Seimas of the Republic of Lithuania Resolution Amending Resolution No XI-2133 of the Seimas of the Republic of Lithuania of 26 June 2012 Approving the National Energy Independence Strategy


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Translated

by the Ministry of Energy of the Republic of Lithuania



 



 







 



seimas

of the republic of lithuania



 



 



resolution



amending

resolution no XI-2133



of

the seimas of the republic of lithuania of 26 june 2012



approving

the nATIONAL ENERGY INDEPENDENCE STRATEGY



 



21 June 2018                     

No XIII-1288



Vilnius



 



 



 



The Seimas of

the Republic of Lithuania resolves:



 



Article 1.



Resolution No XI-2133

of the Seimas of the Republic of Lithuania of 26 June 2012 Approving the National

Energy Independence Strategy shall be amended and set forth to read as follows:



 



SEIMAS OF THE REPUBLIC

OF LITHUANIA



 



 



RESOLUTION



APPROVING THE NATIONAL

ENERGY INDEPENDENCE STRATEGY



 



 



The Seimas of

the Republic of Lithuania, acting pursuant to

Article 14(2) of the Law of the Republic of Lithuania on Energy, resolves:



 



Article 1.



To approve the

National Energy Independence Strategy (appended).



 



 



 



 



 



 



APPROVED



by

Resolution No XI-2133



of the

Seimas of the Republic of Lithuania of 26 June 2012



(version

of Resolution No XIII-1288



of the

Seimas of the Republic of Lithuania of 21 June 2018)



 



 



NATIONAL

ENERGY INDEPENDENCE STRATEGY



 



EXECUTIVE

SUMMARY



ENERGY

FOR COMPETITIVE LITHUANIA



 



1.    The

objective of Lithuania’s energy sector is to meet the needs of the state of

Lithuania, its citizens, and businesses. The National Energy Independence

Strategy (hereinafter referred to as the Strategy) establishes the vision of

Lithuanian energy sector, its implementation principles, strategic directions,

objectives and tasks.  Their achievement and implementation will be detailed in

the Strategy’s Action Plan. The Strategy is implemented in the following four

strategic directions:



1.1.  COMPETITIVENESS.

Energy costs account for a significant share of industry costs and household

budgets. The global trends, including energy decarbonisation, market

integration, digitalisation, urbanisation, need for enhanced energy efficiency,

and development of technologies for the production and distributed energy generation

of renewable energy sources (hereinafter referred to as the RES), necessitate

changes in the energy sector. Therefore, the state will drive the energy sector

toward meeting these global trends and the energy interests of its citizens and

businesses. Energy prices will form in an effective market, which will be

common with the other Member States of the European Union (EU). The country’s

energy infrastructure will be used effectively, ensuring that the share of the

cost of the infrastructure in the final energy price does not exceed the

average for the EU Member States, while tariff patterns provide conditions for

industrial investments. To achieve this:



1.1.1.      The

country’s well-developed energy infrastructure, which is being expanded further

on the basis of a cost-benefit analysis, will be effectively used to increase

the competitiveness of the state.



1.1.2.      Competitive

measures to promote investments in the development of reliable local generation

facilities will be created and applied.



1.1.3.      An

effective regional market for natural gas of the Baltic countries will be

established.



1.1.4.      Smart

and remote accounting and control systems will be implemented to encourage new

services and opportunities.



1.1.5.      When

appropriate technical and market organisation conditions are in place, both

electricity producers using RES and electricity consumers who are demand side

response service providers will be able to participate in ensuring energy

system reliability and providing system services; meanwhile, the

market-oriented support system will promote the efficient functioning of the

market and technology development.



1.1.6.      Successful

outcomes:



1.1.6.1.     Final

electricity and natural gas prices in Lithuania: for industry – the lowest in

the region (compared to other Baltic, Scandinavian and Central and Eastern

European countries), for citizens – a decreasing share of energy expenditure compared

to the average income;



1.1.6.2.      Increased

market liquidity, simplified conditions for launching an energy business or

start using energy services;



1.1.6.3.     As

Lithuania switches to the production of energy from non-polluting sources

(emitting little greenhouse gases (hereinafter referred to as GHG) and air

pollutants), the principles of sustainable development (all methods designed to

ensure development that satisfies well-being in the present without sacrificing

such opportunities in the future) will be used as a guidance, while causing no

adverse economic consequences for the state, industry, and households.



1.1.6.4.     Equal

conditions of competition for state-owned and private entities.



1.2.  RELIABILITY.

The security and competitiveness of state, economic growth, and the welfare of

the country’s citizens depends on the reliable supply of energy. Lithuania is a

part of the European north–south energy corridor being developed, which

stretches from Finland to the Central European countries. The energy security is

assured by the fact of being a part of the European Union’s energy

infrastructure, markets and systems, the availability of the required

electricity-generating sources and alternative sources of gas supply. The

country’s energy reliability and security shall be ensured as follows:



1.2.1.      By

synchronizing Lithuania’s electricity system with the electricity system of the

Continental Europe. It is a strategic priority of the country’s security, so

the synchronisation of Lithuania’s electricity system with the electricity

system of the Continental Europe shall be implemented by 2025. Prior to the

completion of the synchronisation with the electricity system of the Continental

Europe, adequate high-availability generating capacities will be ensured in the

most cost effective and non-discriminatory way.



1.2.2.      By

the completion of the Gas Interconnection Poland–Lithuania (GIPL), which will

connect the Baltic states and Finland with the common gas market of the EU,

improve supply security and diversification in the region, increase regional

market liquidity and competition among suppliers, and allow for more effective

use of the liquefied natural gas (LNG) terminal in Klaipėda.



1.2.3.      The

development of a safe infrastructure of Lithuania’s energy sector will

strengthen the cyber resilience capabilities of the energy sector, will create

the culture of cyber security, and will promote cooperation between the private

and public sectors as well as international cooperation.



1.2.4.      The

outcomes of the improvement of the country’s energy reliability and security

shall be as follows:



1.2.4.1.     The

Lithuanian electricity system will reliably operate in a synchronised mode with

the electricity system of the Continental Europe.



1.2.4.2.     Electricity

imports will be replaced by local electricity generation: it is planned that in

2020 electricity generation in Lithuania will account for 35% of total final

electricity consumption (65% imported), in 2030 – 70% (30% imported), and in

2050 – 100%;



1.2.4.3.     Following

a cost-benefit assessment, capacity development technologies and solutions will

be selected that will provide the necessary reservation and balancing services

through market mechanisms;



1.2.4.4.     The

natural gas transmission system will be connected to the EU gas transmission

system via Poland, while the Klaipeda LNG terminal will meet the regional LNG

needs;



1.2.4.5.     The

risk assessment based approach towards the assurance of cyber security will

prevail in the energy sector, and cyber security will meet the organisational

and technical requirements set by the Government of the Republic of Lithuania.



1.3.  MITIGATION

OF ENVIRONMENTAL IMPACT (energy savings and green energy). Efficiency of energy

consumption improves the financial status of the country’s population,

strengthens business competitiveness, and reduces environmental pollution. The

aim is to increase energy efficiency and RES use as part of the daily life of

each consumer, business or industry that purchases electricity, gas, biofuels

or other fuels/raw materials. RES provide the most promising source of energy

for the development of domestic production. Therefore, further development of

RES and improvement of energy efficiency in line with reduction of

environmental pollution will be supported by financial and non-financial

measures:



1.3.1.      In

the long term, sustainable development of an energy sector free of GHG and air

pollutants will be carried out, taking into account the growing need for

resilience to natural phenomena caused by climate change;



1.3.2.      RES

will be used for the production of energy and biofuels;



1.3.3.      Renewable

energy will be developed by actively and consistently increasing the number of

prosumers producing energy with the use of ambient technologies and by engaging

local energy communities in RES development;



1.3.4.      In

ensuring the expansion of the use of solar energy, solar collectors will be

implemented in the sector of district heat production;



1.3.5.      The

state will promote the integrated renovation of multi-apartment and public

buildings (prioritising renovation in quarters);



1.3.6.      Low-energy-intensive

industries and industries increasing energy efficiency will be promoted, all

industries will be encouraged to implement the latest environmentally friendly

technologies and equipment.



1.3.7.      Successful

outcomes:



1.3.7.1.     As

technologies develop, the share of RES energy will be increasing due to more

participants in the market. In 2020, 30% of the country’s total final

electricity consumption will be from RES; in 2030 – 45%, and in 2050 – 80%. RES

will become the main source of energy in electricity, heating and cooling, and

transport sectors.



1.3.7.2.     In

2030, the intensity of primary and final energy will be 1.5 times lower than in

2017 and in 2050 – 2.4 lower than in 2017;



1.3.7.3.     By

2020, the renovated multi-apartment and public buildings will save around 2.6–3

TWh of energy and by 2030 – 5–6 TWh;



1.3.7.4.     1

TWh of electricity will have been saved across the country’s industries by 2030;



1.3.7.5.     The

amount of greenhouse gas emissions produced by fixed installations which

participate in the EU Emission Trading Scheme will reduce by at least 43% by

2030 compared to the 2005 level;



1.3.7.6.     The

amount of greenhouse gas emissions produced by the sectors which do not

participate in the EU Emission Trading Scheme (energy and industrial fuel

firing installations of smaller than 20 MW capacity in the transport sector)

will reduce at least by 9% by 2030 compared to the 2005 level;



1.3.7.7.     The

amount of greenhouse gas emissions produced by the energy and transport sectors

will reduce by more than 95% by the year 2050 compared to the 1990 level.



1.4.  PARTICIPATION

OF THE COUNTRY’S BUSINESSES IN PURSUANCE OF ENERGY PROGRESS. From a country

importing energy technologies, Lithuania needs to become a country creating and

exporting energy technologies.  Energy efficiency improvements by implementing

building renovation programmes and ameliorating the efficiency of industrial

enterprises’ production, also RES development create a large market for such

services and an opportunity to expand employment opportunities and to develop

innovative zero GHG and zero pollutant technologies and human resources’ skills.

The country’s business development will be supported by the following measures:



1.4.1.      By

promoting the experimental and industrial development of the most promising

energy technologies and innovation incubators, green, distributed energy

generation, and digital solutions in the field of energy research;



1.4.2.      By

promoting information technology (IT) solutions for energy sector optimisation

to be tested in Lithuania and exported;



1.4.3.      Through

cooperation between the LNG terminal, businesses, organisations and the

country’s high and higher schools (including research institutes and

universities), expanding the potential of the gas infrastructure of regional

significance, LNG technologies, distribution, and excellence centre.



