More questions than answers in the boycott strategy of the Astravo nuclear power plant Business

Lithuania has declared by law that the power plant near the Lithuanian border is unsafe and promises to stop importing electricity from Belarus as soon as Astravas starts producing power.

Since the beginning of 2016, the Lithuanian government has tried to convince neighboring countries and the EU institutions that electricity will not enter the common market, but this goal has not been achieved.

Great expectations were generated in February this year, when after a meeting with the Prime Ministers of Latvia and Estonia, Lithuanian Prime Minister Saulius Skvernelis publicly announced that the ministers would soon sign a declaration establishing a common Baltic position not to buy. electricity to Astrava.

However, a few weeks later, the Latvian government announced that it would not approve the statements for the time being and would try to change them.

The new text was the subject of protests in Vilnius a few months later: in early June, Energy Minister Žygimantas Vaičiūnas, who presented the compromise, was criticized by opposition conservatives and their Chancellor Linas Linkevičius for paving the way for the Astrava’s electricity will enter the common market through Latvia.

To limit Astrava’s electricity, the possibility of establishing a system of guarantees of origin for electricity and introducing a tax on electricity from third countries is being considered, thus reducing trade with Russia and Belarus.

There is consensus on the strategic objective, but there are differences of opinion on the tactics for dealing with Latvia, which does not agree with a firm commitment not to accept Astrava’s electricity.

Ž.Vaičiūnas says that it is necessary to actively seek agreement on new rules, because only in this way can a common position be ensured. At that time, there are those in the Ministry of Foreign Affairs who believe that the rules in force since 2018, according to which trade with third countries is only possible through the border between Lithuania and Belarus, do not need to be changed. According to some diplomats, the initiative should be given to Latvians; They are likely to break the rules if, after the trade closes the Lithuanian-Belarusian connection, the Latvians start to trade with Russia and at the same time allow electricity from Astravas.

Now the Energy Minister publicly declares that he hopes Brussels will help Vilnius and Riga reach an agreement.

“We are still waiting for the new version of the European Commission text to meet Lithuania’s expectations, because the current text was not acceptable to us, it talked about not buying electricity from third countries, but naturally we need an even stronger position I cannot reveal all the details yet, “the minister said last week.

Current law in Lithuania provides for the possibility of revoking the permit to import electricity “from a third country where an unsafe nuclear power plant operates”, but some lawyers and energy professionals have serious doubts as to how such a provision would be applied in practice.

In January this year, the amendments to the laws proposed by President Gitanas Nausėda, approved by the Seimas last December, came into force, taking additional measures to prevent the entry of nuclear energy into Lithuania.

Under four amendments to the law, once the Astravo nuclear power plant goes online, companies will not receive permits to import their electricity and their license will be suspended if the government’s Strategic Business Transaction Review Commission determines that the importer represents a threat to the security of the country.

The European Law Department of the Ministry of Justice expressed doubts about the compatibility of the amendments with European Union law and recommended that they be aligned with those of the European Commission.

In its conclusion, the Department later stated that it did not specify the practical implementation of the measures, that is, what restrictions could be applied: a partial or absolute restriction of electricity trade with an EU Member State in transit of electricity from a third country .

Ž.Vaičiūnas now also mentions “extreme measures” related to alternative electricity trading platforms, for example in Poland, but did not specify what they could be. In July, the Minister invited Poland to actively participate in the Baltic electricity and gas markets and asked his Polish counterpart to draw the attention of the operator TGE to these opportunities for cooperation between the two countries.

Former Energy Minister Arvydas Sekmokas says the history of Baltic energy cooperation so far offers little hope that a compromise will be reached.

“We saw the liquefied natural gas terminal project, which was planned as a regional project, unfortunately it failed for one reason or another. We have also seen the Visaginas nuclear power plant project, which was also not supported by Latvia and Estonia. This is a real lack of solidarity between the Baltic countries and it is difficult to expect it to show up now. Of course, you should always hope for the best, ”A. Sekmokas told BNS.

