Generation and transmission interconnections 4 July, 2013 Virgilijus Poderys CEO of LITGRID AB

Internal electricity market Energy industry Sustainability Energy security Competitiveness Renewable energy sources Security of energy supply

R&D achievements  Grid batteries  Carbon capture systems  Offshore wind parks  Small scale nuclear power plants  Fourth generation nuclear power plants  Vehicle-to-grid  Smart grid (smart metering)  North West Europe price coupling due in November ...

Investments into R&D in utility business 4  more than 7 times lower than the EU average among other industries  more than 25 times lower than in the EU technological industries  the lowest income from innovative products among all other major industries (Institute for Prospective Technological Studies of the European Commission's Joint Research Centre)  no a utility company in the top list of the world’s most innovative companies

Why is it so? 5  Historic market design  Policy making  Regulatory environment ‘As regulated companies, TSOs have limited access to the financial benefits of technological innovation. The lack of explicit regulation means that R&D expenses are often treated as any other operating expense. In fact, the drive towards increasing cost-effectiveness tends to reduce R&D allotments on a yearly basis.’ (an extract from ENTSO-E R&D Roadmap , p. 27)

What should be done? 6  let the market play its role  fix and improve EU ETS  harmonize subsidy schemes for RES in all Europe and integrate RES into the European market  introduce SMART regulation

Nordic countries (zonal) 1 GW 2016 Baltic peak demand and cross-border capacities 4,9 vs 4,8 GW Poland (central dispatch) 0,5 GW 3 rd countries 0,6 GW Nordic countries (zonal) 0,7 GW 3 rd countries (nodal) 2 GW Baltic electricity markets in 2016 – crossroad of energy flows 7 ► Lithuania is the crossroad in Baltic-Nordic-Polish-Russian/Belarusian market

Thank you for your attention! 8