1.4.4.      The

outcome of the implementation of changes in the energy sector and capacity

building:



1.4.4.1.     The

establishment of well-paid jobs and increase of high value-added exports of

energy technologies and knowledge;



1.4.4.2.     Lithuania

is a centre of information technology and cyber security solutions for energy,

biomass and biofuel technology, solar and wind energy technology, geothermal

technology, energy market development, improvement of electricity system

operation, development of new electricity system management methods and

implementation of energy projects.



2.    The

strategic directions of the Lithuanian energy sector, which shall enjoy

increased attention during certain periods, will be followed in implementing

the outlined objectives and tasks:









2020

ENERGY-SECURE STATE





 





2030

COMPETITIVE ENERGY











 

2050

ENERGETICALLY SUSTAINABLE AND INDEPENDENT STATE









Objectives

1.      Integration of the

energy system in the EU energy system

2.      Improvement of

energy efficiency of energy consumption

3.      Balanced and

sustainable RES development

4.      Optimisation and

modernisation of energy infrastructure





Objectives

1.      Energy price in the industry

sector will be the lowest in the region (compared to other  (Baltic,

Scandinavian and Central and Eastern European countries); for citizens – a

decreasing share of energy expenditure compared to average income

2.      Smooth transition

from fossil-based energy sources to RES





Objectives

1.  

80% of the country’s energy needs is

generated from non-polluting (zero emissions of GHG and air pollutants)

sources

2.  

100% of local electricity production

in the country’s gross electricity consumption









Tasks

1.      Synchronisation of

the Lithuanian energy system with the energy system of the continental Europe

2.      Improvements of

energy efficiency of energy consumption (targets established by the EU are

implemented)

3.      RES development –

focus on development of prosumers and biomass and wind energy, use of RES for

the production of district heating and household heating

4.      Construction of

interconnections (GIPL) and decision on the long-term LNG imports to

Lithuania

5.      Ensuring balanced

local capacities in production, reservation and balancing; following a

cost-benefit analysis, the development of Kruonis Pumped Storage Power Plant





Tasks

1.      Improvements of

energy efficiency of energy consumption (energy intensity will not exceed the

EU average)

2.      RES development –

focus on development of prosumers and wind energy as well as further use of

RES for the production of district heating by installing effective biomass

cogeneration plants and for household heating

3.      Use of alternative

fuels in the transport sector and its electrification

4.      Establishment of

necessary conditions for the development of non-polluting energy production

methods. Development of small and flexible local energy generation units





Tasks

1.     

Completion of necessary conditions for

the development of non-polluting energy production methods

2.     

Development of effective and

non-polluting energy production, supply, storage/accumulation, and

consumption technologies

 

 

 

 

 









 









 



Fig. 1. The results

sought in the Lithuanian energy sector for the years 2020, 2030 and 2050 (in

accordance with the strategic directions of increased attention of the

Lithuanian energy sector outlined in the previous table of item No. 2)



 













ENERGY RESOURCE CONSUMPTION TRENDS



 



 



Fig. 2. Total consumption of fuel and energy in

Lithuania in 2016, %







Source: Lithuanian Department of

Statistics.



 



 



Fig.3. Dynamics of consumption of primary energy

sources up to 2050, GWh



(excluding the need for gas as a raw material in the

production of fertilisers and consumption of petroleum products for non-energy

purposes)







Source: Lithuanian

Energy Institute



 



 



 



Fig. 4. Foretasted final energy demand according to

fuel and energy types up to 2050 in ktoe







Source: Lithuanian

Energy Institute



 



Fig. 5. Energy

consumption and GDP growth forecasts up to 2050







Source: Lithuanian Energy Institute, Ministry of

Energy of the Republic of Lithuania.



 



 



 



 



 



Fig. 6. The dynamics of carbon dioxide emissions resulting

from fuel combustion up to 2050



[1]



Source: Lithuanian

Energy Institute









 



CHAPTER I



INTRODUCTION



 



3.    The structural reforms and strategic projects of the energy

sector, carried out in Lithuania as a result of implementing the National

Energy Independence Strategy approved by Resolution No. XI-2133 of the Seimas

of the Republic of Lithuania dated 26 June 2012, have diversified energy supply

routes and sources, reduced energy resources prices for consumers, and opened

new development opportunities for the country.  The Lithuanian energy sector

has been substantially restructured in order to reduce and eventually eliminate

the energy dependence on the Russian Federation that has resulted in

unreasonably high resource prices and the use of energy as a political tool.



4.    With regard to these results of the implementation of the National

Energy Independence Strategy and the new EU energy and climate change targets

that Lithuania has to achieve by 2030 by implementing the Paris Agreement of 12

December 2015 between the EU and the United Nations (UN) (hereinafter referred

to as the Paris Agreement), and the new trends in the energy market and also

targets of the EU Energy Union and the Baltic Energy Market Interconnection

Plan, this updated Strategy has been prepared, which includes   state’s key

energy policy targets, directions and their implementing  tasks up to 2030 and

a vision up to 2050. The strategic goal of the state in the energy field is

synchronisation of the Lithuanian energy system with the energy system of

continental Europe. This goal has to be reached by 2025.



5.    In the future, the continuity of the pursued policy and directions

will be maintained, the investment attractiveness of Lithuania will be

improved, new zero GHG and zero pollutant technologies resilient to climate

change will be implemented, innovations in the energy sector will be

encouraged, and energy progress will be ensured.



 



CHAPTER II



 LITHUANIA’S ENERGY

POLICY IN THE EUROPEAN UNION



 



6.    The EU’s energy sector is facing significant challenges: heavy dependence

on energy imports and the issue of energy supply security, the reduction of GHG

emissions in pursuit of long-term climate change mitigation targets under the

Paris Agreement, and the remaining prevalent use of fossil fuels in the energy

mix compared to all other energy resources used.



7.    In response to these challenges, the EU’s energy and climate

change policy, which is based on the principles of greater integration,

security of energy supply, competitiveness, and sustainable development, is

consolidated and consistently reinforced[2].  In implementing the EU’s climate

change and energy policy objectives up to 2030, approved by the European

Council in 2014, and the EU’s Energy Security Strategy[3]

(hereinafter referred to as the European Energy Security Strategy), the EU’s

Energy Union concept was initiated in 2015, setting out the assurance of energy

supply security and solidarity between the Member States, the establishment of

a fully integrated European energy market, the improvement of energy

efficiency, and the reduction of the dependence of the economy on fossil fuels

by linking energy and climate change policies.



8.    The obligations of the EU Member States agreed upon in the context

of the EU’s energy policy will be mostly achieved, and part of them will be

surpassed by 2020[4]. Therefore, even more

ambitious targets of the EU’s energy policy have been agreed upon for 2030:  to

reduce greenhouse gas emissions by at least 40% (compared to the level of

1990), to increase the share of RES in energy consumption and energy efficiency

at the EU level by at least 27% (to increase the energy efficiency target to

30% in 2020, if possible). Also, to achieve at least 15% connectivity of the EU

Member States by electricity interconnections, taking into account the regional

and national specifics of the EU Member States.  It is estimated that

successful continued implementation of these energy and climate change policies

would allow the EU to reduce GHG emissions by 80–95% by 2050 (compared to the

level of 1990).



9.    The implementation of the EU energy policy objectives for 2030 and

the concept of the Energy Union is to be ensured through a common European

Energy Governance System, based on the drawing up of National Integrated Energy

and Climate Action Plans, which in the future, in Lithuania, could replace

strategic planning documents related to the Strategy insofar as it does not

conflict with strategic interests and national safety.



10.     The vision of the updated Strategy and the main strategic

objectives, directions, and tasks of the development of the country’s energy

sectors are substantially in line with the EU’s energy and climate change

policy and the objectives of the Energy Union.



11.     Lithuania’s interests in respect of the objectives of the EU’s

energy policy are as follows:



11.1.   Completion of the EU’s internal energy market. After having been isolated from the EU’s internal energy market

and networks for a long time, Lithuania supports the EU’s infrastructural,

regulatory, and financial measures aimed at further integration into the EU’s

internal energy market, while taking advantage of the benefits it offers in

respect to increased energy security, competitiveness, and sustainable

development.  A fully integrated and effectively functioning internal energy

market of the EU is a priority objective of Lithuania.



11.2.   Assurance of energy security in the Baltic region. The aim will be to implement, as quickly and fully as possible,

the provisions of the European Energy Security Strategy and to ensure that the

results of the implementation of the measures of this Strategy are regularly

reviewed at the EU level.



11.3.   Implementation of the targets of the EU’s climate change and

energy policy. The balanced

development of EU’s renewable energy sources and energy efficiency improvement

will be encouraged. Obligations related to the development of local and

renewable energy sources and energy efficiency improvement after 2020 shall be

based on the burden sharing principle, which ensures the respective

contribution of each EU Member State in the pursuance of the objectives

relating to renewable energy sources and energy efficiency improvement on the

EU level by 2030.



11.4.   Adequate EU’s long-term financing programming policy. The aim will be to ensure the continuity of the financial

instruments of the EU for energy infrastructure and decommissioning of the

Ignalina Nuclear Power Plant and adequate funding in order to alleviate the

financial burden on Lithuanian consumers



11.5.   Strengthening of the EU’s external energy policy. The strengthening of the EU’s external energy policy, coordinated

actions of the EU Member States and their solidarity in cases of crises also

enhance Lithuania’s security. Therefore, reinforced EU’s dialogue with the key

energy resource suppliers, especially with the US, Canada, Norway, and

Australia will also be pursued.



 



CHAPTER III



STRENGTHS, WEAKNESSES,

OPPORTUNITIES AND THREATS (SWOT) ANALYSIS OF THE LITHUANIAN ENERGY SECTOR



 



12.     Strengths:



12.1.   Abolished energy isolation from the EU’s internal energy market

and enhanced energy security through interconnections with Scandinavian and

Polish electricity networks and implementation of a real gas security

alternative – the LNG terminal in Klaipėda.



12.2.   Developed gas and electricity transmission infrastructure and

diversified supplies of energy sources.



12.3.   Acquired excellence in the fields of electricity interconnections

and LNG infrastructure development and LNG trade, and management of nuclear

power plant decommissioning projects.



12.4.   High-capacity terminals for oil and petroleum product import and

export and a steadily operated oil refinery.



12.5.   Operation of well-developed district heating supply (DHS) systems

in all cities.



