Baltic Energy Market News Flash

17.06.2022 Baltic Energy Market News Flash

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The wind energy production market in Estonia seems to run the forefront in the Baltics – there are around 32 known potential windfarm projects planned with a total capacity of 20 GW. The Government estimates the offshore wind potential to be around 7 GW. Market players welcome the newly adopted Maritime Spatial Plan (MSP) which includes areas potentially suitable for construction of offshore wind parks and cables and will, thus, give a highly anticipated boost to the development of offshore wind parks in Estonia. Indeed, the Consumer Protection and Technical Regulatory Authority has announced that it has already received 20 applications for the development of offshore wind parks, in addition to 5 applications where the proceedings have already been started. The organization of auctions for areas where there are several applications will follow. Additionally, the recently amended Building Act paves way for a more flexible cooperation between developers and the State and will enhance companies’ specific development plans. As the TSO Elering carried out a reverse auction for green energy subsidies with a deadline 01.06.2022, some projects will soon step into next development phase. The auction highlighted that in addition to well-known developers, there are many newcomers on the market.


The Cabinet of Ministers in Latvia has supported the draft law "Law on Facilitated Procedures for the Construction of Wind Power Plants to Promote Energy Security and Independence", which aims to establish preferential procedures for the construction of wind power plants with a total capacity of at least 50 MW and the infrastructure related thereto (high-voltage power lines up to 15 km length and new roads up to 10 km) to reach the total capacity produced by wind farms - 1000 MW. At the same time, the Cabinet of Ministers has supported the draft law amending the Law on EIA cancelling requirement to do the full scope EIA for the construction of wind power plants. Both initiatives have been submitted to the Parliament for adoption as urgent. Development on offshore wind in Latvia in its turn now depends on further moves with regard to Estonian and Latvian co-project ELWIND which now requires decision on specific location in the sea. While this is still pending, Ørsted application on determining the area in the sea was denied by the government, but decision on the Eolus Vind AB’s application is on hold. Although amendments to the applicable regulation with regard to offshore wind development was proposed by the end of last year, no decisions have been taken with this regard as well.


Lithuania is in the process of adopting the package of important amendments – the so-called Breakthrough package. It includes amendments to the Law on Electricity, the Law on Renewable Energy, the Law on Environmental Impact Assessment of Planned Economic Activities, the Law on Special Conditions for the Use of Land and the Law on Territorial Planning. The legislative package is currently deliberated in the Parliament, and thus, it may still be subject to further changes. The proposed amendments open opportunities for much more ambitious and more rapid development of green energy. For example, the proposed amendments foresee the cases when the shortened version of environmental impact assessment is sufficient. The amendments include plans to consider wind plants as having no significant impact on the landscape in certain territories, remove an obligation to include wind plants in territory planning documents, remove requirements for sanitary protection zones and set criteria of maximum distance to buildings instead. Changes, if adopted, will also relax the construction of wind plants on agricultural land plots. Finally, the Breakthrough package addresses the possibility of installing more renewable energy capacities than the transmission network can accept generation, thus, maximizing the potential of the network. It must also be mentioned that Lithuania has announced two offshore wind parks (700 MW each) to be built in the Baltic Sea by 2030. The relevant laws (primary legislation) have been adopted in March 2022. Currently, the Government and the regulator are preparing necessary secondary legislation and the first offshore wind auction will be launched in September 2023.

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In Estonia hydrogen is highly in focus as a measure to find alternative green energy resources. The recently adopted Estonian recovery and resilience plan maps out a support measure for hydrogen chains to be enforced by the Environmental Investment Centre already in 2022. For better strategy and planning, still, the sector is longing for the Estonian Hydrogen roadmap to be adopted in the upcoming months.

In Latvia, the policy of alternative fuels is only at the very beginning of development. The draft Transport Energy Law is submitted to the government for approval but is still discussed among the stakeholders. Along with the main goal of the draft law to contribute to the reduction of GHG emissions and emissions of air pollutants, it also aims to ensure development of infrastructure of alternative fuels. The draft law stipulates the Ministry of Transport, in cooperation with other ministries and also with the relevant municipalities, to ensure that new alternative refueling points are installed. At present, there is 1 hydrogen filling station in Latvia (which is the only one in Baltics), where it is possible to fill hydrogen produced from natural gas.


