TALLINN - Long before the Estlink power cable was stretched out along the bottom of the Gulf of Finland, Estonian and Lithuanian energy authorities began speaking about the need to build more undersea cables connecting the Nordic and Baltic states. One might remark that this smacks of counting chickens before they're hatched, but this is precisely the attitude that is now predominant in the Baltic energy sphere. A window of golden opportunities has opened, and everyone wants to make the best of it.
The first hints of a second cable came earlier this year, when Sandor Liive, CEO of Eesti Energia (Estonian Energy), said that one power cable wouldn't be enough for meeting the needs of the Baltic market.
The new cable, which is still only on the drawing board, would be more powerful than the Estlink cable that was inaugurated on Dec. 4. Theoretically it would stretch across the Gulf of Finland and connect Estonia's northeastern region, where Estonian Energy's shale oil-based production plants are located. The tentative deadline for the second cable would be, according to reports, 2010, just after the second reactor of Lithuania's nuclear power plant is shut down and the Baltic states, on net, turn into a massive electricity importer.
In Lithuania, Lietuvos Energija (Lithuanian Energy) and Svenska Krafnat, have launched a feasibility study into a 300 kilometer cable across the bottom of the Baltic Sea that would handle some 700 's 1,000 megawatts. The cost of the project is estimated at 300 million euros. The preliminary deadline: 2010.
Thus for the sake of energy security, the Baltic states are rushing to integrate their markets.
"Only when the Baltic power grids are well connected with northern and Western Europe will the prerequisites for a functioning electricity market be created in the Baltics," Liive was quoted as saying.
The 105-kilometer Estlink cable is based on state-of-the-art technology and can handle 350 megawatts. The project cost 110 million euros.
Initially the cable will direct electricity in a south-north direction, as the electricity-surplus Baltic states sell kilowatts on the Nordic market. Again, after the Ignalina Nuclear Power Plant's scheduled closure in 2009, the energy will flow in the opposite direction.
Ignalina generates some 70 percent of Lithuania's electricity, much of which is exported. Once the second reactor is offline, much of Ignalina's domestically consumed megawatts can be made up by Lithuanian Power Plants, which is 50 kilometers away from Vilnius. The plant, however, runs on natural gas, which makes energy input 2.75 times more expensive than the atom, according to a recent Hansabanka report.
In effect, Latvia is likely to bear the brunt of the Ignalina closure, as Latvia is a major user of the nuclear power plant's energy.
"There is a clear need to build up additional capacities for producing electricity in the Baltic countries," Hansabanka writes. "Otherwise it will be necessary to start importing electricity from Russia or from Nordic countries."
As the report points out, the Baltic energy industry is the most intensive in the EU due to several factors 's long heating season, inefficient energy use, outdated technology, and a disproportionate share of energy production in industry (particularly in Estonia and Lithuania).
Though the Baltics can't change Mother Nature, tackling some of these factors will be crucial in improving the region's overall energy outlook.
As energy production and consumption becomes more efficient, the Baltics' overall energy dependence is likely to decline in the future, according to Hansabanka.