12.6.   Faster-than-EU-average development of RES over the past 12 years,

coupled with the relatively low commitments to investors in the development of

energy-generating capacities that use RES, the development of the biomass

industry, and the acquisition of excellence in the conversion of biomass to energy

and solar energy technology production.



12.7.   A positive attitude of the public towards the use of RES, the

growing number of companies preparing for the use of RES energy in their

activities, and favourable conditions for the development of RES.



12.8.   Achieved financial stability of the energy sector (capable of

overcoming shocks and the effects of financial imbalances).



12.9.   The creation of a system for modernising/renovating public and

multi-apartment buildings, increasing energy efficiency, gradually

transitioning to renovation in quarters.



13.     Weaknesses:



13.1.   Heavy dependence on the import of energy sources and leaps in

prices of imported energy sources.



13.2.   Non-competitive and insufficient local generation of electricity,

physical and technological obsolescence of a large part of electricity and some

heat production facilities. Insufficient competition in electricity reserve and

balancing markets.



13.3.   Heavy dependence on the import of energy production, supply and

storage technologies.



13.4.   Relatively high costs of the maintenance of the natural gas and

electricity supply/transmission infrastructure.



13.5.   Complex and excessive regulation of the heat sector.

Insufficiently attractive connection to DHS systems.



13.6.   More than 70% of multi-apartment residential buildings and a large

portion of public buildings are energy-inefficient, and their slow

modernisation can cause severe economic and social consequences.



13.7.   Growing GHG emissions in sectors not participating in the EU’s

Emissions Trading System (ETS), and CO2 emissions in the transport

and agricultural sectors.



13.8.   High pollutant emissions from household heating equipment due to

the use of biofuels and other solid fuels and inefficient heat production

equipment.



13.9.   Insufficiently consistent regulatory and investment environment

that does not create a level playing field between the public and private

sectors.



14.     Opportunities:



14.1.   The use of natural gas and electricity infrastructure on regional

level and establishment of Lithuania as a regional energy centre.



14.2.   LNG supply infrastructure and reinforced main gas networks as well

as a new gas pipeline to connect Lithuania with Poland, reinforcement of the

interconnection between Lithuania and Latvia and, in cooperation with other

Baltic countries and Finland, the on-going development of the necessary

regulatory and market organisational principles that will allow the functioning

of the regional natural gas market of the Baltic countries and Finland.



14.3.   Sale of energy products, technologies and excellence created in

Lithuania, thus strengthening the economy and international prestige of the

state.



14.4.   Great potential for improving the efficiency of energy production

and consumption, with simultaneous reasonable growth of final energy needs and

rapid growth of electricity needs.



14.5.   Use of funds of public service obligations, allocated on an annual

basis for the production of electricity from RES and its balancing, reducing

the current level and acting on the basis of the best European practices.



14.6.   By rationally using local and/or renewable energy sources in DHS

systems, it is possible to further reduce the need for the imports of primary

energy sources.



14.7.   Rehabilitation of inefficient household/housing heating facilities

and other heat generating facilities with the help of EU support.



14.8.   Reinforcement of the competitiveness of the industry by optimising

the energy tariff policy in accordance with the best European practices.



14.9.   The electrification of transport, which will considerably reduce

GHG and air pollutant emissions and need for imported fossil fuels, and improve

the use of existing infrastructure.



15.     Threats:



15.1.   Dependence of the electricity network on the Russia-controlled energy

systems of the Commonwealth of Independent States’ (IPS/UPS) synchronous zone. 

The electricity system of Belarus, Russia, Estonia, Lithuania and Latvia (BRELL),

which applies market organisation, balancing, and other rules different from

those applied by the EU, is developed without the involvement of Lithuania and

the country is unable to have any impact on the system.



15.2.   Expansion of unsafe nuclear power plants in the region, which

poses threats to national security and the energy system



15.3.   In the years to come, thanks to the capacity of the inter-system

electricity interconnections, Lithuania will be able to cover all of its

electricity needs from imports from EU Member States; however, excessively

large dependence on electricity imports would affect the country’s energy

security.



15.4.   Decreasing consumption of natural gas and heat energy, which will

cause increasing energy infrastructure maintenance costs per energy unit.         



15.5.   The

growing number of cyber incidents in the energy system, which poses threat to

the stable operation of the country’s energy system and its security.                                





 



CHAPTER IV



VISION OF THE

LITHUANIAN ENERGY SECTOR



 



16.     The

vision of the Lithuanian energy sector is the advanced energy industry that

uses zero GHG and non-polluting energy sources, creates added value to the

state and the consumer, is resilient to cyber threats and climate changes, and

ensures reliable supply of energy at a competitive price.

Pursuant to 2030 UN Agenda for Sustainable Development, the objectives of the

Paris Agreement, EU’s 2030 climate change and energy targets, in 2050 the

Lithuanian energy sector will produce 80% of energy from non-polluting sources

(zero emissions of GHG and air pollutants), will supply energy to consumers

safely and at a competitive price, and will contribute to the country’s modern

economy, its competitiveness and attraction of investments. Energy production

sources will include renewable energy sources and technologies capable of

producing energy without polluting the environment. Consumers will be enabled

to produce energy required to cover their needs. The implementation of the

vision of the Lithuanian energy sector by 2020 is estimated to require up to

2.4 billion euros, and in 2021–2030 – up to 10 billion euros in public,

including the EU, and private funds for the development and modernisation of

the energy sector and the restoration of worn out facilities[5].



17.     The

vision of the Lithuanian energy sector is based on the Paris Agreement adopted

under the UN Framework Convention on Climate Change, the strategic provisions

for EU’s 2030 energy and climate change policy targets, and the energy

legislation of the EU and the Energy Union.



18.     The mandatory joint target for the EU (reducing GHG emissions by

at least 40% by 2030, as compared to 1990) defined in the EU’s 2030 Climate and

Energy Framework[6] is aligned with the EU’s target to

reduce GHG emissions by 80–95% by 2050.



19.     The general principles of the implementation of the vision of the

Lithuanian energy sector:



19.1.   To reduce energy dependence on import, while promoting the use of

local sources and RES and implementing energy efficiency improvement measures,

installing zero GHG and zero air pollutant technologies;



19.2.   To ensure the uninterrupted energy supply from secure, reliable

sources functioning in accordance with market rules, to reduce the dependence

of national energy systems on dominating energy suppliers, while providing

conditions for the diversification of energy sources and competition;



19.3.   To carry out the comprehensive integration of national energy

systems in the EU energy market and systems and the common European internal

energy market;



19.4.   To ambitiously fight climate change and air pollution by

installing zero GHG and zero air pollutant technologies, as RES and energy

efficiency improvement targets should contribute to the EU’s climate change and

energy targets, while the solutions should ensure their implementation;



19.5.   To ensure current or increased reliability: in parallel to RES

development, the electricity system balancing, reservation and other system

network services should be ensured in the most efficient way, and the RES

energy producers themselves should be involved in their provision;



19.6.   In implementing the 2050 vision and selecting measures, to be

guided by economic rationality, environmental impact, and social

responsibility;



19.7.   New energy projects shall only be launched after a cost-benefit

analysis;



19.8.   To implement innovations: the development of Lithuanian energy

sector should be based on smart technologies and digitalisation of the energy

industry;



19.9.   To create technologies: from a country importing energy

technologies, Lithuania needs to become a country exporting high-added-value

technologies for the energy sector;



19.10.    To develop, broaden, and use the acquired energy excellence,

knowledge and created infrastructure by expanding the partnership between the

public and the private sectors and ensuring the attraction of investments for

sustainable development of the energy sector;



19.11.    To ensure fair competition between public and private businesses

and a level playing field for all actors in the energy sector;



19.12.    To attract investments for the creation and development of energy

technologies;



19.13.    To ensure cyber security of the energy sector’s infrastructure.



 



CHAPTER V



KEY

AREAS, STRATEGIC OBJECTIVES, TASKS AND OUTCOMES OF LITHUANIAN ENERGY SECTOR



 



SECTION

I



RENEWABLE ENERGY

SOURCES



 



20.   

In 2016, RES accounted for about 25.5%

of final energy consumption in Lithuania. Accordingly, consumption of

electricity from RES was about 17%, in total heat consumption – about 46%, and

in the transport sector – about 4%. A significant share of resources in energy

production comes from wind and biofuels (solid and liquid).



21.    The

main objective of the Strategy in the field of RES is to continue to increase

the share of RES in domestic energy production and total final energy

consumption, thus reducing the dependence on fossil fuel imports and increasing

local electricity-generating capacities.



22.    Although

RES technologies are constantly improving and the cost of equipment decreases,

RES-generated energy produced in newly-installed plants is currently not yet able

to compete in the market. Therefore, the production of RES energy is and will

continue to be supported until the economically and technically acceptable RES

development limit is reached, focusing on the proactive participation of RES

energy producers under market conditions, or until the production of RES energy

reaches market value.



23.    The

development of RES in Lithuania must be carried out in accordance with the

following principles:



23.1.  

Gradual integration of RES in the market

– the most cost-effective technologies

shall be developed, technological maturity shall be considered, taking into

account its development trends in the near future;



23.2.   Affordability

and transparency – the RES incentive scheme must be

market-based, minimise market distortion and ensure minimum financial burden on

energy consumers, clarity and a non-discriminatory competitive environment;



23.3.   Proactive

participation of energy users – as the share of RES

in the energy consumption increases, decentralised electricity production must

be encouraged, consumers must be allowed to use RES energy for their own needs

and to receive a reward for surplus energy supplied to the network in line with

the market conditions, and consumer behaviour and energy demand and supply

management solutions must be introduced.



24.    In

pursuit of the strategic RES target, the aim will be to increase the share of

RES in the total final energy consumption of the country to:



24.1.   30%

by 2020;



24.2.   45%

by 2030;



24.3.   80%

by 2050. RES will become the main source of energy in electricity, heating and

cooling, and transport sectors.



25.    The

main directions for achieving the target:



25.1.   To

increase the share of electricity consumption from RES up to 30% in 2020, 45%

in 2030 and 80% in 2050 compared to the final electricity consumption:



25.1.1.  By

2020, the share of RES in final electricity consumption will grow to 30% and

will constitute no less than 3TWh. From the perspective of technology

development trends, it is estimated that electricity produced from wind will

become the main source of RES energy and by 2020 might reach up to 44%, biomass

– up to 26%, hydropower – up to 19%, energy produced in solar power plants – up

to 6%, and biogas – up to 5% of all RES-generated electricity consumed.



