Progress of Baltic synchronisation with continental Europe

Hannes Kont Director of the synchronisation program Why?

Facilities for the control of transmission of electricity in the are located in Russia.

Environmental impact of Capacities: 337 GW Russian electricity is unknown. Peak load: 215 GW

Possibilities for electricity production and trade are limited. Synchronisation targets

• By the end of 2025, we will disconnect the power systems of the Baltic States from Russia and join the Continental Europe power network and the respective frequency area.

• We will mitigate the political, social and economic risks associated with the eastern neighbour.

• New markets will be opened in order to improve competitiveness of business.

• We will ensure energy security. Agreement on the conditions for interconnection • Signed by Elering (EE), (LT), AST (LV), PSE (PL), select Regional Groups of Continental Europe, and main network operators on 20 May 2019 • Establishes rights and obligations regarding the synchronized connection of the Baltic power network to the Continental Europe Synchronous Area (CESA) • Main requirements:

• Additional studies on dynamic stability

• Transmission capacity tests

• Island operation tests

• Compliance with the terms and conditions, RGCE MLA Operating Handbook and SAFA What are we doing?

• Existing networks are being reinforced and reconstructed, interconnection capacities increased. • To ensure frequency stability, system inertia in the Baltic power system should be provided 24/7; therefore, synchronous condensers will be constructed and the protection and control systems of the grid as well as direct current links will be upgraded. • The present direct current interconnection between and is being reconstructed into an alternating current interconnection (LitPol Link). • A new 700-megawatt undersea direct current interconnection between Lithuania and Poland is being constructed (). • Readiness for isolated (island) operation will created and enhanced. • Implementation of SAFA’s requirements will assure the members of the Continental European frequency area that the Baltic States meet the criteria.

LitPol Link

• The LitPol Link overhead power line, which was built between Lithuania and Poland five years ago, is presently operating as a direct current interconnection. After the synchronisation, LitPol Link will operate as a 400 kV alternating current line.

• The line will ensure synchronized operation with Continental Europe, and, upon completion, it will allow emergency synchronisation if necessary. Harmony Link

• One of the conditions for synchronisation is the construction of a new 700 MW HVDC sea cable line in the coastal area between Lithuania and Poland.

• The construction of the cable line requires the performance of a sea bottom survey, production and installation of the cable, and building the Darbenai substation in Lithuania. How will the project be funded?

Estimated cost of the synchronisation project (EE/LV/LT/PL) is ca 1.65 billion EUR

Phase I – reinforcement of internal networks of the Baltic States • The €430 million phase one package (EE/LV/LT) was approved by the EC in 2019. • The Commission will cover 75% of the phase one investments. • Also PSE received CEF 2019 grant (10,2 MEUR) for Harmony Link preparation phase

Phase II – construction of synchronizers, construction of direct current interconnections between Lithuania and Poland, renewal of management and control systems • the total cost is 1.22 billion EUR (EE/LV/LT/PL) • The € 719.7 million funding (75% intensity) was approved by the EC in oct.2020 Urgency of Investment Bundles in the Phase II - CEF 2020 investment request . The most important challenge of the synchronization process is to technically enable synchronization as soon as possible. . Based on this approach investment bundles were divided into such, that are the most urgent from the perspective of emergency synchronization and those, which are just urgent.

INVESTMENT BUNDLES MOST URGENT URGENT COMMENTS . Harmony Link interconnector is the main project, which enables to synchronize BS BUNDLE 1 HARMONY LINK V systems wth CE, thus its urgency should be considered at the highest level. . Synchronous condensers in BS enables to synchronize the systems in emergency SYNCHRONOUS BUNDLE 2 situation, so finishing those investments earlier enables to provide stability of the CONDENSERS IN BS* V region. NEW LINES CONSTRUCTION . Construction of new lines in Poland is needed to provide full capabilities of Harmony BUNDLE 3 IN POLAND V Link, and to achieve estimated in CBA benefits related with offshore wind power. EXISTING LINES . In order to synchronize BS with CEN, modernization of existing lines is needed in order BUNDLE 4 MODERNIZATION IN POLAND V to provide capability of interconnection via Harmony Link in case of emergency. New 330kV AC switchyard in Darbėnai and modernization of 330 kV OHL Klaipeda-Grobina INTERNAL INVESTMENTS - . BUNDLE 5 with new 330 kV OHL bypass should be constructed in order to connect Harmony Link to LITHUANIA V the Lithuanian transmission grid. . In order to reduce the risk that voltage will rise above acceptable limits, sufficient INTERNAL INVESTMENTS - BUNDLE 6 amount of reactive power compensation should be provided by Shunt reactors’ Circuit ESTONIA V Breakers. INTERNAL INVESTMENTS - . The upgrade of metering system in Latvia is planned to be implemented, according to BUNDLE 7 LATVIA V Baltic power system synchronization mode operation requirements. IT INVESTMENTS IN . According to requirements defined in CFI Agreement Baltic States have to develop, BUNDLE 8 BALTIC STATES V upgrade and implement IT systems to ensure safe operations after synchronization. BATTERY ENERGY STORAGE . The BESS is planned for frequency containment reserve (FCR) and automatic frequency BUNDLE 9 SYSTEM – LT AND LV V restoration reserve (aFRR) to ensure power system secure and stable operation.

