Powering the economy

In this chapter the reform processes relating to the electricity and natural gas markets are examined, beginning with the changes that occurred in the early 1990s and tracking through the first two decades of the new century. In doing so, the influence of international trends are considered, and the various benefits and problems associated with the reform process are discussed in detail. In addition to looking at the structural and ownership changes that occurred during this period, specific attention is given to the manner in which prices for monopoly assets were determined, changes in regulation of electricity pricing for retail customers and the impact of the measures used to promote renewable energy. Related to these various reforms has been the problems that have arisen from the need to ensure security of supply. Additional attention, therefore, is given to an examination of these issues, including the pros and cons of establishing a domestic gas reserve policy.

Liquefied Natural Gas Infrastructure and Prospects for the Use of LNG in the Baltic States and Finland

In the early 2010s, only 23 countries had access to the liquefied natural gas (hereinafter – LNG). Import terminals, despite attractive short-term economics, took long time to build, and rigid supply contracts made truly global use of LNG rather complicated. Concerns about geo-political risks also stunted demand growth from existing supply sources, even when new LNG export routes and sources became available. Current natural gas market is very different, both in terms of market participants and accessibility and diversity of services. In 2019, the number of LNG importing countries reached 43. Rising competition among suppliers and increasing liquidity of markets themselves created favourable conditions to diversify contract duration, size, and flexibility. In addition, development of floating storage and regasification unit (hereinafter – FSRU) technology provided LNG suppliers with a quick response option to sudden demand fluctuations in regional and local natural gas markets [1]. Moreover, LNG is one of the major options not only for bringing the natural gas to regions where its pipeline supply infrastructure is historically absent, limited or underdeveloped, but also for diversification of the natural gas supply routes and sources in regions with sufficient state of pipeline delivery possibilities. And it concerns smaller natural gas markets, like the Baltic States and Finland as well. Accordingly, prospects for use of LNG there in both mid and long-term perspective must be carefully evaluated, especially in regards to emerging bunkering business in the Baltic Sea aquatory and energy transition in Finland, replacing coal base-load generation with other, more sustainable and environmentally friendly alternatives.