25.1.2.  A

lot of attention will be paid to the production of decentralised electricity

from RES. The number of electricity consumers who can generate electricity for

their own needs will be gradually increased. By 2020, after creating a

favourable investment environment, there will be at least 34 thousand

electricity consumers using a prosumer scheme.



25.1.3.  Energy

production from wind energy in the Baltic sea after 2020 is to be conducted

taking into consideration the following:



25.1.3.1. research

carried out and other actions taken which are required for the adoption of decisions

regarding territories which are appropriate for organisation of contests and

for identification of the installed capacity of power plants;



25.1.3.2. assurance of

the adequacy of capacities of the Lithuanian energy system given the

synchronisation of the Lithuanian energy system with the European energy

system;



25.1.3.3. results of

the cost-benefit analysis.



25.1.4.  By

2025, at least 38% of electricity consumed in Lithuania will be produced from

RES and will constituted no less than 5 TWh. Taking into consideration the

assessment of the technology development trends, it is estimated that at least

50% of RES-generated electricity could come from wind, 20% from solar, 15% from

biofuel, 12% from hydropower, and about 3% from biogas.



25.1.5.  By

2030, no less than 45% of electrical power consumed in Lithuania will be

produced from RES and will constitute no less than 7 TWh. With technology

development trends in mind, it is estimated that the majority of electricity –

no less than 53% – could come from wind power, 22% – from solar energy, 16% –

from biofuel energy produced in highly efficient co-generation power plants,

and 8% – from hydropower. Biogas could generate about 1% of electrical power.



25.1.6.  By

2050, electricity generated from RES will constitute no less than 100% of power

consumed in Lithuania, and the amount of energy produced from RES will be no

less than 18 TWh.



25.1.7.  The

vital prerequisite for RES development is the assurance of the required

adequacy of capacities of the Lithuanian energy system. Taking into

consideration the required capacity, the state will ensure the availability of

reservations and other system network services by creating an appropriate

regulatory environment, while the responsibility for balancing will be borne by

the RES-generated electricity producers in line with the EU guidelines[7].

Regional and international cooperation will be gradually promoted in order to

reduce the costs of developing RES.









 



Fig. 7. Market

structure by the amount of RES-generated electricity consumed, % and GWh

(forecast)







Source: Lithuanian Energy Institute, Ministry of

Energy of the Republic of Lithuania.



 



25.1.8. 

In the long-term perspective,

electricity consumers will become proactive participants in the market and will

be given the opportunity to use energy generated from RES for their own needs

to receive a reward for surplus energy supplied to the network in line with the

market conditions. Such consumers will account for at least 30% of all

consumers by 2030 and at least 50% by 2050. These customers will be able to

participate in the market through service providers in the energy sector. The

active participation of local energy communities in investing in co-owned RES

equipment will be encouraged.



 



Fig. 8. The share of prosumers compared to all

consumers, %







Source: The Ministry of Energy of the Republic of

Lithuania.



 



25.2.   To

maximise the share of RES for district heat consumers, households with

individual heating and non-household consumers with individual heating:



25.2.1.  Up

until 2020, RES consumption will continue to increase as compared to district

heat consumption and in individual heating in households.



25.2.2.  The

share of DHS RES will be 70% by 2020 and 90% by 2030. The development of

high-efficiency solid biomass CHP plants will continue, non-recyclable

municipal waste non-hazardous industrial waste that have energy value will be

effectively used for energy production.  



25.2.3.  After

creating a favourable regulatory environment, households with independent

heating will gradually switch to clean, zero GHG technologies and the share of

RES in households will reach 70% by 2020 and 80% by 2030. GHG producing

technologies will be replaced by clean, clean-air technologies that do not

impair the quality of air.



 



SECTION II



ENERGY

EFFICIENCY IMPROVEMENT



 



26.   

Energy efficiency improvement is one of

the most important objectives in the EU and Lithuania. Energy efficiency is

usually evaluated by the primary and final energy intensity, which indicates

how much energy costs went into the production of a specific amount of goods

and services in the country (the ratio of country’s energy consumption to its

GDP). In 2010-2015, the energy intensity of the country’s economy consistently

decreased (primary energy – 32%, final energy – 31%), and in 2015 was the

smallest among the three Baltic States at 205 kgoe/1000 EUR (in Latvia – 207

kgoe/1000 EUR, Estonia – 358 kgoe/1000 EUR). Lithuania is still behind (by

about 70%) the EU average (120 kgoe/1000 EUR).



 









 



Fig. 9. Energy

intensity in EU Member States, kgoe/1000 EUR







Source: Eurostat.



 



27.    The

greatest potential for energy efficiency improvements based on the economic

feasibility of effectiveness measures is in the industrial, building and

transport sectors.



28.    In

the industrial sector, energy costs in total product cost remains high and is

on average 20% higher than the EU average; therefore, more efficient and modern

technologies and also energy management measures are needed to reduce energy

costs and increase the competitiveness of enterprises.



29.    Multi-apartment

residential buildings consume the most amount of heat energy in Lithuania, i.e.

54% of final heat energy consumption. It is in this area, which accounts for

60% of all buildings by area, that the largest potential for saving energy is

observed.



30.    In

2010-2015, final energy consumption in the transport sector increased by 18%,

while the sector itself consumes about 38% of the total final energy. It is

therefore necessary to increase energy efficiency in this sector and to

implement energy efficiency measures related to it.



31.    The

main objective of the Strategy in improving energy efficiency is to ensure that

the intensity of primary and final energy by 2030 is 1.5 times lower than in

2018, and by 2050 it is about 2.4 times lower than in 2018.



 









 



Fig. 10. Energy

intensity reduction forecasts up to 2050







Source: Lithuanian Energy Institute, Ministry of

Energy of the Republic of Lithuania.



 



32.    Energy

efficiency improvement in Lithuania will continue to be carried out in

accordance with the following principles:



32.1.  

Economic feasibility

– the most cost-effective energy efficiency improvement measures should be

given priority when implementing energy efficiency improvement objectives;



32.2.   Proactive

training and education of energy consumers

– since energy consumers can contribute to energy efficiency objectives by

changing their behaviour and habits, energy consumer training and education

must be strengthened;



32.3.       

Competition

– by allowing investors in energy efficiency improvement to compete with each

other for the most economically advantageous projects, by implementing energy

efficiency improvement obligations or by competing for the state support.



33.   

In pursuit of the energy efficiency

improvement objective, the aim will be to:



33.1.   ensure

the implementation of the EU requirements for energy efficiency improvement in

Lithuania by 2020 (i.e. total energy savings of 11.67 TWh) and the financing of

compliance with these requirements;



33.2.   by

2030, ensure that primary and final energy intensity is 1.5 times lower in 2030

than in 2018;



33.3.   by

2050, ensure that primary and final energy intensity is about 2.4 times lower

than in 2018.



34.    The

main directions for achieving the target:



34.1.   To

promote integrated renovation of multi-apartment and public buildings

(prioritising renovation in quarters) and to save about 2.6–3 TWh of energy in

the renovated multi-apartment and public buildings by 2020 and 5–6 TWh by 2030

(by adding up savings in each year).



34.2.   To

promptly develop low-energy-intensive industries and industries increasing

energy efficiency, the deploy and acquire the most up-to-date and

environmentally-friendly technologies and equipment.



34.3.   To

increase energy efficiency in the transport sector by renovating the fleet,

switching to modern and efficient public transport, optimising the

infrastructure for the use of transport and alternative fuel by electrifying or

using alternative fuels.





SECTION III



ELECTRICITY

SECTOR



 



35.   

In 2016, the total installed

electricity-generating capacity in Lithuania was 3591 MW, 2222 MW out of it constituted

the reliably available power for peak consumer demand of the requested capacity.

In 2016, the peak demand was 1979 MW. The projected peak demand will be 1980 MW

in 2020, 2450 MW in 2030, and 3150 MW in 2050. At the same time, however, the

reliable power is expected to decrease down to 2261 MW in 2020, and 1599 MW in

2030 and 2050. Therefore, one of the challenges to be solved in the near future

will be the management of the imbalance between the increasing peak demand and

the decreasing reliable power after 2020. Energy interconnection capacities

allowing to ensure the adequacy of the electricity market are increasing: in

late 2015 – early 2016, after the Lithuania – Sweden (NordBalt) and Lithuania –

Poland (LitPol Link) energy interconnections were launched, the total capacity

(except capacity from third countries) increased to 2435 MW, and in 2030 it is

expected to increase up to 2935 MW. Poland (LitPol Link) interconnections were

launched, the total capacity (except capacity from third countries) increased

to 2435 MW, and in 2030 it is expected to increase the capacity up to 2935 MW.



 



Fig.

11. Electricity-generating capacity in Lithuania and energy interconnection

capacities (forecast)







Source: Litgrid AB.



 



36.   

In 2016, Lithuania produced a total of

3.97 TWh of electricity. Half of all electricity produced in the country was

generated by power plants using renewable energy sources. About 0.45 TWh of electricity

was generated by hydropower plants (excluding Kruonis PSPP), 1.13 TWh – by wind

turbines, and about 0.44 TWh was produced by solar, biomass and biogas fired

power plants. The remaining amount of electricity was produced by conventional

fuel-fired power plants. The largest share of electricity consumed in the

country (about 72% of total electricity consumption or 68% of total electricity

demand) was imported in Lithuania during 2016. Most of it (37%) was imported

from Latvia and Estonia, (27%) – via NordBalt interconnection with Sweden, (5%)

– via LitPol Link interconnection with Poland, and the rest (31%) – from third

countries.



 



 



 



 



 



 



Fig. 12. Lithuanian

electricity balance in 2016



(total electricity

demand in 2016 was 12.25 TWh)







Source: LITGRID AB.



 



37.    In

the first half of 2017, the electricity transmission system operators of

Lithuania, Latvia and Estonia assessed the adequacy of the Baltic electricity

system for the next 15 years, from 2017 to 2032. In the study, the operators

evaluated all the information related to the installed capacities of new and

planned to be closed generating units in the region, as well as their technical

capabilities to provide system services. An assessment of reliable wind power

was carried out in the Baltic region and the reliable power of hydropower and

pumped storage plants was estimated. According to the available data, a total

power of 272 MW worth of new reliable electricity generating facilities are

planned for deployment within the Baltic electricity system by 2032. Meanwhile,

the total power of plants scheduled for closure may reach 2315 MW.