The hydrogen market and regulation in Lithuania are only at the start of their development. In order to prepare National Guidelines for the Development of Hydrogen Technology, an agreement was signed between Baringa Consulting Limited, a UK-based international consulting firm working with Civitta, an international management consulting firm, Amber Grid (the Lithuanian gas transmission system operator) and EPSO-G (gas and electricity TSO holding company). The results of the study will be presented by the end of June 2022. The Guidelines will set out the development of hydrogen sector until 2050 and the action plan to be implemented by 2030. Lithuania has also established the Hydrogen Platform which sets the ground for cooperation between the Ministry of Energy of the Republic of Lithuania and many stakeholders. Finally, Lithuania started the development of its first pilot project for the production of green hydrogen: this project is planned to be implemented by 2024.




It is clear that Estonia will take unprecedented actions to cut off Russian gas – Government has adopted the decision of no Russian gas by the end of 2022 and also, there are plans to develop an LNG terminal in Paldiski by autumn 2022. It will be seen in the upcoming months what will be the proportion and essence of private companies / state contribution to the new project. In addition, Estonia is taking steps for the gas sector to be prepared in case of a crisis as a draft law regarding this is in the works.


The Latvian Parliament has given a conceptual approval to give up Russian gas as of 1 January 2023. Along with possible Latvia's involvement in the establishment of an LNG terminal in Paldiski, there are several initiatives brought forward to develop an LNG
terminal in Riga and Skulte as well. The Minister of Economics says it should be purely based on commercial terms, without involving any state aid.


Lithuania was the first EU country that completely stopped Russian gas import in April 2022. Also, in May 2022 the Lithuanian-Polish gas pipeline GIPL became operational and ended the energy isolation of the Baltic States and Finland, integrating the countries into the EU’s single gas network. The GIPL project most certainly strengthens the region’s energy independence and opens a wide array of new opportunities. It also unleashes the full potential of Klaipeda LNG FSRU “Independence” which became operational in 2014 and which since then became a very important regional player ensuring gas supply to several countries. The demand for green gas produced from renewable energy sources is also becoming a popular trend in the market via Guarantees of Origin platform.




While companies in Estonia struggle to find possibilities for new grid connections in energy production in general, the problem does not seem to affect smaller solar plants, which can still find appropriate connections to the grid. The 2022 reverse auction for green energy subsidies has been dominated by solar energy producers.


In Latvia, since March this year, new amendments to the regulatory framework impacting development of solar power stations were introduced to facilitate introduction of new capacities from solar power. Ministry of Economics explains that construction of solar panels (equipment) on the ground or on a building already requires no construction documentation or a building permit. The permission of the constructions board may be required, for example, in cases where it is necessary to further strengthen the load-bearing structure of the building or for the construction of external engineering networks necessary for the operation of the relevant panels.


The aforementioned Breakthrough package in Lithuania is also very much relevant to the development of solar plants. The amendments, if adopted, intend to shorten and simplify the permitting procedures and environmental impact assessment procedures. The solar plants will also be allowed to be built on agricultural land without any change of land’s purpose which until now was a very severe limitation for development of large solar parks. The set of amendments also includes the regulation of hybrid power plants. Under this regulation, it would be possible to bring together different renewable electricity plants and storage facilities on one site and in that way a synergy – higher efficiency between different renewable energy sources in one project - could be achieved.



European Commission is setting the scene as it adopts REPowerEU guidelines in March 2022. To name a few takeaways amongst others, the document establishes the target for gas storage infrastructure to be filled up by 1 October 2022, requests that new connections be compatible with hydrogen and requires faster permitting for energy projects. In May 2022 the EU Energy Platform has been established to coordinate measures to secure energy supplies for the EU, including through the voluntary common purchase of pipeline gas, LNG and hydrogen. New state aid measures will be possible on the basis of recently adopted European Commission Climate, Energy and Environmental Aid Guidelines, which explain the directions to which national subsidies most likely should flow - keywords are decreasing emissions, alternative green energy sources (such as
hydrogen) and energy storage. While the national incentives are crucial, the EU Innovation fund also offers grants for low carbon technologies with a deadline of 31.08.2022.