Foreign Policy Research Institute A Nation Must Think Before it Acts Lithuania Moves to Bolster Electricity Security
Lithuania Moves to Bolster Electricity Security

Lithuania Moves to Bolster Electricity Security

Lithuania grunge flag

Discussions of security in the Baltic states often focus on the countries’ need to control their border with Russia. These countries’ complicated electricity relations with Russia raise important security questions, too. Some Baltic security analysts fear that Russia could try to coerce the Baltic states by threatening to cut off electricity and disrupt their shared power grid, which Russia controls. With this risk in mind, Lithuania is reducing the region’s dependence on electricity links with Russia by constructing LitPol Link and NordBalt, two recently completed transmission lines that link Lithuania to Poland and Sweden.

There are two sides to Lithuania’s electricity problem. First, Lithuania needs Russian electricity to power its country. Second, and more important, it depends on Russian electricity infrastructure. After shutting down the Ignalina nuclear power plant in 2009, Lithuania began importing nearly three-quarters of its electricity. Almost half came from Russia and Belarus, which means that Lithuania was reliant on the Kremlin and its close ally. On top of this, Lithuania and the other Baltic states are part of the same electricity grid as Russia and Belarus. Russia controls the frequency at which electricity flows, the voltage of the lines and the balance of the grid. Crucially for Lithuanian attempts at deeper European integration, the frequency of the Russian power grid is different from that used by the EU countries in Central Europe.

To address these concerns, Lithuania has built two new transmission cables and the associated infrastructure: LitPol Link and NordBalt. Both are part of the Baltic Energy Market Interconnection Plan, an EU initiative that aims to bring the Baltic energy markets into conformity with EU regulations. The EU provided substantial financial support for both projects, granting 27.4 million euros for the 370 million euro LitPol Link project and 175 million euros for the 580 million euro NordBalt project. LitPol Link consists of a 163 kilometer long overhead transmission cable between Elk, Poland and Alytus, Lithuania. The cable currently has a capacity of 500 megawatts, although the plan is to increase the capacity to 1000 megawatts by 2020. NordBalt is a 400 km undersea cable between Sweden and Lithuania, and has a capacity of 700 MW. Both cables are high voltage direct current, which allows for transmission between synchronous zones with different frequencies. While NordBalt is not yet fully operational, regular operations of LitPol Link started in March 2016.

How will these projects address Lithuania’s dependence on Russian electricity? First, the two transmission cables have a combined capacity of 1200 megawatts. That is on top of the capacity of all the cables already leading into the country and from its own power plants. Maximum capacity demand at peak hours (at night during winter) was 1810 megawatts in 2013, so LitPol Link and NordBalt cannot completely cover peak capacity needs. Yet, although transmission lines practically never run at full capacity – between February 15 and 21, for example, only 83 percent of the cross-border interconnection capacity between Sweden and Lithuania was in use, on average – the added capacity means that Lithuania does not have to rely on significant amounts of Russian electricity. That reduces risk in case Russia decides to stop electricity flows. The two transmission lines allow Lithuania to import significantly more electricity from Europe, thus diversifying its market. This has already caused the price of electricity to drop 33 percent from 2015. NordBalt and LitPol are already transforming Lithuanian electricity imports. In February 2016, Lithuania still imported 81 percent of its electricity, but 69 percent came from Nordic countries (up from less than 50 percent in 2014). Imports from Belarus dropped by 48 percent.

Second, while LitPol Link and NordBalt help insulate Lithuania against Russian manipulation of the electricity market, they also represent the tentative, but crucial, first steps toward decoupling the Baltic states from Russia’s synchronous grid and moving them toward Europe. Estonia, Latvia and Lithuania all want to synchronize the Baltic grid with Europe’s by 2025. The Baltic states’ electricity grids, however, are still asynchronous with those of Poland and Sweden. Full integration would require expensive investment in new infrastructure that would change the frequency at which electricity flows, although Estonia, Latvia and Lithuania would no longer have to pay Russia to maintain the grid.

Russia views the construction of Lithuania’s new electricity links with alarm. Russian naval vessels harassed the ship laying the undersea cable on four separate occasions, prompting an official protest by the Lithuanian government. The Kremlin worries about the trend that the two transmission cables represent. The Baltic states’ vocal desire to synchronize with Europe threatens Russia’s security because it promises to isolate the country, severing its connections to Europe and making it harder for Russia to play a role in Europe. Also, such a move would impose enormous costs on Russia. If Estonia, Latvia and Lithuania were to join the European synchronous grid, Russia would no longer be able route electricity through the Baltics to Kaliningrad. Moscow would have to invest in new infrastructure, such as transmission lines that could handle a transfer in frequency, throughout Russia and Belarus. The Russian government has assessed the cost of these changes at a staggering 2.5 billion euros, which it says it may try to bill to the Baltic states. Although Estonia, Latvia and Lithuania reject these claims, the EU is willing to reimburse Russia up to one billion euros. Russia may insist upon the full amount, however, to apply pressure on the Baltic countries.

Furthermore, the Baltic states’ synchronization poses a threat to Kaliningrad, the Russian province situated between Poland, Lithuania, and the Baltic Sea that serves as the seat of the Russian Baltic Fleet. Kaliningrad has a thermal power plant and is constructing a nuclear power plant, but it also imports some electricity from Russia via cables that cross Belarus and Lithuania and is part of the general Baltic power grid. If Estonia, Latvia and Lithuania were to join the European power grid, Kaliningrad would have to either join the European grid, which could leave its electricity network open to EU manipulation in times of conflict, or form a self-sufficient energy island within the European system. This latter option seems the more likely choice for Russia, but it still leaves Kaliningrad exposed. Crimea’s struggle to import electricity from Ukraine has taught the Kremlin an important lesson about the vulnerability of energy islands. Russia therefore wants to maintain the status quo.

LitPol Link and NordBalt, though vital to improving Lithuania’s access to the European electricity market, are more important as signs that the Baltic countries consider synchronization with Europe key to their security. Attaining full synchronization with Europe’s electricity grid will be very costly. But for the Baltic states, electricity integration is less about economic questions than the belief that decoupling from Russia increases their security. One side effect, however, is that Baltic electricity links with Europe undermine Russia’s ability to control its periphery, making Russia feel less secure. Russia’s problems are self-inflicted: if Russia did not rely on energy to dominate its periphery, if it respected the sovereignty of its neighbors, and if it had shown remorse for its past treatment of the Baltic states, then Estonia, Latvia and Lithuania might have worked more closely with Russia to strengthen the region’s power grid. Instead, Russia is becoming more isolated, and Kaliningrad is in danger of being further cut off from mainland Russia. Though the construction of LitPol Link and NordBalt helps bolster Baltic electricity security, the side effects could breed further unrest in the years to come.