38.    According

to the study, as of 2025, if operation in isolated regime is necessary due to

an emergency, the Baltic electricity system would lack 200 MW of initial

reserves. Therefore, by the year 2025, new reliable power plants must be

deployed in the Baltic states in order to ensure the seamless operation of the

Baltic electricity system and reliable electricity supply when it starts

operating in sync with continental European networks.



39.    The

main electricity objectives of the Strategy when working in synch with the

electricity system of the continental Europe and operating within the common EU

electricity market:



39.1.       

To make flexible use of the

opportunities offered by the power interconnections with the EU Member States;



39.2.       

To develop the electricity sector in a

sustainable way by integrating it into the domestic EU market and ensuring

reliable and competitive reservation and balancing capacities and increasing

domestic electricity-generating capacities from non-polluting sources or using

renewable energy sources that would meet the energy demand of a self-sufficient

state;



39.3.       

To ensure that the interests of the

electricity consumers in the country are met by improving the services

essential to consumers and aiming to achieve that electricity prices were the

lowest in the region in the industrial sector (among the Baltic, Scandinavian

and Central and Eastern European countries), and for citizens – a decreased

share of energy expenditure compared to the average income.



40.    The

objectives of the electricity sector must be pursued in accordance with the

following basic principles:



40.1.  

Energy independence

– the energy dependence on electricity imports must be reduced while

maintaining local reliable and competitive energy production and ensuring

sustainable development of the electricity sector by increasing domestic

electricity-generating capacities that would meet the country’s electricity

needs and be in line with the balance of economic, social, climate change and

environmental requirements;



40.2.   Sustainable

integration and security – the integration of

Lithuanian electricity system into European electricity systems must be

continued in order to contribute to the establishment of the Energy Union and

the common EU electricity market by making flexible use of the opportunities

offered by these integration processes for a reliable supply of electricity to

consumers in the country;



40.3.   Increasing

competitiveness – the functioning and long-term

development of the electricity sector must be based on solutions that increase

the competitiveness of the Lithuanian economy sectors both within the region

and at the EU level;



40.4.   Innovation

development – the development of the

Lithuanian electricity sector must be based on the deployment of smart

electricity technologies, such as smart power energy networks and smart

electricity accounting systems, as well as other innovative technologies;



40.5.   Proper

information and involvement of consumers

– when promoting decentralised electricity production, it must be ensured that

consumers are informed in a due and timely manner, and electricity management

measures must be implemented with the aim to engage consumers in network

management and electricity markets.



41.    In

pursuit of the strategic objective of the electricity sector, the electricity

needs of the domestic consumers will be satisfied by using energy generation

technologies that are competitive on the electricity market, and for the

purposes of ensuring energy security, priority will be given to RES

technologies and other technologies that have zero GHG and air pollutant

emissions. Thus, the aim will be to achieve that:



41.1.   by

2020, 35% of the total final energy consumption of the country consists of

local electricity generation;



41.2.   by

2030, 70% of the total final energy consumption of the country consists of

local electricity generation;



41.3.   by

2050, 100% of the total final energy consumption of the country consists of

local electricity generation, marking the start of RES-generated electricity as

the main source of electricity, as compared to the total final electricity

consumption of the country.



 



 



 



 



 



 



 



 



 



Fig. 13. Electricity

production in Lithuania after considering long-term electricity objectives







Source: The Ministry of Energy of the Republic of

Lithuania.



 



42. 

Main directions and tasks for achieving

the electricity objectives:



42.1.   Synchronisation

of Lithuania’s electricity system with the European electricity system:



42.1.1.  To

implement the project that involves connecting the electricity system of the

Republic of Lithuania to that of the continental European for synchronous

operation via the electricity system of the Republic of Poland. The

disconnection of the Lithuanian electricity system from synchronous work with

IPS/UPS and synchronisation with the electricity system of the continental

Europe is necessary in order to ensure and maintain energy security. This project

must be implemented by 2025.



42.1.2.  In

order to properly prepare for the implementation of the project of

synchronising the electricity system of the Republic of Lithuania with the

electricity system of the continental Europe, to participate in the isolated

work test of the electrical systems in Lithuania, Latvia and Estonia, which

must happen by 2019. During the test, the electricity transmission system

operator of the Republic of Lithuania must take all possible measures to ensure

the reliability and stability of the system, while the users of the electricity

system shall carry out the prescribed test conditions in a responsible manner;



42.1.3.  All

the necessary technical and organisational measures for the timely preparation

of the Lithuanian electricity system infrastructure for its connection to the

electricity system of the continental Europe for synchronous operation must be

implemented without delay:



42.1.3.1.

the project of optimisation of electrical power transmission network of

Northeast Lithuania must be implemented;



42.1.3.2.

by 2020, the second link of power transmission line Lithuania’s power

plant–Vilnius must be installed;



42.1.3.3.

a new power transmission line Kruonis–Alytus must be built;



42.1.3.4.

reorganisation of power transmission lines with the third countries must be

implemented in Lithuania so as to ensure synchronous operation with the

European energy system.



42.1.4.

All necessary technical and organisation measures, which ensure the potential

of synchronous operation of the Lithuanian energy system with the energy system

of continental Europe, must be put into effect in the period from 2021 to the

final and complete synchronisation with the energy system of the continental

Europe in the mode required for the assurance of reliability.



42.1.5.

Following the connection of the electricity system of the Republic of Lithuania

to that of the continental Europe for synchronous operation (by 2025), there

cannot remain any opportunities for electricity from third countries to

directly enter the Lithuanian electricity market or electricity could enter the

Lithuanian electricity system solely to such extent to which this could be

required, should any inevitable technical reasons necessary for

de-synchronisation from the energy system of the Commonwealth of Independent

States (IPS/UPS), including the Kaliningrad Oblast, be discovered.



42.2.   Ensuring

a smart electricity market:



42.2.1.  To

ensure the integration of the Lithuanian electricity market into the common

European electricity market and increase the liquidity of the electricity

market by applying common European electricity market rules and advanced

electricity market solutions.



42.2.2.  To

gradually abandon the regulation of retail electricity prices. To achieve that

the regulation of retail electricity prices by applying social tariffs in line

with certain requirements will only be possible in exceptional cases, thus

protecting socially vulnerable electricity consumers and not increasing energy

poverty in the country.



42.2.3.  To

ensure the application of equal competitive conditions and responsibilities in

the electricity market for all electricity generation technologies as well as

balanced operation of the electricity system.



42.2.4.  In

view of the RES growth, to ensure the flexibility of the short-term electricity

market; to create preconditions for advanced demand side response solutions,

where consumers can proactively engage in the electricity market either

directly or through energy service providers and sell the electricity necessary

for the balancing of the electricity system by deciding to adjust consumption

in the short term.



42.2.5.  To

seek to create a competitive and user-oriented electricity market environment.



42.2.6.  To

completely separate the electricity supply, electricity distribution and

transmission markets.



42.2.7.  In

order to ensure the competitiveness of the Lithuanian industrial sector within

the region, to ensure optimum electricity pricing as well as to improve the

reliability of electricity supply to industrial customers in defined industrial

zones.



42.3.   Lithuanian

electricity generation:



42.3.1.  Taking

into account the results of the Lithuanian generation capacity assessment,

electricity market mechanisms must be immediately developed and applied to

promote balanced investment in the development of reliable local generation

and/or maintenance of current generation.



42.3.2.  To

prioritise electricity generation in power plants where electricity is

generated by using a high-efficiency cogeneration method.



42.3.3.  As

the importance of generating decentralised electricity from RES grows, it is

necessary to keep increasing the number of electricity consumers who can

produce electricity for their own needs. In the long run, electricity consumers

will become proactive participants in the market and will be given the

opportunity to use energy generated from RES for their own needs to receive a

reward for surplus energy supplied to the network in line with the market

conditions. According to plans, the number of consumers who use power produced

from RES for their own needs is expected to account for at least 30% of all

consumers by 2030 and at least 50% by 2050. During these periods, such users

would become a significant source of local power generation.



42.4.   Ensuring

the adequacy of Lithuanian capacities:



42.4.1.  Before

and after the implementation of the project of synchronisation with the

electricity system of the continental Europe (including during the isolated

work of the electrical systems of Lithuania, Latvia and Estonia), to ensure the

reliable adequacy of the capacities of the Lithuanian electricity systems,

taking into account the results of the joint assessment of the Baltic

generation capacities carried out in 2017.



42.4.2.  To

establish appropriate technical, competitive and market conditions in order to

satisfy the needs of system services by local power generation, including power

plants using RES, and demand side response services provided by electricity

consumers.



42.4.3.  After

carrying out a cost-benefit analysis before the end of 2018 and having a

socio-economic justification, to initiate prior to the end of 2023 the

following:



42.4.3.1.     deploy

additional flexible generation capacities not exceeding 200 MW in Lithuania and/or

implement flexible demand management measures to ensure the adequacy of the

electricity system;



42.4.3.2.     implement

the project of the fifth synchronous aggregate of Kruonis Pump Storage Power

Plant in order to ensure the provision of reservation and balancing services.



42.4.4.  To

carry out an assessment of the need for an additional electricity link with

Sweden (NordBalt II) and to decide on the implementation of the project, taking

into account the need for implementation and the opportunities within the

Baltic region.



42.5.   Smart

and sustainable development of the electricity system:



42.5.1.  To

deploy smart electricity accounting systems and smart grids as well as a data

hub or other similar solutions based on best global practices at the same time

ensuring cyber security of the systems and networks as well as energy data

protection. Following a cost-benefit analysis of the deployment of smart

electricity accounting systems and obtaining a positive result, smart

electricity accounting systems must be deployed for all users by 2023.



42.5.2.  In

order to increase the reliability and resilience of the electricity

distribution network to meteorological effects, the new electricity

distribution network lines (if there is an economic justification) should only

consist of cables. Worn out power lines of the electricity distribution network

(0.4–10 kV overhead lines) should also be replaced, with priority given to the

line age, accident-proneness and location in wooded and economically

exploitable areas. With application of the latest smart energy network

technology and rational replacement of terrestrial lines of  power distribution

network with cable power lines, to seek that by 2020 the reliability indicators

of the operator of distribution network (namely, the system average

interruption duration index (SAIDI),  and system average interruption frequency

index (SAIFI)) improved at least 25% (SAIDI – 100 min, SAIFI – once) (in

comparison to SAIDI 138 min, SAIFI – 1.31 times in 2017), by 2030 – at least

50% (SAIDI – 70 min, SAIFI – 0.66 times) (compared to SAIDI – 138 min, SAIFI –

1.31 times in 2017), and by 2050 – the operator of distribution network was 

among the best EU operators of energy distribution network.



