Energy Highlights

G NER Y SE E CU O R T I A T Y N NATO ENERGY SECURITY C E CENTRE OF EXCELLENCE E C N T N R E E LL OF EXCE ENERGY HIGHLIGHTS ENERGY HIGHLIGHTS 1 The Synchronization of the Baltic States’: Geopolitical Implications on the Baltic Sea Region and Beyond by Justinas Juozaitis INTRODUCTION he Baltic States remain the last countries In here, one should note that both Belarus and within the Euroatlantic space whose elec- Russia have specific cards to play in achieving tricity grids continue to operate synchro- their aims. For example, Russia has a competi- nously with the Russian Integrated Power tive edge in the Baltic electricity market as the TSystem/Unified Power System (IPS/UPS). On 28 country does not follow the EU’s environmen- June 2018, after a long marathon of multilateral tal policies. Free of environmental regulations, negotiations and decades of prior discussions, Russia can apply pressure on the Baltic States Lithuania, Latvia, and Estonia had finally agreed by positioning the withdrawal from electricity to synchronize their power systems with the trade with the 3rd countries as an economically Continental European Network (CEN) through irrational decision. Russia’s experience in framing Poland. With European Union allocating €323 negative opinion towards strategic energy pro- million in January 20191 and additional €720 mil- jects in the neighbouring states is plentiful. lion in October 20202 for synchronizing Lithu- anian, Latvian and Estonian power systems, the Moreover, Russia is moving faster with its prepa- Baltic flagship energy project gains momentum. rations for the desynchronization of the Baltic States from IPS/UPS than they are doing so them- Given the joint Baltic and Polish political com- selves. Russian authorities have already narrowed mitment reinforced by financial aid and politi- the BRELL4 ring by building additional transmis- cal support from the European Union, Russia’s sion lines along its borders with the Baltic States capabilities in opposing the Baltic withdrawal and Belarus. The Kremlin has also installed rein- from the IPS/UPS are diminishing rapidly. Nev- forcements in other parts of its circular transmis- ertheless, there should be no room for compla- sion system to increase the electricity transfer cency. The Kremlin is interested in maintaining capacity between North-Western and Central electricity trade with Lithuania, Latvia and Es- regions of IPS/UPS. Most importantly, Russia tonia after their synchronization with CEN that has doubled Kaliningrad’s generation capacities, goes directly against the principles outlined in diversified its natural gas supply (primary fuel in Political Roadmap on the synchronization of Bal- electricity generation) and successfully tested tic States.3 With the launch of Ostrovets nuclear its capabilities to operate in an isolated mode power plant (NPP) in early November 2020, Be- twice. The Baltic States are lagging as critical larus also wants to gain access to the Baltic en- infrastructural projects enabling their synchro- ergy markets that Lithuania, Latvia and Estonia nization with CEN will only be completed dur- collectively denied just two months before the ing 2022 – 2025. To make matters worse, the operational start of its NPP. Baltic States’ capabilities to operate their power 2 ENERGY HIGHLIGHTS systems in isolation from IPS/UPS remains un- An interstate synchronous power system, there- tested. fore, should not be understood merely as national power grids functioning together under Having completed the first unit of Ostrovets the same frequency and management principles NPP, Belarus will also try all means at its disposal or as a system sharing standard regulations. One to persuade the Baltic States to open its markets should also perceive such a system as a geopoliti- for electricity trade in the short term and long cal bond between countries either trusting each term perspectives. In here, Minsk will strive to of- other enough to enter into an interdependent fer cheap electricity for the Baltic market even if relationship in the strategic power sector or be- the proposed price will be lower than its nuclear ing forced to do so by finding themselves under generation costs. Since the majority of expendi- the sphere of influence from a foreign power. tures (90 %) on the construction of Ostrovets Even if economic, infrastructural, technological, NPP are financed by the Russian loan that Belarus managerial and legal factors have a role to play in will start paying back in April 2023,5 Minsk has explaining the emergence, development and dis- room for manoeuvre in offering electricity price integration of interstate synchronous networks, that temporarily does not fully incorporate capi- European history shows that these processes tal costs. cannot be fully