A study for Lithuanian Power Sector Scenario Building for the Evolution of Lithuanian Power Sector for 2020 - 2050 Litgrid AB Date: 2020-12-16 REPORT: 2020-0430 DNV GL Headquarters, Veritasveien 1, P.O.Box 300, 1322 Høvik, Norway. Tel: +47 67 57 99 00. www.dnvgl.com Report title: Scenario Building for the Evolution of Lithuanian Power Sector for 2020-2050 Client: Litgrid AB Contact person: Vaida Tamašauskaitė Date: 2020-12-16 Org. unit: Energy Markets and Technology Project no: 10208029 Report no: 2020-0430 Performed by: Verified by: Approved by: Gudmund Bartnes Erik Dugstad Ingrid Bye Løken Jørgen Bjørndalen Daniel Brenden Frida Berglund Copyright © DNV GL 2020. All rights reserved. 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DNV GL Energy Energy Markets and Technology P.O.Box 300 1322 Høvik Norway Tel: +47 67 57 99 00 DNV GL - Scenario Building for the Evolution of Lithuanian Power Sector for 2020-2050 2 Table of contents 1 EXECUTIVE SUMMARY ..................................................................................................... 7 2 INTRODUCTION ............................................................................................................ 10 3 THE ENERGY POLICIES SHAPING OUR FUTURE ................................................................. 12 3.1 Introduction 12 3.2 Clean Electricity To Drive Increasing Global Decarbonisation Momentum 12 3.3 EU To Spearhead Global Decarbonisation Efforts 16 3.4 Lithuania: Energy Independence And Decarbonisation To Drive Transition 18 3.5 From policy to modelling: Key assumptions 24 3.6 Developing three scenarios for power generation 25 4 LITHUANIAN ELECTRICITY SCENARIOS ........................................................................... 27 4.1 Introduction 27 4.2 Cross-scenario assumptions 29 4.3 National Trends Scenario 37 4.4 Centralized Energy Scenario 41 4.5 Distributed Energy Scenario 45 5 POWER GENERATION MODELLING RESULTS .................................................................... 49 5.1 Introduction 49 5.2 Key Takeaways 49 5.3 National Trends Results 52 5.4 Centralised Energy Results 55 5.5 Distributed Energy Results 60 5.6 Peak demand 64 6 FLEXIBILITY MARKET BACKGROUND: THE IMPORTANCE OF FLEXIBILITY ............................. 66 6.1 Introduction 66 6.2 Evolving Flexibility Solutions in the Power Market 66 6.3 The Balancing Market 69 6.4 Flexibility Market Background: Defining Relevant Flexibility Solutions 70 7 SYSTEM ADEQUACY ASSESSMENT: INTRODUCING THREE LEVELS OF FLEXIBILITY TO THE LITHUANIAN POWER MARKET .................................................................................. 78 7.1 Introduction 78 7.2 Outlining the challenges in a Low Flexibility Case 80 7.3 Outlining challenges and solutions in a medium flexibility case 84 7.4 Identifying surplus week solutions in a high flexibility case 91 7.5 System adequacy performance by scenario 94 8 IDENTIFICATION AND RECOMMENDATIONS FOR ACTIONS AND MEASURES ....................... 102 8.1 Wind Power Business Case 102 8.2 Power-To-Gas Business Case 103 8.3 Battery Storage Business Case 112 8.4 Demand-Side Flexibility Business Case 116 8.5 Summary of flexibility business cases: Technology trilemma 117 DNV GL - Scenario Building for the Evolution of Lithuanian Power Sector for 2020-2050 3 9 ROADMAP TO 2050 ..................................................................................................... 120 9.1 Introduction 120 9.2 2020-2025: Supporting the ramp-up towards de-synchronisation 123 9.3 2025-2030: Delivering on EU targets and facilitating NENS implementation 125 9.4 2030-2050: Delivering on the NENS 128 10 CONCLUSIONS ........................................................................................................... 131 10.1 Meeting NENS targets 131 10.2 The importance of flexibility to facilitating the energy transition 131 10.3 Defining a roadmap that can support NENS target delivery 132 11 REFERENCES .............................................................................................................. 134 APPENDIX 1: ANALYSIS TOOL AND MODELLING METHODOLOGY ................................................... 136 Main sources for scenario development 137 List of figures Figure 1: World Final Energy Demand By Carrier ........................................................................... 13 Figure 2: World electricity generation by power station type ........................................................... 14 Figure 3: Flexibility issues by timescale ........................................................................................ 15 Figure 4: World utility-scale storage capacity ................................................................................ 16 Figure 5: Overview Over Green Deal Aims .................................................................................... 17 Figure 6: Installed generation capacity in Lithuania in 2020, MW ..................................................... 19 Figure 7: Strategic Aims Under NENS ........................................................................................... 20 Figure 8: Power Consumption, Generation and Net Imports over 2019 ............................................. 21 Figure 9: Power generation over 2019 by technology % share of total .............................................. 21 Figure 10: Power generation by renewable energy source under NENS vision, TWh ............................ 23 Figure 11: TYNDP Development Scenarios .................................................................................... 26 Figure 12: Installed Capacities By DNV GL Scenario, 2030, GW ....................................................... 28 Figure 13: Power Generating Capacity By Technology By Scenario, 2050 .......................................... 29 Figure 14: Lithuanian electricity import and export capacity ............................................................ 30 Figure 15: Electricity Forecast Scenario By Sector .......................................................................... 31 Figure 16: Scenario for electricity demand from electric vehicles in Lithuania .................................... 34 Figure 17: Commodity prices in DNV GL’s power price model .......................................................... 35 Figure 18: Installed Capacity Under National Trends Scenario ......................................................... 37 Figure 19: Net Change By Technology By Year, GW ....................................................................... 38 Figure 20: Technology Share Of Total Capacity In 2040 .................................................................. 39 Figure 21: Installed Capacity Under Centralized Energy Scenario, GW .............................................. 41 Figure 22: Net Capacity Change By Technology By Year, GW........................................................... 42 Figure 23: Technology Share Of Total Capacity In 2040 .................................................................. 43 Figure 24: Net Capacity Growth By Technology By Year, GW ........................................................... 45 Figure 25: Net Capacity Change By Technology By Year, GW........................................................... 46 Figure 26: Technology Share Of Total Capacity In 2040 .................................................................. 47 Figure 27: National Trends Power Generation By Year, TWh ............................................................ 53 Figure 28: Centralised Energy Power Generation by Year, TWh ........................................................ 57 Figure 29: Distributed Energy Power Generation by Year, TWh ........................................................ 62 Figure 30: Lithuania peak load results compared with ENTSO-E scenarios ......................................... 65 Figure 31: Sources of variability and flexibility in the power system, based on (DNV GL, 2017) ........... 67 Figure 32: Time-scale of flexibility services, based on (DNV GL, 2017) ............................................. 68 Figure 33: EV electricity demand projection (left) and capacity profile (right) .................................... 72 Figure 34: Load curtailment versus load shifting ............................................................................ 73 Figure 35: Lithuania import and export capacity ............................................................................ 75 Figure: 36 Power to gas capacity scenario ..................................................................................... 76 Figure 37: Average annual power price and wind power capture price by flexibility case ..................... 79 Figure 38: Electricity price duration curves in the National Trends Scenario - Low flex case ................. 80 DNV GL - Scenario Building for the Evolution of Lithuanian Power Sector for 2020-2050 4 Figure 39: Low flex case, production, load and price during energy surplus week in 2050 ................... 82 Figure 40: Low Flex case - Power price in an energy deficit week