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SwedLit Interconnection: Baltic countries resolve the dispute [free access]

May 1, 2009

The Baltic countries have finally resolved the long-standing dispute over where the proposed Sweden-Baltic electricity interconnector, called the SwedLit project, will land on the Baltic side. Latvia and Lithuania had been competing for the undersea cable to land in their respective territories. Lithuania has now emerged as the winner with the signing of a joint declaration in end-April 2009 by the three Baltic countries - Estonia, Latvia and Lithuania.

The Sweden-Baltic electricity interconnection is of great significance. According to the European Commission (EC), the project is crucial to connecting the "energy island" of the Baltic countries with the rest of the European power market. With European Union's (EU) backing, the project had assumed great political importance. The joint agreement between the Baltic countries is the first concrete result of the work of a high-level group on the Baltic Energy Market Interconnection Plan (BEMIP) launched by the EC in October 2008.

The decision has also cleared the way to gain access to EU funding for the construction of the SwedLit project. Earlier this year, the EU had announced a funding of EUR175 million for the Sweden-Baltic interconnection project and for strengthening the internal power grids in the Baltic region. The funds will remain available provided the construction on the interconnector begins before end-2010. This could perhaps be one the factors that led to the resolution of the dispute between the so-far adamant Latvia and Lithuania.

While the landing point will be Lithuania, it has been agreed that the interconnector will be a trilateral energy infrastructure project with the participation of the energy companies of Lithuania, Latvia and Sweden on equal terms. The project developers aim to deliver a complete proposal for the cable at the European Council meeting in June 2009.

Lithuania, in fact, seems to be ready to implement the project. Lietuvos Energija, the Lithuanian transmission system operator (TSO) and a subsidiary of the national power company LEO LT, has undertaken a joint feasibility study on the project with the Swedish TSO, Svenska Kraftnät. The study was carried out by the Swedish firm SWECO and completed in April 2008.

The SwedLit has been proposed as an undersea high-voltage direct current cable (HVDC) with a capacity to carry between 700 MW and 1,000 MW of power. It is expected to be 340 km long. According to the SWECO feasibility study, the cable could cost between EUR516 million and EUR738 million, depending on the final route, capacity and technology chosen. While the Lithuanian TSO has already selected the town of Klaipeda as the landing point of the interconnector on its side, Svenska Kraftnät is expected to choose between Hemsjö and Nybro as the landing point in Sweden in the next couple of months.

LEO LT has a subsidiary called InterLinks, which is charged with the responsibility to construct energy interconnectors for the Lithuanian grid. InterLinks will start the preliminary work on the project soon. In 2009, the company plans to conduct the seabed survey, complete the technical design of the inland cable and undertake territorial planning works. The estimated cost of these works is about EUR4 million.

The SwedLit cable will also provide an important channel to transmit renewable energy. The project is expected to link the Baltic Sea offshore wind farms on its route and help move that energy to the rest of Europe. While the cable is expected to begin operations in 2016, InterLinks believes that commercial operations can begin much earlier by 2014-15.

The construction of the SwedLit interconnector is an important factor in the creation of an open and transparent common Baltic electricity market and its integration with the Nordic electricity market, in particular, the Nord Pool. Work on this initiative is also underway. Meanwhile, the energy companies in the Baltic region are also considering the idea for a single grid operator for the whole region.

The SwedLit is not the first interconnector between the Nordic and Baltic regions. EstLink, linking Estonia to Finland, was the first electricity link between the two regions. It was put into operation in November 2006. The cable is jointly owned by the TSOs of Lithuania, Latvia and Estonia and two Finnish companies, Pohjolan Voima and Helsingin Energia. The 105 km long direct current cable can carry 350 MW of power. There are plans to construct the 650 MW EstLink 2, for which the EU is expected to provide EUR100 million.

While the SwedLit and EstLink 2 projects will boost electricity interconnection between the two sides of the Baltic Sea, the EU is also firmly moving ahead with plans to strengthen electricity trade between Baltic and West European countries. An important project is the Lithuania-Poland interconnector called the LitPol. This is a 154 km, double-circuit 400 kV alternate current link with a capacity of 1,000 MW. It is estimated to involve investments of about EUR237 million and be completed in the 2012-15 timeframe.

So far, electricity connections between European and Baltic countries have been limited. But the EU is now making sure the region gets the needed attention. With strong political and economic motivation, the Baltic region will soon be an integral link for the European power grid.

SwedLit project: Key facts

Source: InterLinks