2023-05-05
Litgrid First Quarter Results: Continuation of Synchronisation Projects and Important Decisions for the Development of Solar and Wind Energy
At the beginning of this year, the Lithuanian electricity transmission system operator Litgrid consistently continued strategic projects for the synchronisation with the Continental Europe, introduced new rules for the development of renewable energy sources, ensured reliable electricity supply to Lithuanian consumers, provided support to the Ukrainian electricity system, including sending one of the most important transmission network devices, a 330 kV autotransformer. The company's revenue and profit grew, although the transmission rate for consumers decreased as congestion management revenues was used.
"At the beginning of the year, we successfully completed a number of tasks contributing to Lithuania's energy independence. We continued the projects of synchronisation with the Continental Europe: we signed contracts for the reconstruction of the substation in Šiauliai and the expansion of the switchboard of the substation in Bitėnai, we started the construction of a synchronous compensator in Telšiai, we announced the procurement for the installation of a frequency stability assessment system for the three Baltic countries, we prepared the project for the reconstruction of the Kruonis PSHP substation, we reached the finish line in the first stage of the construction of transmission lines in Western Lithuania – we installed new supports in 80 km sections. In the first quarter, we intensively prepared for the isolated operation test of the electrical system, which we successfully performed in April, when we operated for the first time in the so-called island mode and managed the frequency of the country's electrical system by ourselves," says Rokas Masiulis, CEO of Litgrid.
In March, after more than half a year of intensive cooperation with market participants, the National Energy Regulatory Council (VERT) approved the new legal basis for the use of electricity transmission networks prepared by Litgrid, which creates conditions for the transformation of the energy sector by renewable expansion. Litgrid has introduced to the market a new interactive map of the 110 kV and 330 kV transmission grids, which provides information on available and reserved capacities. After the new regulation came into force, 61 requests to connect solar, wind power and storage facilities were received within a few days, with a total permitted generation capacity of 7,500 MW.
"Market activity shows that we are taking big steps in the right direction. A particularly important signal is that the developers plan to install almost 800 MW of electricity storage facilities, which are given priority in the new regulation. Storage facilities are particularly important for balancing the system, as the majority of electricity generation will come from renewable energy sources in a few years. Of course, the submitted requests are not final decisions, but at the same time, this is not the limit," says R. Masiulis.
In the first quarter, Litgrid also focused on innovation. The company has signed a contract to implement virtual dynamic line rating technology, a system that measures and predicts the temperature of overhead lines, which is expected to allow more electricity to be transmitted over the same lines. Litgrid also created easier conditions for independent demand aggregators connecting electricity consumers to start operations and the first company performing such activity in Lithuania began to provide its services.
In January, Litgrid sent a 330/110/10 kV autotransformer to Ukraine, which will help ensure electricity supply as Russia is targeting Ukraine's energy infrastructure. Another such autotransformer is planned to be sent, and support is also provided with other means.
Reliability of supply
Compared to the first quarter of last year, the amount of transmitted energy decreased by 9 percent: in 2023 in January–March, the electricity transferred for the needs of the country amounted to 2.627 TWh, at the same time in 2022 the transferred amount was 2.886 TWh.
Compared to the beginning of 2022, Litgrid achieved better network reliability indicators. During the first 3 months of 2023, the Average Interruption Time (AIT) was 0.006 min. (in the first quarter of 2022 – 0.083 min.), and the Energy Not Supplied (ENS) was 0.195 MWh (in the first quarter of 2022 – 2.956 MWh). The regulator has determined that AIT should not exceed 0.934 min and ENS should not exceed 27.251 MWh throughout the year.
The total availability of interconnections with Sweden (NordBalt) and Poland (LitPol Link) was 99.77 percent and 99.97 percent in the first quarter, respectively.
Financial results
In the first quarter of 2023, company revenue reached €86.8 million. Compared to the same period last year, it was 28.1 percent higher. Income from electricity transmission increased 2.6 times to €53.1 million due to approved transmission prices for 2023, for which the forecasted price of electricity and costs for technological needs were more than 5 times higher than in 2022. Nevertheless, the transmission rate for consumers decreased by 4.3 percent, as €35.6 million of congestion management revenues were used to reduce the rate in the first quarter.
Income from additional services decreased by 62 percent to €7.4 million euros. The main reason for the decrease is that the regulator set a 59 percent lower rate for additional services. Imbalance and balancing electricity income increased by 14.8 percent up to €24.3 million, but the system balancing service provided by Litgrid is always of zero profitability, i.e. an increase or decrease in income does not affect the result, this income only covers the costs actually incurred.
In the first quarter the earnings before interest, taxes, depreciation, and amortization (EBITDA) were €19.9 million and net profit was €12.9 million. In comparison, in 2022 first quarter EBITDA amounted to €3.4 million and the net loss was €2 million. The causes for profit increase were €32.8 million in higher electricity transmission income and €6 million lower compensation costs for technological losses in the transmission network because of lower electricity prices. €21.6 million negative impact on the change in profit indicators came from the worse result of additional services revenue and €1.7 million – from higher operating costs.
Litgrid Investments for the three months of 2023 amounted to €11.2 million, of which 61 percent intended for the implementation of strategic and state-important electricity projects, 39 percent – for the reconstruction and development of the transmission network and operational support.
Congestion management revenues in the first 3 months was €21.1 million and, compared to the beginning of last year, was 36 percent lower. These revenues are not accounted as income and do not directly determine the company's performance, their use is regulated by the Regulation of the European Parliament and the Council no. 2019/943 and the methodology approved by the Agency for the Cooperation of Energy Regulatory Authorities of the European Union (ACER). Congestion management revenues are mainly used for partial financing of the company's investments that increase the capacity of inter-system connections.
