Photo: COWI

Power sector development in the Baltic electricity market 

In the years to come, the Baltic electricity sector is expected to go through major changes. Up till recently, the sector was characterised by vertically integrated monopolies, but at present the sector is undergoing reform processes to meet the requirements of the EU Directives regarding liberalisation of the electricity sectors.

This implies a different organisation of the sector, with new roles and responsibilities, and focus on new issues such as a well-functioning electricity market, security of supply and market power.

In this project, long-term scenario analyses have been used to clarify the challenges facing the future Baltic electricity market and to analyse the robustness of the power sector. The project has examined how existing power plants will manage in a competitive market, how power prices will develop and what investments are likely to be preferred by investors.

Objective

The objective of the project has been to create a common platform of understanding by carrying out a range of quantitative analyses illustrating the consequences of different future market situations within the Baltic region.

In particular, the following subjects have been in focus:

  • The economic consequences for different stakeholders of a common Baltic electricity market (CBEM);
  • The impact of trade with countries outside the Baltic region;
  • The impact of different future prices of CO2;
  • The impact of CHP support schemes;
  • The impact of the closure of the Ignalina nuclear power plant in Lithuania (INPP).

Participants in the project from the Baltic side have been representatives from the Ministry of Economy, the price regulators, the TSOs, the Lithuanian Energy Institute and the Institute of Physical Energetics in Latvia.

The project has been disseminated in a main report, an executive summary and during a final project seminar in Tallinn held on 12 May 2005.