42.5.3.   To

ensure the quality and reliability of electricity supply to provide consumers

with the right services.



42.5.4.  To

ensure that electricity consumers are informed properly and timely in order to

involve them in the management of the electricity grid and to encourage them to

become proactive players in the market.



42.6.   The

implementation of international and national objectives and tasks that affect

the security of the electricity sector, the sustainable development of zero GHG

emissions and competitiveness:



42.6.1.  To

ensure that the electricity market of the Republic of Lithuania is not directly

exposed to electricity from third countries where unsafe nuclear power plants

are used.



42.6.2.  To

seek to establish the principle of a level playing field at the EU level in

trade with third countries, the main criteria of which should be the obligation

to apply to third countries the same energy production requirements as are

applied within the EU in terms of nuclear safety and environmental protection

(including GHG emissions); also the obligation to ensure parallel market access

conditions (reciprocity principle).



42.6.3.  To

ensure that EU and international organisations issue nuclear safety and

environmental decisions and recommendations regarding the nuclear power plant

under construction in the Ostrovets District in the Republic of Belarus,

recognised as unsafe in 2017 and posing a threat to the national security of

the Republic of Lithuania, its environment and public health, in line with the

interests of Lithuania[8].



 



SECTION

IV



HEATING AND

COOLING SECTOR



 



43.    The

country’s district heating system is an integral part of the overall energy

sector, closely tied by technological and energy ties to the electricity

system, fuel supply and other systems. Well-developed district heating systems

are in place in all Lithuanian cities and supply about 53% of all buildings

nationwide and about 76% of all buildings citywide. The main users of DHS are

residents living in multi-apartment buildings. In 2016, 17,840 buildings (about

700 thousand apartments) with DHS supply of 27,359 total consisted of

multi-apartment houses, where heat sales amounted to about 72.6% of the total

amount of heat sold. The remaining users are budgetary institutions (14%) and

business organisations (13.9%)



44.    As

natural gas has been rapidly replaced by biofuels since 2011, the price of DHS

has decreased, but the key issue, namely inefficient heat consumption, remains

relevant. In 2016, a total of 8.9 TWh of heat energy was produced and supplied

to the networks. It is estimated that as the number of district heating

customers grows, accompanied by rapid investments in more efficient energy

consumption, by 2020 district heating systems will supply 8.9 TWh, by 2030 –

8.5 TWh, and by 2050 – 8.0 TWh of heat energy. The total installed capacity of

heat generating facilities in DHS systems is 9582 MW. At the end of 2016,

biofuel units with condensing economisers used by heat supply companies and

independent heat producers accounted for a total of 1589 MW of heat power. The

peak demand for DHS systems in 2016 was 3212 MW, lowest – 379 MW. In 2016, the

share of RES-generated heat facilities in the fuel structure was 64.2%, while

the share of natural gas decreased to 33.4% (natural gas remains the main fuel

for energy production in Vilnius and Klaipėda). In 2016, about 55 MW worth of

new biofuel-fired facilities were built in Lithuania, which will further

promote the development of the local biofuel market and reduce the final price

of heat to consumers accordingly.



45.    In

2016, 3.6 TWh of heat energy was generated in CHP plants. It accounted for

about 41% of the total heat energy produced in the DHS system. The installed

electric capacities of biofuel and waste fired CHP plants are 79 MW. In

implementing the National Programme for Heat Sector Development in 2015–2021,

approved by the Government of the Republic of Lithuania on 18 March 2015 by

Resolution No. 284 “On the approval of the National Programme for Heat Sector

Development in 2015-2021”, high-efficiency biofuel- and municipal waste-fired

Vilnius CHP plant with a heat capacity of 229 MW and an electricity capacity of

92 MW, and a waste-fired Kaunas CHP plant with a heat capacity of 70 MW and an

electricity capacity of 24 MW power plant by 2020 Kaunas waste heat generating

power plant burning waste are expected to be built. These CHP plants are

expected to satisfy around 40% of Vilnius and Kaunas district heat needs.



46.    Existing

requirements for district heating systems to maintain a reserve capacity

corresponding to the capacity of the largest boiler in a particular system but

not exceeding 30% of the maximum system capacity, and the installed high

surplus capacities of heat generating sources, resulting from significantly

lower heat needs and the commissioning of new sources, force to reduce the

installed capacities that require running costs, while ensuring the necessary

capacity reserve and reliable heat supply to consumers.



47.    In

2015, private households not connected to district heating systems used up 686

kt of fuel for the production of heat energy. It is almost the same amount of

fuel (790.2 kt of fuel) that was used by companies in 2016 for the production

of district heat supply, including fuel for purchased energy. Heat production

in households mainly uses firewood and wood waste: in 2015 they accounted for 72.4%,

natural gas – 14.8%, liquefied petroleum gas and gas oil – 1.67%, solid fuels

(coal, peat, briquettes) – 7.48%. About 88% of all fuel is consumed for heating

and hot water and 12% for food production. It is estimated that 600 kt of fuel

will be consumed in private households for heat production in 2020, 560 kW of

fuel in 2030, and 530 kW of fuel in 2050. The efficiency of heat and hot water

production technologies in the decentralised sector is quite low and there is a

significant potential for energy savings. This sector also has the potential of

converting primary energy resources that can significantly improve the heat

supply of the population and promote more efficient use of  RES part of which

could be used in other sectors.



48.    The

centralised cooling network in Lithuania is not developed. Residential and

commercial premises are cooled independently, using electricity. The

preliminary annual cooling demand in Lithuania ranges from 5 to 6 TWh. The need

was determined based on the assumption that the cooling demand in Lithuania,

given its climatic conditions, is ~60 kWh/m2 per year. However, in

order to develop this sector, one should consider the fact that it would only

be useful to do this when connecting to the network buildings that already have

a centralised (common mechanical) ventilation system, such as offices,

supermarkets and new high energy class multi-apartment buildings, as

investments in old multi-apartment buildings to take advantage of centralised

cooling supply would be unreasonably high. In this case, the annual cooling

demand would be reduced to 2-3 TWh.



 



Fig. 14. The share of

RES in a primary fuel structure in DHS systems and heat price







Source: Lithuanian

District Heating Association, National Commission for Energy Control and Prices



 



49.   

The main objective of the Strategy in

the heating sector is the consistent and balanced renewal/optimisation of the

DHS system, which ensures efficient heat consumption, reliable, economically

attractive/competitive supply and production, enabling the deployment of modern

and environmentally-friendly technologies using local and renewable energy

sources, ensuring system flexibility and a favourable investment environment.



50.        

The heat sector in Lithuania will be

further developed in accordance with the following principles:



50.1.   Transparency

– ensure that heat supply activities are managed in an efficient, transparent

and non-discriminatory way with respect to entities operating in the heat

market and its consumers, including the acquisition of energy resources in the

most transparent and competitive manner, ensuring the lowest costs to the final

consumer;



50.2.   Competitiveness

– the rational use of investments necessary for the reliable supply of

consumers with non-polluting heat at an acceptable price, ensuring the ability

of DHS to compete with alternative heat supply methods;



50.3.   Efficiency

– the establishment of regulatory principles, which promotes the implementation

of technical and management solutions in the systems of DHS enterprises,

ensuring reliable and the most cost-effective heat supply to the end user;



50.4.   Advancement

– the adjustment of the system to the deployment of different

environmentally-friendly and price-competitive innovative technologies in the

areas of heat production, supply and consumption.



51.    In

developing the heat sector in Lithuania, the following will be pursued:



51.1.   District

heat supply from renewable and local energy sources is 70% by 2020;



51.2.   District

heat supply from renewable and local energy sources is 90% by 2030;



51.3.   District

heat supply from renewable and local energy sources is 100% by 2050 and at

least 90% of buildings in cities receive heating from the DHS.



 



Fig. 15. Meeting of the

demand for DHS system capacity by fuel type







Source: Lithuanian

Energy Institute



 



52.   

The main directions for achieving the

target in the area of the strategic heating and cooling sector :



52.1.   Assessment

and/or modification of the regulatory environment:



52.1.1.  The

establishment of a regulatory environment conducive to attracting investment

and creating a non-discriminatory environment for all participants in the

district heating market;



52.1.2.  The

promotion of heat, generated using DHS method, supply in buildings and

prioritisation of urban areas in order to reduce air pollution;



52.1.3.  The

assessment of the current situation and future development of heat supply in

the decentralised sector by setting out rational development directions and

taking into account the changes in heat production technologies that increase

the efficiency of heat production and consumption;



52.1.4.  The

assessment of the current situation and future development of the cooling

sector and the establishment of guidelines for the most rational solutions to

supply cooling;



52.1.5.  The

review of existing requirements for heat production reserve capacity.



52.2.   Technical

tasks for the implementation of the solutions:



52.2.1.  The

assessment of the feasibility of the use of solar energy technologies and heat

storage facilities for the production of heat in a centralised manner, and, if

economically feasible, their implementation;



52.2.2.  The

installation of a remote heat accounting data reading system;



52.2.3.  The

rational development of high-efficiency CHP plants that create possibilities

for local electricity generation;



52.2.4.  Timely

updating (or replacement, if no longer economically and/or environmentally

feasible) of:



52.2.4.1.     Existing

biofuel combustion plants in order to maintain the RES consumption;



52.2.4.2.     Existing

heat transfer facilities and their systems in order to minimise heat losses and

to enable optimal development of the transfer network;



52.2.4.3.     Heat

units and/or heating and hot water systems of buildings, providing technical

conditions, when economically reasonable, for individual adjustment of the heat

demand for each consumer.



 



 



 



SECTION V



NATURAL GAS



 



53.    The

share of natural gas in the country’s overall consumption of fuel and energy

remains significant (25.1% in 2016), yet as of 2012, there has been a downward

trend (35.9% in 2012). From 2006 to 2012, the country’s natural gas needs

ranged around 33.5 TWh, while in 2013–2016, due to the increasing use of

renewable resources, the overall consumption of natural gas decreased to 23.38

TWh. In 2016, 65% of natural gas imported in Lithuania was consumed in industry

(the majority in the production of fertilisers), 21% in the energy sector, and

14% in households and the small business sector.



