Lithuanian Electricity Market Development and Implementation Plan has been updated

Date

2020 08 03

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The Ministry of Energy, having regard to the recommendations of the European Commission (further – Commission), has updated the Lithuanian Electricity Market Development and Implementation Plan. The Lithuanian Electricity Market Development and Implementation Plan presents the liberalization of the retail electricity supply market, the introduction of smart metering for electricity consumers, the development of an electricity consumption data collection and sharing platform, as well as the planned changes in the energy balancing market from 2025.

Already in April, the Commission issued an official opinion about the acceptance of the electricity market development measures proposed in the Lithuanian Electricity Market Development and Implementation Plan and providing recommendations to assess the possibilities of including additional measures to promote more efficient market development.

After receiving the Commission’s opinion and publishing the updated Lithuanian Electricity Market Development and Implementation Plan, Lithuania has moved closer to the latest stage of capacity mechanism state aid coordination with the Commission in order to ensure reliable operation of the electricity system and sufficient security of electricity supply after 2025.

The updated plan contains revised provisions regarding the actions aimed at gradual phase-out of regulated electricity prices for households in three steps. The following actions have already been taken: consumers consuming 5000 kWh and more of electricity per year and qualifying the first stage, as of 1 January 2021, are going to have the opportunity to choose an independent electricity supplier.

Provisions regarding the encouragement of the application of price-based demand response and the assurance of real-time monitoring of the electricity supply and demand balance have been revised.

Provisions on scarcity pricing that reflect the sudden shortage of supply in the market and encourage market participants to actively reduce market consumption by responding to market signals and to ensure capacity readiness when the market needs it most have also been revised. Such pricing would allow a more accurate reflection of the costs of balancing reserves in energy prices in the event of a sudden and severe shortage of supply in the market, and would enable market participants to recoup costs incurred in the wholesale market and thus would reduce the scope of the adequacy problem.

A commitment to seek to form a single load frequency control block in the Baltic region prior to synchronization with Continental Europe, thus saving costs for all Baltic countries, and to take steps to enter into cooperation agreements with neighbouring transmission system operators of load and frequency control blocks, as well as to strive to establish a regional coordination centre together with other Baltic States so as to ensure the efficient and reliable operation and maintenance of an increasingly integrated electricity system has been made.

Lithuania, like many other European Union countries, faces similar problems in the electricity system – there is a lack of incentives to develop a reliable, accessible, flexible and competitive electricity system capacity market. The capacity mechanism is one of the most competitive ways to address this issue.

The final Lithuanian Electricity Market Development Implementation Plan is available here.

The Commission’s opinion can be found here.