1

Lithuanian PXLithuanian PX

Giedrius Radvila

AB “LIETUVOS ENERGIJA” 2009-09-16

MiniforaVilnius

2

Is there a need for a changeIs there a need for a change? ?

?APX UK

OMEL

Powernext

Opcom

GME

NORD POOL PX

Gielda Energi

EEX

APX

BelpxOTE

EXAASouth Pool

PXE

NORD POOL PX

3

Issues that need to be Issues that need to be addressedaddressed

Closure of second unit of Ignalina NPP

Exporting system becomes importing

Diversification of fuel for electricity production in Baltic states

Projects of new interconnections

4

Background for changesBackground for changes

2008 Cooperation agreement between NPS and Lietuvos energija – Planning of establishment of Estlink price area.

Joint declaration of the prime ministers council of the Baltic (27th April 2009)

Memorandum of understanding of the Baltic energy market interconnection plan (17th June 2009)

Baltic energy market interconnection plan (17th June 2009)

LV, LT, SW memorandum of understanding (9th July 2009)

Lithuanian electricity expansion plan (8th of July 2009)

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Lithuanian electricity market Lithuanian electricity market expansion planexpansion plan

http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=349252&p_query=&p_tr2=

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Goals of market development Goals of market development

To improve conditions for consumers to choose or change supplier without any barriers;

To stipulate competition among generators, importers and suppliers;

To remove barriers for the trade with parties from EU;

To set transparent conditions for the trade of electricity imported from non EU countries;

To develop transparent electricity market organization and surveillance based on Nord Pool Spot principles.

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ChangesChanges

Generators

Transmission grid

Distributiongrid

Consumers

PX, Wholesale market

Suppliers

Source: Svenska Kraftnät

Transparent transportation of

electricity.

Organization of trade at PX based on Nord Pool Spot

principles. Goal – determinemarket price of electricity

Unfettered bilateral trade with EU countries,

transparently regulated trade with non EU countries

The support of generators does not

distort electricity price s and does not create barriers for electricity

market operation.

Regulated tariffs applicable only for

household consumers and small commercial

consumers.

Ability to choose supplier, which offers best price and make an agreement for

the electricity provision.

Hourly trade and balance responsibility

Support of effective co-generation and renewable energy

generation

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Changes of electricity market Changes of electricity market from 1from 1stst January 2010 January 2010

Implementation of Nord Pool Spot (NPS) principles for wholesale trade organization. Price formation principle - marginal price setting. Trading platform for anonymously trading at auction until 2011. Hourly trading and balancing responsibility applied for all market participants. Unfettered trade with EU countries; Transparent and competition ensuring tariffs for electricity market and transmission grid entrance, clear regulation and control towards electricity produced and imported from non-EU countries. Implemented non discriminatory and transparent principles of electricity transportation. Securing independency of TSO according EU regulation.

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Application of regulated Application of regulated tariffstariffs

Starting from 1st of January 2010, regulated tariffs is going to be abolished for the consumption totaling 35% of Lithuanian demand.

Gradual increase of a share of consumers with non-regulated tariffs: Starting January 1st, 2011 - 45 % Starting January 1st, 2012 - 55 % Starting January 1st, 2013 – regulated tariffs are applied only for the household consumers. Starting January 1st, 2015 for all consumers (except the guaranteed tariffs for the consumer groups designated by EU regulations)

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ChangesChangesRestructuring Lietuvos energija ABRestructuring Lietuvos energija AB

Lietuvos energija ABTSO functionsMarket operator functionsImport/ExportOperation of power production (KHPSPP, KHPP)

TSO ABTSO functionsMarket operator functions

Lietuvos energija ABImport/ExportOperation of power production (KHPSPP, KHPP)

Independent supplier ABTrade of electricity

Lietuvos energija ABImport/Export, Holding company

Independent supplier ABTrade of electricity

TSO ABTSO functionsMarket operator functions

Kruonis HPSPPand Kaunas HPPPower production

MO ABMarket operator functions

Lietuvos energija ABImport/ExportHolding company

Kruonis HPSPPand Kaunas HPPPower production

TSO AB(ISO)TSO functions

Tod

ay

Un

til 2

01

02

01

02

01

1

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ChangesChangesAuctioningAuctioning

PXProducers LT

Suplaer4

ConsumersConsumers

Import/Export

Suplaer3Suplaer2Suplaer1

BP..NBP1

Producers LT

ConsumersConsumers

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Marginal price for all transactionsat auction, €/MWh

ChangesChangesPrice formationPrice formation

Demand

Supply

Price, €/MWh

Volume, MWh

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ChangesChangesGate closureGate closure

Physical electricity market

Day ahead auction

Announcement of transmission capacities by TSO

Regulation/Balancing

1 day before operation day

13:00gate closure

Operationhour

13:00-16:00 submission of regulation power bids to TSO

1 hours before operation hour

correction of regulation power bids volumes and prices

balancesettlement

Operation day (physical delivery)

until 13:00 market participants must submit bids and offers

10:00

10:00Start of DAM

trade

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ChangesChangesCooperation with Nord Pool SpotCooperation with Nord Pool Spot

NPSMOTSO

Service Level Agreement

2009-05-05 Prefeasibility study by Nord Pool Consulting. 2009-06-06 Seminar by NPC on proposals for Lithuanian DAM 2009-06-23 – 2009-08-28 Negotiations with Nord Pool Spot 2009-08-28 Letter of Intent was signed.

No.73/2009 Nord Pool Spot will deliver the technical solution for new Lithuanian market place Nord Pool Spot AS and Lietuvos Energija AB today announced that they have signed a Letter of Intent to implement a new market model for the Lithuanian electricity market. In the future the Lithuanian market will be based on the same principles as the Nordic power market,where price and flow are calculated at the same time to increase market efficiency (implicit auction). The partiesaim to establish a service contract where Nord Pool Spot will provide the systems and services from the Nordic market to the Lithuanian market place.The technical solution will be ready prior to 1 January 2010, when the new market model is scheduled to start operating in Lithuania.  Lysaker, 28 August 2009.

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Towards an integrated Towards an integrated marketmarket

NO

RD

PO

OL P

X

Polish PXGielda Energii

2009

Isolated Baltic electricity market.

NO

RD

PO

OL P

X

Polish PXGielda Energii

Common Baltic electricity market

Baltic electricity market integration

Polish PXGielda Energii

Estlink IIEstlink I

Swedish-Baltic link

LitPollink

2014 - 2015

Integration of Baltic electricity market into the Nordic and continental Europe

electricity markets.

Implementation of projects of new interconnections.

Estlink I

Estlink I

2010-2013

Creation of common Baltic’s electricity market based on Nordic

electricity market organization principles and gradual abolishment of regulated tariffs for consumers

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Thank you.

Questions?