Unifying the EU energy community

Utilities Unbundled - Issue 14

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As Lithuania prepares to take over the European Union (EU) Council Presidency in July 2013, Dalia Grybauskaitė, President of Lithuania, presents a personal view.

“It's vital that EU members work hand in hand to successfully implement energy measures.”

— Dalia Grybauskaitė, President of Lithuania

Governments around the world face two main energy challenges:

  • Timely replacement of outdated, inefficient energy infrastructure to improve cost efficiency, diversity, security of supply and reduce our carbon footprint
  • Lack of appropriate funds for the major turnaround needed in energy production and transmission assets, including improved integration between countries and markets

EU Member countries are also struggling to find the best alternatives for further energy development. At the same time, there's not enough collaboration between different countries to find joint solutions.

Which energy mix fits the EU dimension best? Who should pay for the implementation of new technologies and solutions? Is the EU Emission Trading System (EU ETS) the most efficient measure to fulfill our CO2 emissions targets?

These are tough questions. It's vital that EU members work hand in hand to successfully implement energy measures.

Focus on funding for physical interconnection

As the world's largest regional energy market with over 500 million customers, the EU continues to suffer from market fragmentation. This impacts the region's competitiveness against other large scale economies of the world, such as the US and China.

As a counter measure, EU Member States decided to implement the single EU energy market. However, this goal can only be achieved with the establishment of physical power and gas connections between different EU regions.

One of the key prerequisites is available funding. As the EU Council President, Lithuania will emphasize sufficient allocation of financing to energy transmission infrastructure development in the 2014 to 2020 financial window.

Making energy decisions together

More and more countries in the EU understand the benefits of a joint position in dealing with major primary energy suppliers. Lithuania will seek to ensure the EU position in relation to its neighbors is based on mutual benefits, rather than one-sided short-term gains that limit further progress of productive collaboration.

Energy diversification for Lithuania and the Baltics

Energy supply diversification is one of Lithuania's major goals, while a key goal for the Baltic region is synchronizing the Baltic energy systems with Western European electricity networks.

The Lithuanian Government is updating its energy strategy, and analyzing potential scenarios including:

  • LNG terminal in Klaipėda, which would increase LNG market liquidity in the region
  • Connection of the Lithuanian and Polish natural gas systems
  • Construction of power links to Poland and Sweden, which is already in progress

Local energy sources, such as biomass, can and should contribute to reducing dependency on expensive, imported energy sources. The Baltic States and our European neighbors need to work together to create a self-sufficient regional power system.

Coordination is key

Achieving the best possible results requires coordination. Estimates for implementing Lithuania's energy independence-related projects range from €6b to €7b (US$7.8b to US$9b) to 2020. This significant investment must be spent wisely, taking into account geopolitical, economic, and affordability factors.

This is an abridged version of an article by Dalia Grybauskaitė, the President of Lithuania. For more information on this topic, please contact Alexandra Reuther.

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