On 8 February 2025, the Baltic States disconnected themselves from the Russian electricity system, and on 9 February 2025, Estonia, Latvia and Lithuania synchronised their electricity systems with that of continental Europe. It has taken decades of effort for the Baltic countries to synchronise their system with the European electricity system. The Competition Authority as an energy market regulator has also played a role in the preparatory process.
Synchronisation with Europe cost the Baltic countries and Poland approximately 1.6 billion euros (investments by transmission system operators in the electricity grid), of which Estonia’s share was 298 million euros. The European Union funded the projects to a maximum of 75% from the Connecting Europe Facility (CEF).
The remaining 25% of the required investments in Estonia are covered by the congestion charge, ie synchronisation investments were not included in the transmission service network charges. Investments for synchronisation were classified as so-called projects of common interest. Projects of common interest belong to the sphere of the European public interest, which have a cross-border impact and which contribute to the development of the joint European energy system, boost competition and help to ensure energy security in Europe. According to European Union regulations, the Competition Authority, together with the authorities of Latvia, Lithuania and Poland, has had to review and analyse the investment applications necessary for synchronisation for cross-border cost sharing and give its approval so that transmission system operators can apply for European Union support.
To improve the functioning of the electricity market, the Competition Authority, together with energy market regulators from neighbouring countries, has processed the terms and conditions and methodologies of transmission system operators and participated in drafting them. These documents are an important basis for operating in the Continental Europe Synchronous Area. The Competition Authority, together with the Latvian and Lithuanian regulatory authorities and the Baltic transmission system operators, makes a significant contribution by helping to create and launch a new frequency reserve market, which will play a central role in ensuring the stability and security of supply of the electricity system after the synchronisation of the Baltic electricity systems with the Continental Europe Synchronous Area. An important part of the launch of the frequency reserve market is also the Competition Authority’s decision that the costs of frequency reserves should be distributed among market participants at national level.