Experts answer whether wind farms can “inflate” high electricity prices

The Nord Pool electricity price trend is showing a lot of hope for renewable energy: as the winds pick up in Scandinavia, there is an immediate positive effect on the price of electricity on the exchange – the more renewable energy is produced, the more the price of electricity falls. For Lithuania to be able to supply itself with cheaper electricity, it needs not only more and more powerful wind farms, but also the right conditions for them.

According to Vytenis Koryzna, CEO of the independent energy supplier Enefit, increasing Lithuania’s wind energy capacity would lead to a more favourable electricity price.

“Currently, the price of electricity generated by fossil fuel power plants, such as gas, coal or gas shale, is almost €200 per megawatt-hour (MWh), while electricity generated by wind turbines is several times cheaper. With very high wind generation, the cost of electricity can be around €50 per MWh, and even approach 0 at night when electricity consumption is minimal. The more wind power we have, the more the price of electricity drops”, comments Mr Koryzna.

However, the price of electricity on the exchange, which depends on wind power capacity, is also sensitive to the wind itself: when wind farms produce less electricity due to a lack of wind, the price of electricity immediately reverts back to traditional fossil fuel power plants, and the price of electricity starts to rise again.

“There is a paradoxical situation: the more wind power we have, the more the scissors between the maximum and minimum electricity prices increase. For this reason, wind energy cannot be the only guarantee of a reduction in the price of electricity,” says Mr Koryzna.

Surplus energy needs to be accumulated

Balancing and storage capacities, which need to be developed in parallel with the overall development of wind energy in the country, could ensure a more stable electricity price on the exchange, renewable energy experts believe.

“With the right balancing and storage mechanisms in place, we could achieve 100% self-sufficiency in renewable energy, allowing us to use the surplus electricity generated by these solutions when renewable energy capacity is too small to meet the country’s demand. This would give us a much more stable electricity price on the electricity exchange,” says Linas Sabaliauskas, who currently works as a consultant for renewable energy company Enefit Green in Lithuania.

He said that Litgrid, the Lithuanian electricity transmission system operator, is currently testing and installing its first electricity storage devices. It is hoped that commercial entities will be able to contribute to the storage capacity at a later stage, allowing private capital to accelerate investment in the development of storage in the country.

„Verslas yra pasiruošęs investuoti į atsinaujinančios energetikos plėtrą. Jei skaičiuotume, kiek šiuo metu „Litgrid“ turi prašymų plėtoti atsinaujinančios energetikos projektus, jų vertė siektų 4 mlrd. eurų, o jau leidimus gavusių projektų – 1,5 mlrd. eurų. Vystytojai labiausiai laukia žadamų palengvinimų ir procesų pagreitinimo, nes šiuo metu vien projektinė vėjo elektrinių parko vystymo stadija užtrunka 2-3 metus“, – sako V. Koryzna.

Lithuania can outperform the EU average

The installed capacity of wind farms currently operating in Lithuania is about 790 megawatts (MW). According to the Lithuanian Wind Energy Association (LVEA), the total combined capacity of all wind farms under development in the country is more than 2.7 gigawatts (GW), with at least a third of them expected to be generating electricity by 2024.

“If the wind farm developers manage to realise all their plans, this capacity could generate around 9 terawatt hours (TWh) of electricity per year for Lithuania, which would meet around 60% of the country’s electricity consumption. And we would have a better price for electricity. For example, in October we saw a significant drop in the price of electricity, and one of the reasons for this is the higher generation of electricity from wind,” said Edgaras Maladauskas, LVEA’s interim director.

According to him, a major breakthrough in wind energy is expected from the wind farms that are currently under development: the 500 MW European Energy parks in Rokiškis, Anykščiai and Raseiniai, the 400 MW Windfarm Akmenė One park in Akmenė, the 300 MW LT Energija park in Pagėgiiai, and the 300 MW E wind park in Kelme.

“Lithuania needs at least 50 parks with a total capacity of 3,450 MW to cover the country’s electricity demand on a low-wind day. With more wind power capacity, we would be able to meet not only our domestic needs, but also contribute to reducing the price of electricity both in Lithuania and in neighbouring countries. Just as Lithuania currently buys hydroelectric power from Latvia, we could offer wind power to Latvia,” says Mr Maladauskas.

Last year, wind power generated only 10% of the country’s electricity demand, not far behind the European Union (EU) average of 14%.

“It is very likely that we will be well ahead of the EU average in 2023, as the capacity of the wind farms currently under construction by Enefit Green alone already exceeds that of the existing ones in the country, with a further 600 MW of wind farms due to come on stream by the end of next year, or at the latest by early 2024. At this rate, wind energy could generate 20% of the country’s demand as early as next year,” said Sabaliauskas.

The interlocutors agree that the development of wind energy in Lithuania requires the willingness of all stakeholders to pursue the common strategic goal of energy independence.

“Strengthening the country’s renewable energy position requires not only powerful wind farms and private investment, but also the contribution of public authorities and Litgrid in increasing grid capacity and facilitating permitting for new wind farms. Otherwise, we will have big ambitions of developers and opportunities that are completely disproportionate to them”, says Mr Maladauskas.