Litgrid Group Starts Year with Growing Income
“The introduction of the new LitPol Link and NordBalt power interconnections not only significantly improved the reliability of the electricity system and expanded electricity import opportunities – their operations also brings new revenues. This is a very important news – Litgrid's income is growing not only because of the tariff rate, but also due to the new opportunities that have opened up together with the new markets”, says Daivis Virbickas, CEO of the Lithuanian electricity transmission system operator Litgrid.
With the start of the operation of the new interconnections with Poland and Sweden, Litgrid’s income from transmission congestion was EUR 2.7 million. The revenues received from congestion fees can be primarily used to maintain the interconnections and to expand their capacity. This can be done by increasing the capacity of existing interconnections or expansion of the internal lines causing congestion in the interconnections, construction of new interconnections, and enhancement of the reliability of the internal network.
A nearly doubled increase in the reserve capacity purchase price established by the National Control Commission for Prices and Energy, and an increase in the reserve capacity demand due to the operation of the new interconnections with Sweden and Poland caused a EUR 10 million rise in demand for system services. There also was an increase in technological losses of the electricity network, which are directly related to the operation of the installations of the new electricity interconnections – the direct current converters, 400 kV electricity transmission line, and sea cable.
The annual return on capital of the first quarter of 2016 grew from 3.3% to 8%, while return on assets increased from 1.4% to 4% compared to the same period of 2015.
“The improving indicators of return on capital and assets come as the result of more efficient operations and decisions related to the ITT competences during few last years as well as to asset valuation. Necessity to ensure security of electricity supply, along with the new interconnections to other power systems as well as rising cyber-security challenges set the agenda for the near future. Understanding the expectations of the shareholders and the society for our activities and projects help us grow the reputation of the regional competence centre”, says Virbickas.