In his opinion, the boycott could impede the development of the Astrava power plant.

“It is very hopeful that the first unit will not launch, there was really no reason to do so, but we have to focus on not launching the other units, the second and then the third and fourth,” said A. Sekmokas.

The chairman of the Seimas Energy Commission, Virgilijus Poderys, says that it is important for Lithuania to know what it wants in the negotiations.

“There is also a legal problem with what Latvians and Estonians say: you can prohibit because you have such a law, we do not have such a law, you have to understand each other too. In other words, we have to find a compromise and an agreement. But again. Before that we have to have our own position, which should be perhaps a little more radical than what can be reached with the agreement with Latvians and Estonians, but it must be united, ”V. Poderys told BNS.

In the context of the Astrava nuclear power plant: competition in seaports

Reinis Aboltinis, a Latvian energy expert and researcher at Riga Technical University, does not believe that Latvia is interested in trading electricity with third countries, and the volume of electricity exchanges between Latvia and Russia and indirectly Belarus has been declining in recent years. years.

“Personally, I regard the situation as one in which the Latvian authorities have expressed their concerns about sufficient electricity supply in an ambiguous and perhaps somewhat clumsy way. The Nord Pool region is rich in electricity generating capacity, which can guarantee the supply of electricity to the Baltic countries through existing connections – EstLink, NordBalt, – R. Aboltinis told BNS.

There is also a legal problem with what Latvians and Estonians say: you can prohibit because you have such a law, we do not have such a law, you have to understand us too.

The Latvian government announced in August last year that after Lithuania cut electricity trade with Belarus, Riga would move it to the border with Latvia. The then Latvian Economy Minister Ralph Nemiro said he understood Lithuania’s concerns about the safety of the Astrava power plant, but said the decision to exchange electricity with Russia was made taking into account Latvia’s interests in preventing the electricity shortage.

The operator of the Latvian electricity transmission system, AST, told BNS about the need to ensure trade opportunities between the Baltic States and Russia, and the Latvian Ministry of Economy asked AST to develop a methodology for calculating and allocating capacity. to establish trade capacity on the Latvian-Russian border as soon as Lithuania reduced trade. capacity from Belarus to Lithuania up to 0 MW.

In September 2019, Latvian and Estonian traders AST and Elering released a statement on the Nord Pool exchange stating that they had developed a methodology for trading with Russia.

Litgrid, in turn, provided the Latvian and Estonian operators with a regional methodology for trading electricity with third countries, and consulted the European Commission.

Aboltinis said he saw the only reason why the Latvian authorities were reluctant to make prominent public statements to cut off electricity exchanges with Belarus, which was shielding itself from the possible consequences for cargo transit through Latvia.

“Most of the cargo transit to the ports of Latvia comes from Belarus, and if political decisions are made in Belarus, the transit flows can be diverted from the sea ports of Lithuania and Latvia to the Russian ports in the Gulf of Finland. And transit makes up a large part of Latvia’s GDP, “said R. Aboltinis.

Nuclear energy expert Jurgis Vilemas is also convinced that Latvians can now fully meet their electricity needs by introducing new power plants in Riga. At the same time, the expert notes that Belarus, if it wants to enter the EU market with its own electricity, must do so through Russia, and the latter is likely to benefit from it.

“If we disconnect the lines, the Belarusian wants to export through Latvia, which means that he has to go through Russia. Then there will be no other language (…) The Russians will say that we are buying that excess energy from them, and what we will do next with that is our business here. Russia will continue to impose the conditions, “Willem told BNS.

He added that there was still one question left for Finland: “Finland will take care of all these issues and if they benefit, they will import. It’s not good for them now, they don’t matter. “

Signs of possible obstacles to the synchronization project

Energy Minister Ž.Vaičiūnas affirms that the negotiations with Latvia and Estonia on the boycott of Belarusian electricity do not threaten the synchronization project with European grids.

R. Aboltinis believes that Lithuania and Latvia will still be able to reach a compromise, and their agreement will not hamper synchronization with continental Europe.