54.    Following

the completion of the liquefied natural gas terminal in Klaipėda and the EU

Third Energy Package in late 2014, and the second gas pipeline

Klaipėda-Kuršėnai in 2015, the situation in the natural gas market has been

substantially improved by enabling acquisition of natural gas in international

markets, eliminating decades-old monopoly in the natural gas sector and

creating competition. Lithuania has become able to independently supply itself

with natural gas (and to supply significant quantities to the Baltic region)

through the LNG terminal in the event of a disruption of supply from Russia or

a lack of competitiveness. In 2016, 60% of the natural gas consumed in Lithuania

was imported through the Klaipėda LNG terminal. These significant changes in

the natural gas sector as well as favourable trends in international markets

have led to a 50% decrease in the price of imported natural gas in Lithuania

from 2012 to 2016, transforming Lithuania from one of the highest price for

natural gas paying EU members to one of the lowest price natural gas paying EU

members. Considering the results achieved, the global dynamics of the LNG

market and the potential of the regional natural gas market, it is

strategically important for Lithuania to secure long-term LNG supply in order

to ensure a competitive and reliable supply of natural gas.



 



Fig. 16. Average import

price of natural gas in 2007–2016, EUR/MWh



Source: National Commission for Energy Control and

Prices.



 



55.   

Lithuania, like the other Baltic states

and Finland, still remains isolated from the EU’s common natural gas market.

The Gas Interconnection Poland–Lithuania (GIPL) project will allow to integrate

the Baltic states and Finland into the EU’s natural gas market and will

contribute to the creation of the Energy Union, while enhancing the

competitiveness and liquidity of the Lithuanian and regional natural gas

markets, diversifying supply sources and routes, and creating opportunities to

utilise the Klaipėda liquefied natural gas terminal not only for the needs of

the Baltic states' consumers, but also Polish and Ukrainian consumers, thereby

increasing security of supply in the region and, thanks to additional income

from natural gas transmission and repeated gasification of liquefied natural

gas, reducing the share of the liquefied natural gas terminal and natural gas

infrastructure maintenance costs paid by the Lithuanian customers.



 









 



Fig. 17. Forecast of average natural gas prices to end

consumers' in Lithuania, EUR/MWh







Source: The Ministry of Energy of the Republic of

Lithuania.



 



56.   

Significant changes in the natural gas

sector relating to prevailing downward trends in natural gas consumption in the

energy sector are driving up the costs of operation of the natural gas

infrastructure and the costs of ensuring the security of natural gas supply for

gas consumers and users of the system. Therefore, one of the main tasks in the

field of natural gas is to reduce the cost of maintaining the natural gas

supply infrastructure and to seek for lower natural gas import prices. The

natural gas consumption level in industry, the transport sector and the

households will depend on the competitiveness of natural gas as an energy

resource. In the short to medium term, consumption of natural gas in the

industry and in the transport sector is expected to partly absorb the declining

natural gas consumption in energy production; meanwhile, the level of natural

gas consumption in the long run will depend on its consumption for non-energy

uses in the industrial and transport sectors. 



57.    It

is anticipated that in the energy sector in Lithuania, like in the EU, natural

gas will remain an important energy resource for the transition to a low-carbon

economy in 2050. In 2020–2030, the demand for natural gas in the country will

reach 20.4–20.9 TWh, of which about 51% will be comprised of the demand for gas

as a raw material in the fertiliser industry. The demand for natural gas is

expected to increase to 24.5 TWh by 2040 and consumption of natural gas as a

raw material for fertiliser production (non-energy use) is expected to amount

to 44%. The increase of natural gas consumption as a primary energy resource in

the country is associated with an increase in the RES balancing needs in the

production of electricity and heat. In 2050, the total consumption of natural

gas in the country will be 20 TWh, of which 55% will be consumed for non-energy

purposes (fertiliser production)[9].



58.   

The main objective of the Strategy in

the field of natural gas is to ensure a technically reliable and diversified

supply of natural gas to consumers based on efficiency and cost-effectiveness

principles and competitive prices.



59.    The

objective of the natural gas sector will continue to be pursued based on the

following principles:



59.1.   Efficiency

– Lithuania needs to make more effective use of its geographical location and

well-developed natural gas supply infrastructure, to actively participate in

the search of new natural gas transit routes and infrastructure users,

including the attraction of new industrial users to Lithuania who are

intensively using natural gas in the production process; this way, Lithuania

will more effectively use the existing natural gas infrastructure, while the

income will reduce the infrastructure maintenance costs to all natural gas

consumers in Lithuania;



59.2.   Competitiveness

– in order to increase the competitiveness of natural gas as an energy source

and to ensure the continuity of their activities, natural gas suppliers and

natural gas infrastructure operators must ensure the supply of natural gas to

Lithuanian consumers at economical costs that are based on the

cost-effectiveness principle and prices that are competitive to those of

alternative energy; it should be achieved by improving access to

infrastructure, optimising the costs of maintaining natural gas infrastructure,

and implementing a coherent and ambitious programme for boosting the efficiency

of infrastructure operators;



59.3.   Innovation

– the promotion of cooperation between energy, science and study institutions

and business organisations will lead to the development of innovative

technologies for the use of LNG in the energy, transport, shipping and industry

sectors in Lithuania. By fully utilising its LNG infrastructure and scientific

potential, Lithuania must become a leader in LNG technologies, distribution and

excellence in the Baltic region; innovation is related to the deployment of

smart energy networks and smart energy accounting systems and the application

of power-to-gas technologies;



59.4.   Integration

– in order to make better use of the existing infrastructure, increase

liquidity of natural gas markets and competition among suppliers, the Baltic

natural gas markets must be fully integrated into the common regional natural

gas market by creating favourable conditions for natural gas trade within the

region and the functioning of the regional market within the integrated

European natural gas network;



59.5.   Security

– guaranteed secure, reliable, diversified supply of natural gas to satisfy the

needs of the customers of the country by ensuring Lithuania’s ability to

independently supply itself with natural gas from international LNG and EU

natural gas markets.



60.    In

pursuit of the strategic natural gas objective, the aim will be to:



60.1.   by

2020:



60.1.1.  create

a regional Baltic natural gas market (with the possibility to expand to

Finland) in pursuit of better liquidity of the natural gas market,

competitiveness and more efficient use of the existing infrastructure in

Lithuania for natural gas transit and export to the region;



60.1.2.  reduce

the operating cost of LNG and natural gas transmission and distribution

infrastructure;



60.1.3.  develop

and exploit the potential of being the centre for LNG technology, distribution,

storage and excellence;



60.1.4.  modernise

the natural gas transmission and distribution infrastructure;



60.2.   by

2030:



60.2.1.  make

effective use of the well-developed natural gas supply infrastructure as well

as opportunities provided by access to international LNG markets and

integration in the European natural gas market;



60.2.2.  ensure

that the natural gas system, as an integral part of the common energy system,

ensures the reliable and competitive fulfilment of RES needs, electricity

reserve capacity and balancing needs, efficient cogeneration as well as

industrial and household needs.



60.3.   In

2050, when Lithuania switches to energy production from non-polluting (low GHG

and air pollutant emissions) energy sources, Lithuania should ensure that this

transition period does not lead to negative economic consequences for the

state, the natural gas industry and households, in accordance with the

principles of sustainable development.



61.   

The main directions and tasks for

achieving the target:



61.1.   To

create a regional natural gas market;



61.2.   To

decide on the long-term LNG imports to Lithuania;



61.3.   To

implement the Gas Interconnection Poland–Lithuania (GIPL) project;



61.4.   The

development and maintenance of the natural gas network and infrastructure is

oriented towards the security and competitiveness of the system, reduction of

network maintenance costs and more efficient use of existing infrastructure;



61.5.   To fully develop capacities of the LNG Cluster and LNG Excellence

Centre in Lithuania;



61.6.   In

line with the principles of sustainable development, to ensure transition to

energy production from non-polluting sources without any negative consequences

to industries, businesses and households using natural gas.



 



SECTION VI



FUELS



 



62.   

Petroleum products account for a large

share (38.9%) of the country’s primary energy consumption.

In 2016, the total consumption of petroleum products

accounted for 1.7 million tons per year in road transport, of which 80.8% was

diesel for road transport, 12.5% – petrol and 6.6% – liquefied petroleum gas.

In recent years, the popularity of diesel has grown as 8.2% more was consumed

in 2016 than in 2015. Petrol demand increased by 5%, while liquefied gas

dropped by 5.7%. In 2016, biofuel consumption in road and rail transport was

4%.



 



Fig. 18. Consumption of

petrol, diesel and fuel oil, thousand t







Source: The Ministry of

Energy of the Republic of Lithuania.



 



63.   

Lithuania has the only oil refinery in

the Baltic region with an annual capacity of 10–11 million t, a terminal in

Būtingė for oil import and export via the Baltic Sea with capacities at 6.1 and

8 million t/year respectively, and one of the most modern reverse terminals for

petroleum products in the region in Klaipėda with an annual capacity of 7.1

million t. At present, Lithuania has sufficient technical capabilities to

import oil and petroleum products from various countries, has diversified

supply of petroleum products and is technically protected from possible supply

disruptions from any one country. Petroleum product stocks for the needs of

Lithuanian consumers have been accumulated and are continuously maintained,

corresponding to 90 days’ worth of net petroleum product imports. The future

development of the Lithuanian oil and petroleum product supply system will be

influenced by the transport system trends, global changes and – in response to

them – the legal framework adopted by the EU member states. Climate-related

policies, fluctuations in the prices of oil and petroleum products, and the

concentration of oil resources in unstable regions of the world will lead to

the search of alternatives to these traditional resources in the transport

sector.



64.    Due

to improved economic conditions, final consumption of energy in the transport

sector is increasing every year, while the share of biofuels is decreasing.

Lithuania has a first-generation biofuel industry and therefore aims to

maximise local consumption of sustainable local biofuels and contribute to

strategic objectives. Gradually, the role of alternative fuels (electricity,

hydrogen, biofuels, LNG, compressed natural gas, etc.) will increase in transport

sector and the share of RES will continue increasing.



65.    The

main objective of the Strategy in fuels sector is to gradually shift to less

polluting fuels and electricity consumption by making flexible and efficient

use of the existing infrastructure in the oil and petroleum product sector and

the local RES potential.



66.    Fuels

sector development in Lithuania should continue in accordance with the

following principles:



66.1.   Competitiveness

– ensuring diversified petroleum products supply and their supply alternatives

as well as effective competition among market participants;



66.2.   Security

– maintenance of state stocks of oil and petroleum products as well as oil

refining capacities;



66.3.   Integrity

(transformation) – integration of alternative

fuels, reducing dependence on imported fossil fuels, increasing energy

efficiency, reducing pollution.



