Market of the Month – Baltics
|
In 2004, the three Baltic countries of Estonia, Latvia and Lithuania became full members of NATO and the European Union. They were the fastest among the fastest growing economies in the EU, with average GDP growth exceeding 7 percent. Last year’s global economic crisis has slowed that growth to more than a 5 percent GDP decrease, while at the same time helping to tame inflation and smooth the path to Euro currency adoption. The countries are taking steps towards their economic recovery, with EU and IMF support.
Located on the eastern side of the Baltic Sea, the Baltic countries border Sweden, Finland, Russia and Poland. Together, they comprise an area comparable to the state of Oklahoma with 7 million residents. With relatively modern infrastructure, these countries have much in common historically, geographically and economically. Due to a lack of natural resources, they strive to take advantage of their strategic geographical location and their main resource – a highly educated and skilled workforce.
As a gateway between Russia and Western Europe, the Baltic countries continue to play an important role for U.S. trade interests. The region offers opportunities to U.S. exporters and English is widely spoken in business. Our Commercial Service Nordic offices [LINK to Nordics] and Baltic partner offices work together to offer customized solutions for U.S. companies that make the entire region more accessible as a single market. Contact us today to learn more.
The prime ministers of the Nordic and Baltic nations agreed on a joint plan to link the energy sector of the three Baltic states to the overall energy supply of the European Union. This priority EU energy infrastructure project will extend the Nordic electricity market model to the Baltics. The plan calls for connecting Sweden with Lithuania via an underwater power line. From there, energy supply lines are to be extended to Estonia and Latvia. The new Swedish EU presidency is expected to facilitate and give high priority to plan implementation, with more than half-billion Euros possible for additional support of regional energy infrastructure projects. The Baltic Energy Market Interconnection Plan (BEMIP) covers three areas:
 | Electricity market integration. The electricity market design will be based on the Nordic model. A specific roadmap has been proposed, which removes the barriers to conforming to EU internal electricity market rules such as eliminating regulated tariffs, removal of cross-border restrictions, establishment of market-based congestion management, full opening of the retail market and establishment of a common power exchange for physical trade in the Nordic and Baltic area. Progress on these market design aspects is crucial to the integration of the Baltic and Nordic electricity systems. |
| Electricity interconnections and generation. There are three sets of infrastructure projects: |
- The Nordic Master Plan covers the projects between the Nordic countries such as Fenno-Skan II linking Finland and Sweden, Great Belt in Denmark, Nea-Järpströmmen between Sweden and Norway, South Link in Sweden and Skagerrak IV between Denmark, Norway and others.
- Projects linking the Baltic area with the Nordic countries and Poland include NordBalt, the previously called SwedLit linking Sweden to Lithuania, Estlink–2 between Estonia and Finland and LitPol between Poland and Lithuania. Strengthening the electricity grid between the three Baltic States belongs to this set of projects.
- Interconnections between Poland and Germany form the third set of projects, with the loopflows caused by wind generation in the North as the main driver.
| Gas internal market and infrastructure. The main goal is to enhance supply security through a higher level of diversification of routes and sources. The outlook is good for potential projects that could satisfy this objective, which includes interconnections (new or implementation of reverse flow), liquefied natural gas (LNG) facilities and development of gas storages. BEMIP gas sector plans will be further developed. |
Special Focus on Renewable Energy
The European Union is actively working to reduce the effects of climate change and establish a common energy policy. The Baltic countries of Estonia, Latvia, and Lithuania are developing their renewable energy resources in order to meet EU climate change goals.
Estonia
Estonia plans to raise its renewable energy usage to 5.1 percent of total energy by 2010, according to an EU agreement, as it lessens its dependence on oil-shale-fired electricity. Wind and biomass are the most promising sources, and small-scale hydroelectric power is also being pursued.
Tallinn Estonia
Latvia
Latvia has sought to diversify its energy sources and increase energy conservation. Currently, half of power production is provided by renewable sources, mainly hydropower. The other half is comprised of oil and gas, but also a growing portion of waste to energy (mainly wood waste), geothermal and wind.
Riga Latvia
Latvian renewable energy legislation is under development. The current EU policy dictates that Latvia has to increase the share of renewable energy in final energy consumption by 7.1 percent to reach 42 percent by 2020. Wind and biomass would benefit from clear support due to their considerable potential. Government incentives for the use of renewable energy include a quota system since 2002, authorizing capacity levels for renewable installations (determined by the Cabinet of Ministers on an annual basis), and reduced excise tax rate for bio-fuels. Rape seed oil is subject to no excise tax, regardless of its end use.