TAKING INTO ACCOUNT GEOPOLITICAL CIRCUMSTANCES ALL THE INVESTMENT ITEMS INCLUDED IN PHASE II ARE URGENT, BUT SOME OF THEM HAVE HIGHER LEVEL OF URGENCY. Out of the initial Phase II Investment Request, the following items (highlighted in colour) have been approved for funding so far.

No Name of investment position CAPEX

1 Poland 535,76 1.1 Harmony link (PL) 344,00 1.2 Construction of new 400kV line Dunowo-Zydowo Kierzkowo 57,79 1.3 Construction of new 400kV line Pila Krzewina-Zydowo Kierzkowo 110,78 1.4 Modernization of 400kV OHL Krajnik-Morzyczyn 2,10 1.5 Modernization of 400kV OHL Morzyczyn-Dunowo-Slupsk-Zarnowiec 16,60 1.6 Modernization of 400kV OHL Zarnowiec-Gdansk/Gdansk Przyjazn-Gdansk Blonia 4,50 2 Lithuania 474,01 2.1 Harmony link (LT) 338,60 2.2 Construction of Darbėnai switchyard 12,00 2.3 Reconstruction of 330 kV OHL Klaipėda-Grobine (till new switchyard Darbenai from single to double circuit) including new OHL 20,60 2.4 Construction of synchronous condensers 74,00 2.5 Development and implementation of Frequency Stability Assessment System (FSAS) together with Special Protection Schemes (SPS) 3,70 2.6 Upgrading SCADA, other IT-systems and their environment needed for real-time operations and for operational planning 6,60 2.7 Upgrading control systems of HVDC Nord Balt connection 2,50 2.8 Battery Energy Storage System (BESS) for frequency regulation (10 MW each) 16,00 3 Latvia 99,50 3.1 Construction of synchronous condensers 74,00 3.2 Battery Energy Storage System (BESS) for frequency regulation 16,00 3.3 Modernisation of instrument transformers and meetering system upgrade 0,50 3.4 Modernisation of System Protection Schemes (SPS) and Under Frequency Load Shedding (UFLS) 4,00 3.5 Power system upgrade (automatics modernisation), SCADA and dispatcher trainer 5,00 4 Estonia 110,60 4.1 Construction of synchronous condensers 74,00 4.2 Upgrading SCADA, other IT-systems and their environment needed for real-time operations and for operational planning 8,10 4.3 Development and implementation of Frequency Stability Assessment System (FSAS) together with upgrades to System Protection Schemes (SPS) 3,70 4.4 Upgrading control systems of HVDC connections 1 and EstLink 2 20,5011 4.5 Schunt reactor Breaker reconstruction 4,30 Main risks and challenges for Baltic TSOs

• Extremely challenging timetabel • Market uncertainty and delays of the works related with the pandemic • Lack of production or implementation capabilities in market (HVDC cables, SC etc.) • Interdependency of the projects (delays might have cascading effect to other projects) • To guarantee that sudden desynchronisation from the Russian/Belorussian power system will not result in a black-out. • Until there is a technical possibility for emergency synchronisation with Continental Europe, it is necessary to be ready for long-term operation as a separate Baltic synchronous area.  We will disconnect the power system from Russia  By 2026 we will join the power network of Continental Europe  We will improve business opportunities for electricity producers and traders  We will ensure energy security  We will reduce the environmental footprint Thank you!