67.     In

pursuit of the strategic objective of the fuels sector Lithuania will aim for

the following targets:



67.1.   By

2020, 10% of energy consumption in the transport sector is from RES;



67.2.   By

2030, 15% of energy consumption in the transport sector is from RES and there

is 50% less use of cars running on traditional fuel (petroleum and diesel) in

cities;



67.3.   By

2050, 50% of energy consumption in the transport sector is from RES and there

is 100% less use of cars running on traditional fuel (petroleum and diesel) in

cities.



68.    The

main directions for achieving the targets:



68.1.   To

increase the share of biofuels consumed in the transport sector in the general

fuel balance and, given the national nuances, increase the share of biofuels

mixed in fossil fuels up to the permissible limits set by the EU standards;



68.2.   To

promote the use of electric vehicles, including electric cars, in the transport

sector, while preserving and developing the existing network of electric

vehicles; to create an electric vehicle charging network, to increase the

electrification of rail transport;



68.3.   To

renew public transport fleets consistently replacing them with vehicles running

on electricity or alternative fuels;



68.4.   To

promote the use of natural gas and other alternative fuels in heavy transport,

maritime transport and public transport, exploiting the existing potential of

the LNG distribution station and other LNG infrastructure.



 



CHAPTER

VI



RESEARCH

AND DEVELOPMENT DEMAND AND DEVELOPMENT OF COUNTRY’S BUSINESSES



 



69.    As

a result of completed significant strategic energy projects, the successful

design and development of individual energy branches, Lithuanian energy

companies, business enterprises and science and study institutions have

accumulated exclusive competences in the field of solar energy, biomass,

geothermal energy, LNG and other areas, which need to be maintained, further

developed and strengthened. It is necessary to achieve that research and

development in Lithuania and the resulting products acquire industrial

production and become part of Lithuanian exports, thus contributing to the

country’s economic growth. This requires focusing on priority research

directions and, at the same time, ensuring the practical use of the results of

these studies and of existing and advanced competences.



70.    Taking

into account the specifics and needs of the Lithuanian energy sector, the

strategic goals, the existing and desired competences, the following priority

directions for research and development in energy have been identified:



70.1.   The

planning of the future development of the energy sector, energy economics;



70.2.   The

modernisation of existing energy production technologies based on new

challenges and requirements;



70.3.   The

development of new energy production and storage technologies with low GHG and

air pollutant emissions and resilience to climate change and their integration

into the network;



70.4.   Technologies

using local energy generation and renewable energy sources;



70.5.   The

analysis of the operation of the electricity system and improvement of its control;



70.6.   Technologies

relating to distributed generation, smart networks, production and use of new

promising energy types;



70.7.   Ensuring

reliability and high-quality of electricity supply, vulnerability of

electricity systems and optimisation of operating modes;



70.8.   The

functioning of electricity markets, power mechanisms and the proactive

involvement of consumers in the operation of the electricity system and

markets;



70.9.   Energy

 and cyber security, reliability of energy equipment and systems, resilience to

cyber-attacks;



71.    In

order to achieve the use of energy expertise and the results of research and

development in other areas of the economy as well as increased export and

opening of new businesses in the country, the following will be undertaken:



71.1.   Increasing

synergies among science and study institutions, energy companies and

engineering companies by promoting various forms of cooperation through the use

of investments from the EU research and innovation programme Horizon 2020,

national and other programmes, developing digital energy innovations and

improving technologies in Lithuanian energy sector, thus strengthening the

ecosystem of scientific research and innovation in Lithuania;



71.2.   In

order to achieve closer cooperation between energy companies and educational

institutions, partnership-support programmes for energy companies and

engineering companies shall be drawn up to encourage cooperation by developing

and deploying digital energy innovations and improving technologies;



71.3.   Using

fiscal measures to stimulate investments in the technological development of

solar, wind, biomass, biofuel and other renewable energy sources, improvement

of production, acquisition of technology and development of a centre of

excellence as well as development of LNG technologies and expansion of the

centre of excellence;



71.4.   Engagement

of engineering companies in the development of new LNG technologies,

technological equipment and transport measures and integration of such

companies in the market;



71.5.   Encouraging

the development of new energy production technologies, including RES,

distributed energy generation and smart grids, and their integration into the

network;



71.6.   Promotion

of the production of electricity storage technologies, attracting investments

in the production of these technologies in Lithuania;



71.7.   Assessment

of opportunities for the production of offshore wind energy technologies,

attracting investments for the production of these technologies in Klaipeda

Port;



71.8.   Development,

production and export of technologies for the production and use of local

energy resources;



71.9.   Promotion

of IT solutions for optimising the energy sector and their testing in

Lithuania, support for the export of such products;



71.10.    Strengthening

of companies constructing energy facilities and infrastructure in order to

increase the added value they create, stimulate the export of services and the

innovation of these enterprises;



71.11.   

Promotion of the production of solar

energy technology  entrenching the status of Lithuania as the largest

excellence centre and exporter of solar technology in the Baltic and Nordic

region.



 



CHAPTER

VII



STATE-OWNED

ENTERPRISES AND ENERGY SECTOR MANAGEMENT



 



72.   

The energy sector represents a

significant part of the Lithuanian economy, and some state-owned energy

enterprises and facilities have a strategic significance for the national

security of Lithuania, ensuring reliable energy supply and opportunities for

the development of an efficient energy market. In order to ensure the

achievement of this objective, state control in these strategic energy

enterprises will be maintained, while allowing reliable private capital in

order to enhance the transparency and efficiency of such enterprises and to

attract private capital to participate in strategic energy projects.



73.    The

security of the state energy sector will be ensured observing the following

principles:



73.1.   Physical

and cyber-security of energy infrastructure based on risk assessment;



73.2.   Ensuring

the compliance of investments in the energy sector with national security

criteria;



73.3.   Protection

of the activities and personnel within the energy sector.



74.    To

improve the resilience of the information infrastructure managed by the energy

sector companies to cyber-attacks an approach based on risk assessment will be

established where the used cyber security measures are proportional to curb the

identified risk, correspond to the importance of information and the risk posed

to it. Special attention will be given to the planning of assurance of

continuity of the operation of information infrastructure of the energy sector,

to regulation, to practical testing of cyber incidents and activity continuity

plans during training and exercises.



75.    In

order to ensure the highest level of transparency in the management and

operation of the energy sector companies, their efficiency and professionalism,

special attention should be paid to the following key management principles:



75.1.   Resistance

to corruption;



75.2.   Transparency

of operations;



75.3.   Professionalism,

knowledge development and preparation of necessary specialists, capacity

building of employees and managers in energy technology, cyber security and

energy economics;



75.4.   Effective

management and implementation of innovative technologies;



75.5.   Active

engagement of the public by observing the operation of state and municipality

managed and controlled companies which provide public services, by putting

forward suggestions with regard to more transparent and more efficient

activities of such companies, the lowest energy generation and transmission

costs, and the lowest energy prices to consumers.



76.    The

management of state-owned energy enterprises must be ensured through the

establishment of corporate governance principles, operational objectives,

management organisation models, management structures and accountability,

operational monitoring and control systems for these enterprises, i.e. by:



76.1.   clarifying

the activities of the energy enterprises and formulating clear shareholder

requirements for the enterprises;



76.2.   introducing

corporate governance based on best global practices, ensuring the transparency

of business activities of the enterprises;



76.3.   forming

effective management for the enterprises, increasing the number of independent

members, hiring international experts if necessary;



76.4.   ensuring

the necessary competences, attracting and retaining highest level

professionals, as business success is determined by people;



76.5.   strengthening

corruption prevention through control and accountability;



76.6.   aiming

at a stable regulatory environment that meets EU requirements and best

international practices to govern energy activities.



 



CHAPTER

VIII



IMPLEMENTATION

OF THE STRATEGY



 



77.   

The implementation of the Strategy shall

be coordinated by the Ministry of Energy. The implementation of the Strategy

involves the Ministry of Energy, other state and municipal institutions,

bodies, enterprises, organisations and other persons specified in the Strategy

Action Plan and/or programmes.



78.    To

implement the provisions of the Strategy, the Government or its authorised

institution shall approve the Strategy Action Plan and other strategic planning

documents related to the Strategy, which shall include measures for the

implementation of the Strategy provisions.



79.    The

Government shall annually report to the Seimas (the National Parliament) on the

implementation of the provisions of the Strategy.



80.    The

Ministry of Energy is supported in coordination of the Strategy’s

implementation by a state-owned entity, which analyses the trends in the energy

sector and submits proposals to the Ministry of Energy to ensure timely

implementation, improvement and updating of the Strategy.



 



 



Speaker of the Seimas  

                                                                                    Viktoras

Pranckietis



















[1] GTC—gas turbine CHP plant; CCGT—combined cycle gas turbine power

plant, CCGT CHP—combined cycle gas turbine CHP plant, SE—steam-electric power

plant, SCC—steam cycle CHP plant, Mini CHP—mini CHP plant, ICE CHP—a CHP plant

with an internal combustion engine, WHB—water heating boilers, SC—solar

collectors, End

users: transport, industry, decentralised consumers.











[2] EU

legislation is used to create an EU internal energy market and strengthen its

effective operation and resilience, regulatory and financial instruments are

used to increase the degree of interconnectivity of Member States’ energy

infrastructures, strengthen the EU’s external dimension of energy policy,

encourage the development of renewable energy and increased energy efficiency.











[3] Communication

from the Commission to the European Parliament and the Council “A European

Strategy for Energy Security”, COM/2014/330 final. http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52014DC0330&qid=1407855611566











[4] In

2012, compared to 1990, EU GHG emissions were reduced by 8% (2020 target—20%).

In 2015, a 16.7% RES share in the EU’s final energy consumption was reached

(2020 target—20%) EU’s energy efficiency target for 2020 (20%) was already

achieved back in 2016.











[5] Estimates

by Lithuanian Energy Institute and Epso-g.











[6] European

Commission Communication on a policy framework for climate and energy in the

period from 2020 to 2030 (COM (2014) 0015). http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2014%3A15%3AFIN











[7] Provisions of the

European Commission’s 2014-2020 Guidelines on State aid for environmental

protection and energy (2014/C 200/01).











[8] The Republic of

Lithuania Law on Recognition of the Nuclear Power Plant under Construction in

the Ostrovets District in the Republic of Belarus as Unsafe and Posing a Threat

to the National Security of the Republic of Lithuania, its Environment and

Public Health.











[9] Lithuanian

Energy Institute.