The most promising sectors for renewable energy equipment in Latvia are wind energy and energy produced in combined heat and power plants.
Lithuania
The Government of Lithuania has had an active environmental protection program since 1992. The Ministry of the Environment is currently preparing the country to meet its EU environmental requirements, estimated to require $50 million annually until 2015. The bulk of spending will go towards improving wastewater treatment, sewage networks, and waste management.
Lithuania imports approximately 60 percent of its energy resources, including oil, gas, nuclear fuel, and coal. The production capacity of Lithuania’s power plants and oil refinery exceed domestic demand, making the country a net exporter of electricity and petrochemicals. However, electricity exports have dropped sharply since Lithuania took one of Ignalina’s nuclear reactors offline. The other reactor will be decommissioned this year, per EU agreement. (The three Baltic States and Poland have agreed to cooperate in constructing a new nuclear power plant on the site of the current plant, a project which could cost $6-8 billion.)
Vilnius Lithuania
Lithuania imports all of its natural gas from Russia, which comprises approximately 30 percent of Lithuania's energy usage. Thermal energy plants and the chemical industry are the largest users of natural gas. The government is considering construction of a gas storage facility to maintain reserves. The country is also in the process of synchronizing its electricity grid with Western Europe. (The Baltics' first electricity connection with the Western European grid, between Estonia and Finland, began operation in December 2006.)
U.S. environmental consulting companies appear to be more active than equipment manufacturers and suppliers in this sector. There are substantial opportunities for environmental service providers willing to team with local partners, including in laboratory chemical analysis, site assessment, soil and groundwater remediation, environmental impact consulting, and services related to hazardous and other waste management. Specific infrastructure projects include construction of electric power transmission lines to Poland and Sweden; building a natural gas storage facility; construction of an LNG terminal; construction of a new nuclear power plant; and upgrading existing combined heat and power plants.
The U.S. Department of Energy’s Office of Policy and International Affairs is planning a Baltic Clean and Green Energy Conference in Fall 2009. This event will bring companies, financiers, and government entities together to highlight clean energy technologies that can assist the region in diversifying its energy resources and to forge lasting public/private partnerships in the months leading up to the Copenhagen Climate Change Conference. The conference covers three topical areas:
| renewable energy technology in the Baltics; |
| electricity infrastructure/smart grids and grid-appropriate nuclear power; and |
| project financing and tendering. |
For more information, contact Michael Apicelli at the U.S. Department of Energy, (202) 586-1238 or michael.apicelli@hq.doe.gov.
| Population: 7,086 million (est. 2009) |
| Capitals: Tallinn (Estonia), Riga (Latvia), Vilnius (Lithuania) |
| Government: Parliamentary Republic (Estonia), Parliamentary Democracy (Latvia, Lithuania) |
| Languages: Estonian, Russian / Latvian, Russian / Lithuanian, Russian, Polish |
| GDP (est. 2008): Total Baltic - $105 billion ($23 billion Estonia, $33 billion Latvia, $48 billion Lithuania) |
| Primary Import/Export Partners: Finland, Germany, Sweden, Russia, Poland |
CS offices produce market research reports to help U.S. companies determine market potential, market size and potential competitors. Visit our site to access our reports.
Every year, we help thousands of U.S. companies navigate challenges to export goods and services worth billions of dollars. Located across the United States and in U.S. Embassies and consulates in nearly 80 countries, our global network of trade professionals opens doors that no one else can.
Whether you’re looking to make your first export sale or expand to additional markets, we offer the expertise you need to connect with lucrative opportunities and increase your bottom line.
Visit our website to open a world of opportunities.
Estonia
Reene Sepp, Commercial Specialist
U.S. Embassy
Kentmanni 20
15099 Tallinn, Estonia
Tel: +372 668-81-30
Email: seppR@state.gov
Brian McCleary, Regional Senior Commercial Officer, Partnership Post in Finland
Email: brian.mccleary@mail.doc.gov
Latvia
U.S. Embassy
Raina bulv 7.
Riga, LV-1540, Latvia
Tel: +371 703-62-00
Frank Carrico, Regional Senior Commercial Officer, Partnership Post in Sweden
Email: frank.carrico@mail.doc.gov
Lithuania
Jonas Vasilevicius, Commercial Specialist
U.S. Embassy
2600 Akmenu 6
Vilnius, Lithuania
Tel: +370 5-266-55-00
Email: vasileviciusJ@state.gov
David McNeill, Commercial Attaché, Partnership Post in Poland
Email: david.mcneill@mail.doc.gov
Estonia
|
|
|
|
Latvia
Lithuania