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2022.08.06 10:00

Lithuania is paying 100 times more for electricity than Sweden – why?

The cosmic rise of electricity prices in Lithuania has not peaked yet, analysts warn. With the country paying more for its needs than Sweden, what's the reason behind it?

By mid-June, the majority of Lithuanian households had to pick an independent electricity supplier, as part of an EU-mandated market liberalisation process. This was happening when electricity was trading at some 300 euros per MWh at Nord Pool, a previously unseen price that many hoped had reached its peak.

However, the price kept growing, reaching 400 euros in Lithuania, significantly more than some of the other countries in Nord Pool are paying.

“In Sweden, electricity prices are almost 100 times lower on the electricity exchange than in the Lithuanian zone. And in our zone, electricity prices are actually breaking records, reaching more than 400 euros per megawatt-hour, or about 40 cents per kilowatt-hour, which is a more usual measure for households,” says Tomas Janeliūnas, political analyst and head of the Energy Research Institute.

The discrepancy, he says, is down to differences in infrastructure. Unlike Sweden, Lithuania imports most of its electricity, but the capacity of electricity connections is limited and not enough to meet the demand.

“We have to cover the shortfall ourselves by using gas. And gas has been extremely expensive lately,” says Janeliūnas.

While the government has adopted measures to subsidise part of the electricity price for households, the rates remain significantly higher than they used to pay even a year ago.

Energy analysts now have but one piece of advice – economise, where possible.

“But if you are a single pensioner who is already economisng on electricity, possibilities for saving even more are very slim,” notes Janeliūnas. “There are no good solutions here. Unless we can expect some kind of compensation from the government again.”

So far, electricity subsidies have only been extended to households, not corporate consumers, which transfer higher energy prices to more expensive goods.

The Association of Independent Electricity Providers has proposed a way to cut electricity prices for everyone – the government should put a cap on gas price.

Vilius Juraitis, the president of the association, says some European countries have already decided to do it. Meanwhile, unless the Lithuanian government intervenes, prices for the country in Nord Pool could reach 600 euros per MWh.

The Electricity Regulatory Board says it has to evaluate the proposal – both whether it is legally possible and whether it will actually work.