The National Energy Regulatory Council (NERC) informs that on November 5th the public consultation, held by NERC on the project Terms, Conditions and Methodology on Cross-Zonal Capacity Calculation, Provision and Allocation with Russia, prepared by the Lithuanian transmission system operator (TSO) Litgrid AB together with TSOs of Latvia and Estonia, has ended – LITGRID AB has been asked to provide explanations for the notes on the project of Methodology.
Notes that had been obtained from market participants and NERC during the public consultation were sent to LITGRID AB that shall evaluate them and together with the assessment of notes provide the updated project of Methodology for approval.
According to Article 9(3)(13) of the Law on Electricity, NERC approves the rules prepared and submitted by the transmission system operator governing control of transmission networks and interconnectors, provision and allocation of their capacity, and congestion management.
NERC notes that TSO submitted its final project of Methodology at the end of September. Having assessed all presumptions and calculations it was identified that the prepared Methodology does not prevent the possibility to trade electricity generated in Belarus and this would be done by using Lithuania's energy infrastructure.
The new tripartite Methodology enters into force on two conditions: 1) it is agreed on by national energy regulators of all three countries – Lithuania, Latvia, Estonia; 2) with the launch of Astravets Nuclear Power Plant in Belarus.
Nevertheless, the current situation reveals that the TSOs of Latvia and Estonia are already applying the new Methodology, though it is not approved by the energy regulator of Lithuania (LITGRID AB is currently working in accordance with the methodology approved in 2018).
ESSENTIAL NOTES ON THE PROJECT OF METHODOLOGY
- NERC notes (for more detailed information click here):
1. The calculation principle of the proportional coefficient 0.62 based on the technical capacity of electrical connections neither represents the actual physical flows from Russia and Belarus in 2019, nor possible physical and commercial flows after the launch of Belarusian NPP.
2. The calculated impact of the applied formulas and multiplier on the final result of capacity and commercial flows based on the actual 2019 data is not realistic, as it is assumed that the balance of the Belarusian electricity system would not change after the launch of Belarusian NPP. In other words, Baltic TSOs' estimate that Belarus will consume all the electricity produced by Belarusian NPP domestically and will not seek to export it. Thus, the balance of the Belarusian system will remain the same.
3. Based on the simulation results provided by the TSO, NERC is of the opinion that a situation, when a significant increase in physical electricity flows and commercial trading capacities is observed, is not in line with the Law of the Republic of Lithuania on Necessary Measures of Protection Against the Threats Posed by Unsafe Nuclear Power Plants in Third Countries and does not provide necessary effect to eliminate the impact of Belarusian NPP on the calculated trading capacity amount according to the project of Methodology.
4. NERC proposes to establish a principle that the Latvian-Russian commercial trading capacity is calculated before working session of day-ahead market by estimating the actual physical flows of the Latvian-Russian interconnections.
5. An effective and reliable system of electricity origin certificates should be implemented.
• Notes of market participants
- Ignitis Group AB;
- Eesti Energia AS;
- INTER RAO Lietuva;
- State Consumer Rights Protection Authority has no notes on the basis of its expertise.
The main objective of the Lithuania's regulator is to find a joint solution to prevent the trade of electricity generated in Belarus, in which the precarious nuclear power plant has already been launched, in the Baltic States. Moreover, continuous efforts should be made in designing effective and reliable system of electricity origin certificates.
In the long term, Lithuania is focused on full synchronisation with the continental European network; thus, if a joint agreement with Latvia and Estonia is not reached, Lithuania will have to protect its national security interests by all accessible political, legal, and technical means.