understood without analyzing geopolitics. Given the following processes, the paper stud- ies geopolitical implications on the Baltic States’ During the Cold War, the emergence of inter- synchronization with CEN with a specific empha- state synchronous power systems in Europe was sis given on the Russian and Belarusian behav- influenced by the great power rivalry. It is not iour. First, the study exposes the interconnection a coincidence that today one finds three major between tectonic geopolitical shifts and the es- interstate synchronous areas in Europe as they tablishment, development and disintegration of were created by countries that shared a similar synchronous interstate power networks. Second, strategic environment. For example, West Ger- it introduces Russian response to the synchroni- many, France, Italy and the Benelux countries zation of the Baltic States, its current objectives not only have signed the Treaty Establishing and means to achieve them. Third, it discusses the European Coal and Steel Community in 1951 Belarusian prospects in gaining access to the Bal- but, together with Austria and Switzerland, they tic electricity market. The paper concludes that have also established the Union for Coordina- the Baltic States should strive to move quickly tion of Production and Transmission of Electricity not only in proceeding with the synchronization (UCPTE) that is now known as Continental Eu- but also in increasing their readiness to operate ropean Network.6 Seven years later, their power in an isolated mode and to establish an emer- grids began operating synchronously, and most gency synchronous interconnection with Poland of these countries were NATO members (Aus- if needed. With researchers and policymakers tria and Switzerland excluded).7 The first signifi- mostly focusing on the classical themes of Rus- cant enlargement of the CEN occurred in 1987 sian energy geopolitics, i.e. natural gas and oil, when three NATO members and contemporary the paper hopes to shed more light on another newcomers to the European Union – Portugal, important object of study – the geopolitics of Spain, and Greece – together with Albania and synchronous interconnections. Yugoslavia synchronized their power grids with CEN. In here, one should note that the West had SYNCHRONIZATION AND GEOPOLITICS previously supported the development of asyn- chronous interconnections with Yugoslavia ‘to To recognize the geopolitical implications as- lure Yugoslavia further away from the socialist sociated with Lithuanian, Latvian and Estonian block’,8 thus further highlighting the importance withdrawal from the IPS/UPS, one first needs to of geopolitics as opposed to contradicting the ar- grasp the strategic significance of synchronous gument. power grids operating beyond national borders. ENERGY HIGHLIGHTS 3 A similar process took place behind the Iron Cur- were temporarily disconnected from CEN be- tain. During 1957 – 1960, the power systems of cause of the Yugoslav Wars.13 Notably, Turkey German Democratic Republic, Poland, Hungary had also synchronized its power grid with CEN in and Czechoslovakia were interconnected, paving 2015. Most of the countries mentioned above ei- the way for the establishment of the Мир (Mir) ther belonged to the Euroatlantic space via mem- synchronous area in 1962 – a predecessor of IPS/ berships in NATO or the EU or had aspirations UPS. During the same year, these Central Eastern of joining it by the time they have synchronized European countries were synchronized with the their power grids with CEN. Others eventually Soviet Union, while Romania and Bulgaria joined expressed their willingness to join either both or- the synchronous operation shortly afterwards.9 ganizations or one of them. At first, Moscow permitted the dispatch centre in Prague to manage the synchronous area outside These developments happened against the Rus- the Soviet Union on a day-to-day basis. In con- sian will. Russia wanted to maintain the syn- trast, a similar dispatch in Moscow was more fo- chronous operation with its former subjects and cused on the core Soviet territory, even though it reorganized Mir into IPS/UPS in February 1992 was hierarchically superior to the one in Prague. through the newly established Commonwealth The control centre in Moscow, however, became of Independent States (CIS). As of a conse- more involved in regulating the system frequency quence, CIS countries became the core partici- in the Central Eastern European countries since pants within the IPS/UPS. The Central Eastern the 1970s, thus centralizing Kremlin’s control European states, however, were not optimistic over the common synchronous area within its about continuing their synchronous operation sphere of influence.10 within IPS/UPS

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