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Increasing power generation in the Baltics

By Ina Coretchi

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Increasing power generation in the Baltics

An EBRD loan will help Lithuania and Latvia create a new power generation facility to compensate for the loss of an important nuclear power supply and to lessen the reliance on electricity imports.

Finding new sources of energy to satisfy the needs of both the businesses and the people of the region has become an overriding strategic priority after the closure of the Ignalina Nuclear Power Plant in Lithuania late last year dramatically slashed the volume of electricity produced in the Baltics.

The Bank's intervention has taken on an important new dimension at a time when investors and financiers are shying away from long-term investments, particularly in capital-intensive projects such as power plants.

"These projects represent an excellent example of the Bank's crisis response in the region and its commitment to providing crucial support for strategically important projects in the current challenging market," says Nandita Parshad, EBRD Director of the Power and Energy team.

EBRD loans for Lithuania and Latvia

With the support of a €71-million loan from the EBRD, the majority state-owned power company AB Lietuvos Elektrine will build a new state-of-the-art combined cycle gas turbine (CCGT) unit on its site close to the city of Elektrenai, 50 km west of Vilnius. The new unit will replace two of the plant's eight outdated facilities, which were built in the 1960s. It will also add an extra 150 MW to LPP's total capacity, which currently stands at 1,800 MW.

Lietuvos Elektrine is set to become the main electricity provider in the country. It will gradually increase its output from the current 5 per cent to 60 per cent of the Lithuanian economy's electricity needs.

In Latvia the EBRD is financing the construction of a new power plant with a €150 million syndicated loan to Latvenergo, the state-owned company which produces 95 per cent of Lativa's power capacity. The loan will be used to finalise the rehabilitation of Latvenergo's second combined heat and power facility, Riga CHP-2. With the Bank's support, Latvenergo will build the second CCGT unit at Riga CHP-2, which will replace the outdated conventional gas-fired units. The first CCGT facility was successfully commissioned by Latvenergo in 2008.

Continuous development

The construction of the new modern power plants will promote the continuous development of the energy sector in Baltics, facilitating its further deregulation and the entrance of new players onto the market. In addition, the project represents a significant leap forward in terms of environmental standards and energy efficiency.

"We are not only helping Lithuania and Latvia to address the current deficit in power capacity and to modernise its power plants," says operation leader Julien Mauduit from the EBRD Power and Energy team. "Ignalina's shutdown has created strong incentives for establishing an integrated power system in the Baltics.

"Through these projects the EBRD is helping the Baltic states to lay the foundation for the development of the Common Baltic Electricity Market, which can then be further interconnected to European networks."

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