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Baltic States agree on electricity trade

01.09.2020

Yesterday, the ministries responsible for the energy sector in Estonia, Latvia and Lithuania reached an agreement on the functioning of energy trade with third countries after the launch of the nuclear power plant in Belarus.

“It’s important to us that the agreement covers issues important to Estonia,” said Minister of Economic Affairs and Infrastructure Taavi Aas, “a tariff for the use of common infrastructure and a decrease in trading capacities with third countries. The agreement made covers these elements, which also improves the market position of and outlook for our electricity producers.”

Deputy Secretary General for Energy of the Ministry of Economic Affairs and Communications Timo Tatar said that Estonia has focused on finding solutions throughout the negotiation process. “The equal treatment of market participants, sufficiently reduced risks concerning security of supply and the improvement of investment certainty on the Baltic electricity market are important to us,” added Tatar.

Energy trade with Belarus will cease after the launch of its nuclear power plant, and a system of certificates of origin of electricity will be implemented for this purpose. Electricity trade will be directed to the Russia-Latvia cross-section in reduced quantities, using the capacities left over from internal trade in the Baltic States. Electricity trade between Kaliningrad and Lithuania will continue in the current quantities.

The establishment of a single tariff for infrastructure use was also agreed and will be done as soon as the acts that allow this have been adopted in Latvia and Lithuania at the end of Q1 2021. Estonian laws already allow for the tariff to be established.

According to estimates, the agreement will reduce trade between the Baltic States and third countries by half. The new trilateral methodology for calculation of trading capacities will be sent to energy market regulators (the Competition Authority in the case of Estonia) at the end of this week, after which the methodology will also be accessible to the participants of the Baltic electricity market. The new agreement will remain in force until the synchronisation of the Baltic electricity systems in late 2025.

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