The energy markets of Estonia, Latvia, and Lithuania still lack adequate electricity connections, both between themselves and to other parts of the EU. However, the situation is improving. Currently the Estlink 1 and 2 connections between Estonia and Finland, the LitPol Link connection between Lithuania and Poland and the Nordbalt connection between Sweden and Lithuania have raised the interconnectivity of the Baltic States with the EU electricity market to approximately 22%. More integration improves competition and helps bring more affordable energy prices for consumers.
The Baltic Energy Market Interconnection Plan (BEMIP), under which the LitPol Link and Nordbalt were planned, aims to further integrate the Baltic States' energy market by building more infrastructure.
BEMIP projects have been part of the European Economic Recovery Plan (EERP) which means that they have been eligible for over half a billion euros in funding. Projects can also be funded through the European Regional Development Fund, the EU's Cohesion Fund, and, as projects of common interest, through the Connecting Europe Facility.
The BEMIP forms part of the overall 'EU Strategy for the Baltic Sea Region'.
Electricity market integration
Under the BEMIP, the Nordic electricity market model (NORDEL) will be extended to the three Baltic States. The aim is to remove barriers to competition in the countries and bring them into conformity with EU rules. Actions include:
- removing cross-border restrictions to the trade of energy
- reducing electricity congestion across borders and establishing common energy reserves
- removing regulated energy tariffs
- fully opening the retail market and establishing a common power exchange in the Nordic and Baltic areas.
Electricity interconnections and generation
To properly integrate the Baltic States into the EU's internal energy market, new electricity infrastructure projects are required in the Nordic countries, Poland, Germany, and the three Baltic states themselves. Under the BEMIP, these projects consist of three sets:
- The Nordic Master Plan which covers those projects linking Nordic countries together such as the Fenno – Skan II connection linking Finland and Sweden, and the Great Belt project in Denmark.
- Projects linking the Baltic area with the Nordic countries, as well as Poland. These include projects such as NordBalt linking Sweden and Lithuania, and LitPol linking Poland and Lithuania. They also include projects to strengthen the electricity grid between the three Baltic States themselves.
- Interconnections between Poland and Germany to help deal with loop flows caused by increased wind generation in Northern Germany. Loop flows occur when the electricity produced in one country is diverted to a different part of its territory through a neighbouring country's' grid.
Gas internal market and infrastructure
BEMIP projects concerning gas include:
- new interconnections such as the BalticConnector pipeline between Estonia and Finland
- the implementation of reverse flows such as through the proposed Amber PolLit pipeline between Poland and Lithuania
- LNG facilities in Estonia and Latvia
- gas storage facilities in Latvia.