Why Latvia’s first grid-scale battery is a breakthrough for the Baltics

**Pamela Largue** (0:10)
The Baltic region might be small on the map, but it's increasingly becoming a hotspot for energy innovation. Latvia, Lithuania and Estonia are modernizing their grids, digitizing their energy systems, and setting an example of how smaller nations can lead the energy transition. As renewables become a larger part of the generation mix, the grid becomes more volatile, and that's where battery energy storage systems come into play. They act as fast response stabilizers, smoothing out fluctuations and ensuring a reliable supply of electricity. To unpack this topic, I'm joined by Michael Hierholzer, VP of Strategy, Business Development and Product Management, and Armin Fürderer, VP of Sustainable Customer Solutions at Rolls-Royce Power Systems. This episode is brought to you in partnership with Rolls-Royce Power Systems, a German company at the forefront of innovation for more than a hundred years, helping to power, protect and connect the modern world. I'm Pamela Largue, and this is the Energy Transitions Podcast.
Armin, Michael, thank you so much for joining me today. We're talking about battery storage in Latvia, which I think is quite exciting because we seldom cover the Baltics. So I'm really keen to get into the details of this. But my first question, I think, is more broad, and that is in terms of the Baltic landscape and the opportunities that are coming about because of the energy transition. Michael, would you like to tell us more?

**Michael Hierholzer** (1:50)
Yeah, surely. I mean, it's a very exciting market for us to currently be in. I believe there are mainly three main drivers that we see in the market that are making this so interesting. One, of course, is the energy mix that is changing quite quickly and quite different. So you have Latvia on the one hand, who relies heavily on hydro and biomass. Then you have Lithuania, who has recently scaled wind at an oppressive speed, Estonia moving away from the oil shale. So all of those developments are, of course, very great for decarbonization. But it also means, of course, that the system has less inertia and more variability with it. Then you have, of course, the market dynamics that are quite unique. You have very extreme price fluctuations. So sometimes you even have negative pricing when strong renewables output coincides and with imports from the Nordics. You have interconnections to the Western Europe that are limited. Of course, there isn't too big of an industrial baseload in the region. So the grid can't naturally balance itself in that way. Then, of course, one of the most important and most recent topics, the Brell disconnect or the European synchronization. So as we know, after February 9th last year, the Baltics pulled the plug on the old Soviet Union system. So with that now, the Baltics have fully synchronized with continental Europe grid. That was, of course, long term in the making, I believe since they joined the EU in 2000-2004.
And of course, a huge step forward into energy security and independence. But that means on the other hand, of course, also that now the region itself carries the full responsibility for its own grid stability. So, I would sum it up as really fast renewable growth, volatile markets, and then, of course, the full post-Brell responsibility that turned the Baltics now into really one of Europe's most demanding power systems, but also one that's highly attractive for battery energy storage solutions like ours.

**Pamela Largue** (3:49)
Yes, I'd like to touch on that actually just a little bit further. You know, you mentioned now the disconnection from the Soviet grid. What impact has this had in terms of maintaining the 50 Hertz frequency?

**Michael Hierholzer** (4:01)
I mean, the impact was quite significant. With the disconnect, the grid stability, or they turned the stability from external dependency to primary local responsibility. So once the Baltics left the Brell ring, the grid had less synchronized inertia, so to say, which means that frequency deviations now happen much faster. And as we know, in a relative small power systems or in an environment like the Baltics, now even minor disruptions can quickly become system relevant. And as a result of those fluctuations, they need to be managed locally and very quickly using local assets. And this is exactly where then the flexibility of fast response technologies like battery storage systems come into play and play an essential and critical infrastructure role. I think here it's important to note, though, that battery solutions often, or in general, do not replace generation. They are more so there to stabilize the renewables heavy system post-Brell. And that is then done whether through frequency containment reserves, so stabilizing the frequency deviations in real time, frequency restoration reserves, that happens then within minutes, or also reactive power or voltage support that's becoming increasingly important in the region.