“I think Latvia and Lithuania can reach a compromise, diplomats are probably looking for a solution as we speak (…) In my opinion, the situation does not compromise the (dis) synchronization project. The Baltic transmission system operators They are professional organizations and they work in this direction. The decision has been made and it will not change, “said the Latvian expert.

However, the possible influx of cheap Russian-Belarusian electricity to the Baltic markets could lead to Polish discontent.

Prime Minister Saulius Skvernelis, who met with Polish Prime Minister Mateusz Morawieckis in June, said Latvia’s refusal to contribute to the electricity boycott of the Astrava nuclear power plant could complicate the synchronization project across Poland.

Skvernel then said after hearing a clear Polish stance that energy from the Belarusian nuclear power plant could not enter the Polish market.

Asked by BNS whether Poland could change its position on the offshore electricity connection with Lithuania because it failed to reach an agreement, S. Skvernelis said “everything can be”.

A. Sekmokas believes that there are risks in the synchronization project.

“If only Belarusian electricity enters the Baltic market one way or another, Poland, which has a very clear position vis-à-vis Russia, especially as this is a risk for Polish coal-fired power plants, would at least delay the construction of Harmony Link until very serious guarantees are given. ” very clear evidence that electricity from Belarus will not enter Lithuania and, through Lithuania, Poland. I think this is a very obvious risk, ”said A. Sekmokas.

Astravo’s electricity price can be artificially lowered

Willem doubts that the influx of Belarusian electricity into the Nord Pool exchange is worth worrying financially about, as nuclear power plants, especially those that have just been built, will not be cheap.

“Today, nuclear power plants are one of the most expensive sources of electricity and no one, except perhaps the Chinese, is capable of building a nuclear power plant that generates electricity that can compete in the market. This is already a known fact here and Belarus will face a certain problem, because it will be necessary to realize that energy in any case, because the debts must be paid, “Vilms told BNS.

In fact, Belarusians are very stuck with this nuclear power plant, which is a big problem.

According to him, Belarusian consumers will have to pay for the project, as it will be difficult to buy expensive electricity for export.

“In fact, Belarusians are very stuck with this nuclear power plant, which is a big problem. Its cost will be about 7-8 cents per kilowatt hour. Do you mean what you can force to pay? Only your consumer, nothing more” said the energy expert.

Latvian expert R. Aboltinis also said that he saw a high probability that Belarus was the main consumer of electricity from the nuclear power plant.

“Hypothetically, if Belarusian electricity can be sold to Nord Pool, it is not possible for Astrava electricity to be cheap, it will face stiff competition on the Nord Pool exchange unless it is subsidized. The most likely scenario is that the electricity from the nuclear power plant is used to meet the internal needs of Belarus itself, “said R. Aboltinis.

According to Sekmok, Belarus is likely to try to sell electricity cheaper, because nuclear power plant production, including interest on loans and their closing costs, is more expensive than other sources, such as green energy.

“Obviously, the project is not very profitable economically (…) The most important thing for them will be to pay interest or repay the loans, so to do so it is still necessary to sell the electricity, even below cost, that is, without pay full attention to closing costs. ” , – Sekmokas told BNS.

Willem believes that if there is a surplus of electricity, it might make sense to sell it by half a bale, thus at least partially covering costs, but Belarus is likely to take a different path and an Astrava NPP reactor will account for a relatively small part of electricity consumption. from the country.

“Now they produce all their electricity from imported natural gas from Russia. The conflict between Gazprom and Belarus is quite serious. (…) So what will they do? They will close their own relatively old power plants, just like ours old Elektrėnai units, and they will save money; they won’t have to import expensive Russian gas and use their nuclear energy. Of course, it will be a little more expensive than producing from gas, but you have to operate that nuclear power plant, otherwise no one will give you construction costs, ”said J. Vilemas.

However, critics of this position point out that by replacing Russian gas with Russian nuclear fuel, Belarus will not yet escape dependence on Moscow.