electricity from Kaliningrad to Lithuania through its local affiliate, announced in late July it has double increased its electricity supply to Lithuania in the first half-year. According to the company, the imports in the period went up 29.8 per cent, up to 3.9 TWh, to Finland and up 97 per cent, up to 2.99 TWh, to Lithuania.

Analyst: Baltic grid synchronisation can be in danger

But it is Latvia’s decision to buy Astravyets electricity that is particularly painful to Lithuania. Arvydas Sekmokas, former Lithuanian Energy minister, is anxious that Latvia’s nodding to Astravyets electricity can put in a serious jeopardy the much-awaited synchronisation of the Baltic grids with the European network.

«If Belarusus gluts Latvia and the Baltics with cheaper electricity, creating a new monopoly of supply, I believe that synchronisation of the Baltic power grids will make no sense then, to the Latvians at least. Lithuania will inevitably have to revisit the issue of the Astravyets electricity ban,» he emphasised to BNN.

Meanwhile, Latvian Economics Minister Ralfs Nemiro says he «understands» Lithuania’s anxiety about the safety of the Astravyets nuclear facility, but emphasised that the decision on electricity trade with third countries was made to prevent possible electricity shortages.

The next few years will be trying

With Latvia stepping up electricity trade with third countries, the experts agree that it is difficult to speak about the Baltic solidarity, which is essential to complete the grid synchronisation.

«With Belarus launching the Astravyets nuclear power plant next year and with the synchronisation set for completion in 2025, the Baltic states are facing the next couple of years what I call a black hole. On one hand, we’ve committed to synchronising our grids with the European network, but on the other hand, possibly cheaper Belarusian electricity will bait the Baltic states and I cannot be sure that our neighbour (Latvia) won’t trade our solidarity for it,» Sekmokas accentuated.

«Latvia is a sovereign state and Lithuania cannot demand it to stay away from Belarusian power. However, it is clear that with Latvia and Lithuania in disagreement over the Astravyets issue, as well as on the synchronisation, it is Russia that is rubbing its hands out of joy,» the analyst concluded.

What will Brussels say?

Meanwhile, Rytas Staselis, a Lithuanian energy expert, says it is unclear whether Brussels will side with Lithuania or Latvia in their different take on Astravyets electricity. «I am not ruling out the possibility that there will even be pressure on the anti-Astravyets law that is in place in our country…I would hesitate to predict today which the European Commission would hit at more – the Latvians’ disloyalty to their political declarations or our Astravyets law,» he told Lithuania media this week.

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