The project will be financed under the Connecting Europe Facility (CEF), an instrument for funding European infrastructure networks development. The sum accounts for 67 percent of the amount applied for. A total of more than EUR 149 million has been allocated for EU energy projects. This CEF call was primarily focused on funding various studies of energy sector, while the funding of specific project implementation works has only been allocated to three projects. The LitPol Link has been recognized as the most eligible for funding project under this CEF call.
"Joint efforts helped to achieve the main goal to mitigate the impact of investments on the electricity transmission rate. Therefore the decision to fund LitPol Link project will benefit all electricity users. Cooperation of a number of different people and public authorities has been very important in ensuring funding for the LitPol Link works. The first step was made in 2013, when the project was listed under the EU Projects of Common Interest. The National Commission for Energy Control and Prices then worked together with the Agency for the Cooperation of Energy Regulators (ACER) to identify opportunities for the project's funding, while the major role in the coordination of actions was assumed by the Ministry of Energy," said Lithuanian Minister of Energy Rokas Masiulis.
The CEF framework provides funding to energy, transport and telecommunication projects listed under the EU Projects of Common Interest. In 2014, under the CEF regulations, Litgrid addressed the countries to benefit from this project - Sweden, Norway and Germany. ACER monetized the cost of reliability of the Lithuanian power system for the first time during an independent cost-benefit assessment, and concluded that the benefits brought by the LitPol Link project would exceed the investments. The CEF has been addressed for compensation of the project costs in order to mitigate the impact of investments on the electricity transmission rate.
"Looking into opportunities, preparing the application, and combining interests with other project stakeholders to benefit from it along with the national regulating authorities and their association, was a very intensive and difficult task that had to be implemented along with the development of the process regulations," said Daivis Virbickas, chairman of the Board and CEO of Litgrid.
The share of LitPol Link project costs borne by Lithuania is 108 million euros, which covers the investment into the power transmission line from Alytus to the Lithuania-Poland border and the HVDC back-to-back converter station near Alytus town in Lithuania. EUR 27.4 million of these costs will be covered by the CEF funding.
The LitPol Link project is part of the BEMIP plan on the Baltic energy market interconnection that aims at linking the power systems of the Baltic Sea region countries together and eliminating isolated energy islands in the EU by 2015. This link will connect the power systems of Lithuania and Poland for the first time in December 2015.