Baltic Energy Market Interconnection Plan GRIP 2017

Executive Summary

The completion of the gas internal market, increase of security of supply and fostering of competition are the main priorities outlined in the European Union’s (EU) energy policy. The Regulation No. 347/2013 on guide- lines for trans-European energy infrastructure aims to accelerate the development of infrastructure projects having regional importance, so called “Projects of Common Interest” (PCI) in certain priority corridors. The second EU-wide List of PCIs was adopted by the European Commission (EC) on 18 November 2015. It consists of about 200 energy infrastructure projects, including 10 gas infrastructure projects in the BEMIP region. If implemented, these projects will significantly change the gas markets in the region, firstly by interconnecting currently separate sub-regions such as 1) Finland, 2) Estonia, Latvia and Lithuania, 3) Poland, 4) Denmark and Sweden, and integrat- ing even four Member States (Finland, Estonia, Latvia and Lithuania) into a common European gas market, and secondly by enhancing diversification of gas supply sources (access to global LNG markets and Norwegian continental shelf). Since the last BEMIP GRIP report, LNG terminals have been commissioned in Klaipėda, Lithuania, and Świnoujście, Poland. Both terminals diversify gas supplies in the Baltic Sea countries. For the countries in the region that rely, either fully or to a large extent, on a single supplier this is a major shift, bringing from one side more choices and opportunities for the gas market players, and from another side requiring adequate changes in legislation and commercial practices of gas companies to accommodate an increased market complexity. With respect to the role of the gas in the energy market, the expected paths differ within the region. Based on the demand scenarios in ENTSOG’s TYNDP 2017, demand is expected to decrease in Denmark, Estonia and Finland in both scenari- os: European Green Revolution and Blue Transition. According to European Green Revolution, gas demand is expected to remain stable or slightly decrease in all coun- tries of the BEMIP region except for Poland, where demand is expected to increase in all scenarios. Poland, with its high demand, dominates both scenarios. From 2015 to 2025, the European Green Evolution foresees an increase in demand of 3% in the region while the Blue Transition expects 33%. If the high share of Polish demand is excluded, the total demand in the region from 2015 to 2025 is expected to decrease by 11% in the European Green Evolution scenario and increase by 2% in the Blue Transition scenario. This increase is mainly driven by an expected soaring demand in the largest market of the region – Poland expects gasification of new areas in the country, substitution of coal-fired-furnaces with the ones supplied with gas and a wider use of gas power plants for electricity generation.

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BEMIP Gas Regional Investment Plan 2017