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Energy 7 February, 2018 11:00 am   

Russia is threatening with a blackout. Disputes keep the Iron Curtain in energy supplies


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Although the Iron Curtain has not completely collapsed in the power sector, Poland is fortunately on its safe side. If Latvia and Estonia do not communicate with it by June, they may lose funds to remove the barrier – writes Wojciech Jakóbik, editor-in-chief of BiznesAlert.pl.

The Commission establishes the next deadline

Poland and the Baltic States should prepare a joint project by June this year to synchronise their electricity networks with the rest of the European Union – said Maroš Šefčovič, Vice-President of the European Commission and Commissioner for the Energy Union, quoted by the Polish Press Agency, on Friday in Riga. If this deadline is met, it will be possible to present financial support for synchronization, according to Šefčovič. In fact, the Commissioner’s declaration signifies another postponement of the declaration deadline, as he recently threatened with losing funds for network synchronization in September 2017, as BiznesAlert.pl reported.

This process involves the integration of electricity grids within the European system in which Poland has been operating since 1996 and disconnecting them from the IPS/UPS system (BRELL) in which the Soviet bloc was operating, including the Baltic States, which had been part of the territory of the Soviet Union before its disintegration. Synchronization takes place by adjusting the operating frequency of the system.

Russia is threatening, but plan B is available

Lithuanians admit that in the absence of synchronisation, Russia could threaten the Baltic States with disconnection from the IPS/UPS system despite the lack of connection to the European system. Russians have already signalled their readiness to implement this scenario. – We cannot wait. The year 2025 is an extreme deadline for the readiness for implementation of this project – as Žygimantas Vaičiūnas, Minister of Energy of Lithuania, warned in August 2017. – We see preparations in Russia and we must therefore be ready to work in isolation – he added.

Nevertheless, it is worth mentioning that there is a possibility of installing converters, which will allow for further trade in energy with Belarus and Russia. It is a matter of costs and political resistance. This solution is currently being analysed by the Lithuanian operator Litgrid. This is also important because the Russian Kaliningrad Oblast would become an energy island after synchronisation. The alternative is its integration into the European system, or just converters.

However, the Russian nuclear power plant of Rosatom in Ostrovets, Belarus is on its way. Lithuanians do not want to import energy from this facility, because they regard it as a threat to the environment, and energy from there as a tool to undermine their own production projects. Poles share the arguments from the energy security aspect, not fearing environmental effects of Ostrovets that much. Therefore, Lithuanians will probably not be interested in converters to Belarus.

Dispute of the Baltic States

Generally speaking, there has been agreement on the need to remove the Iron Curtain between the networks of Poland and the Baltic States since 2007, when their prime ministers made a strategic decision on this issue. The Baltic Energy Market Interconnection Plan (BEMIP) was adopted in 2009 by the Commission, Denmark, Germany, Estonia, Lithuania, Latvia, Poland, Finland, and Sweden. It was there that the date of synchronization in 2025 appeared. The point of disagreement was the synchronization model, about which we wrote many times on BiznesAlert.pl.

Poles wanted to interconnect the energy markets, but not with LitPol Link 2, a new power generation connection that would expose the new coal unit in Ostrołęka Power Plant and nuclear power plant to the competition of cheap supplies from Scandinavian countries, as announced by the government. It is therefore a dispute about the vision of the energy market, which, as Poland and Lithuania believe, may be subject to far-reaching state interference in order to defend their interests, and according to Latvia and Estonia should act in the most independent way possible, which will guarantee the lowest energy prices.

The Baltic countries initially protested, and then Lithuania broke off, and reached an agreement with Poland on synchronisation without LitPol Link 2. A Lithuanian expert wrote about it on BiznesAlert.pl. The removal of the Baltic energy island using the grid in Poland was to take about 10 years. The deadline for the decision is June and for implementation is the year 2025. This means that synchronization is already delayed. An alternative to synchronisation by Poland would be to link the electricity networks of Latvia and Estonia with the Scandinavian system (other than continental). However, according to the analyses, its costs would be higher and its implementation longer. According to Lithuania, this model can be implemented by 2030.

Time to put an end to disputes

It is not clear whether the rebellious Baltic States will manage to implement synchronisation according to this model. It is possible that quarrels among the Baltic States will lead to the fact that Lithuania will synchronise with Poland and the other countries with Finland. However, it is worth reaching an agreement that will guarantee the greatest possible support of EU funds, which is particularly important for the tight budgets of the Baltic Island.