16 May 2017
WindEurope encourage Lithuanians to pursue their ambitious plans for wind.
A WindEurope delegation (CEO Giles Dickson, Kresten Ørnbjerg of Vestas and Aistis Radavicius of the Lithuanian Wind Association) met the Lithuanian Energy Minister on 12 May. We also met the Chair and Vice-Chair of the Energy Committee in the Lithuanian Parliament and the Chair of the Economy Committee.
We were encouraged to learn that the Lithuanian Government is thinking of proposing a 2030 renewables target of 45% of electricity (up from 16% today) as part of their new national energy strategy. We urged the Minister to include as part of this ambitious MW figures for both onshore and offshore wind and, above all, to give a clear long-term visibility on when these MW will be auctioned and deployed (Lithuania has 500MW installed today). We urged Members of Parliament to support all this too – the Parliament will need to approve the strategy in the autumn.
The Minister and MPs sought our advice on the optimum regulatory support. Their existing auction regime, which provides a fixed price for 12 years, has delivered 3 onshore auctions prices of €56/MWh. But they want to move to a cheaper system – and they probed us on the idea, much talked-about across Europe since the recent German offshore auction, that wind may be becoming “subsidy-free”. We said the key thing was to provide revenue stability for investors and recommended Contracts for Difference.
Both the Minister and MPs had concerns about grid stability, especially given their imminent desynchronisation from the Russian electricity system – they rely on the Russians for grid balancing today. We explained how wind is balancing responsible, how we offer frequency control and other balancing services, and how more flexible turbines, smart grid, demand response and storage are making it cheaper and easier to integrate high penetration levels of wind. We offered advice on how to upgrade their 900MW pump storage facility from fixed to variable speed.
They have concerns too about military radar. We explained how modern turbines are less radar-distorting and how developments in radar technology are also mitigating the problem (they still have 1980s Soviet radar without in-fill). They were interested in joining the WindEurope industry / military platform to learn more.
Overall, it was encouraging to find a Central and Eastern country that wants to do more wind and is actively considering how to do so. In the medium term the prospects seem better for onshore than offshore, though they want to start deploying the latter too before 2030. In the short term there will be a 2-year gap in the onshore market while they modify their auction system. But the conditions for growth beyond that are good, not least given their desire to increase their current low levels of own power generation (only 25% of what they consume) – and the lack of incumbent thermal competition.
Also, they understand the jobs and growth benefits of wind and are keen to attract those investors who’ve been turned away from Poland by the new distance law. While the volumes will very small compared to a nation such as Germany, there would be significant political value in a CEE country doing the right thing on wind.