Updated national expectations for EPSO-G: priorities – green energy transition, interconnections, increasing resilience and security, and system flexibility
EPSO-G (legal entity code 302826889, registered address Laisvės pr. 10, Vilnius, Lithuania)
Following the approval of the updated letter of expectations by the Ministry of Energy, the new EPSO-G energy group of companies will have clear and even broader areas of responsibility. Key priorities include enabling the green energy transition, international interconnections, strengthening resilience and security, and ensuring the flexibility of the electricity system.
National security
The Ministry of Energy pays particular attention to the resilience of critical infrastructure. There are plans to strengthen physical and cyber infrastructure protection. In view of the military and hybrid threats in our region, there are plans to install unmanned aircraft detection systems and physical barriers, strengthen cyber security, and ensure the availability of human and material resources.
The role of EPSO-G in ensuring national security is also emphasized – the Group is already participating in the implementation of the Lithuanian-German artillery factory project in Baisogala. The Group is expected to show leadership and expand its activities and expertise in the defense industry by investing in security and defense industry projects that are important to the state and in line with national interests.
International connections and networks
One of the most important projects – the implementation of the Harmony Link electricity interconnection with Poland. Efforts are also being made to strengthen the interconnections between Lithuania and Latvia and to reach a decision on the implementation of the Baltic Hub offshore interconnection with Germany and the conditions for the project’s implementation.
There are expectations to increase international gas flows from the Klaipėda liquefied natural gas terminal towards Central Europe and Ukraine. Measures will also be taken to ensure the development of a pure hydrogen network in the Nordic and Baltic countries and the implementation of hydrogen development.
These projects are important not only for achieving greater integration with the European Union (EU) electricity and gas markets, but also for strengthening the reliability of the system and creating conditions for the development of renewable energy sources (RES), green transformation, and increasing the country’s competitiveness.
Energy green transformation and system flexibility
It is planned that by 2028, electricity generation capacity based on renewable energy sources in Lithuania will reach at least 8 GW, so the EPSO-G group must strive for leadership in integrating renewable energy generation capacity and managing energy flows. The Group will actively seek to ensure optimal transmission infrastructure development, sector integration, and flexibility of the electricity system. Dynamic transmission tariffs will also be assessed and the geological structure of Syderiai will be analysed in order to evaluate long-term energy storage possibilities.
The Ministry of Energy expects EPSO-G to actively contribute to the development of green gas infrastructure by utilizing the existing natural gas infrastructure for the development of biomethane and creating a new green hydrogen ecosystem. The Group is also expected to conduct studies to assess the possibilities of transporting hydrogen, synthetic green gas, and CO₂, submit proposals, and make decisions that will create the highest added value for Lithuania.
Financial Expectations
The Group’s adjusted average return on equity must be no less than the benchmark established by the Government. The return on investments must be at least equal to the average investment return of mature Western European economies—sufficient not only to maintain the technical condition of the infrastructure under management but also to enable system expansion and to make investments in the energy transition attractive.
The Group must maintain an investment-grade credit rating of no lower than Baa2 from Moody’s, or an equivalent rating from other credit-rating agencies. Over the medium term, the ratio of the Group’s net debt to adjusted EBITDA must not exceed 6×, and over the long term, 5×.
The Group must uphold a consistent dividend policy, and the dividend payout must be no less than the level set by the Government. EPSO‑G must strive for the highest possible dividend yield from its subsidiaries and associates, and prioritize using cash flows to finance strategic investments or projects.
Operational and Sustainability Principles
The Group is required to conduct its business in accordance with the highest standards of transparency, governance, ethics, and social responsibility. Its operations must be grounded in the best governance practices as prescribed by the laws of the Republic of Lithuania, OECD recommendations, and other leading global standards.
The Group must follow policies of sustainable development and good corporate governance. The Company is committed to achieving net-zero greenhouse gas emissions by 2050 and to contributing to the United Nations Sustainable Development Goals.
The Group must provide transparent support and humanitarian aid, with a focus on collaborating with academic institutions to promote careers in the energy sector and on delivering humanitarian assistance for the restoration of Ukraine’s devastated energy infrastructure.
The EPSO-G Group consists of the management company EPSO-G and six directly controlled subsidiaries: Amber Grid, Baltpool, Energy Cells, EPSO-G Invest, Litgrid, and Tetas. EPSO-G and the Group companies also hold shares in GET Baltic, Rheinmetall Defence Lietuva, Baltic RCC OÜ, and TSO Holding AS. The rights and obligations of the sole shareholder of EPSO-G are exercised by the Ministry of Energy.
Enclosed: Letter of expectations, Press release.
For more information
Gediminas Petrauskas, Communications Partner at EPSO-G
Tel. +370 610 63306, e-mail gediminas.petrauskas@epsog.lt
Attachments
