Top sectors that have potential in the Baltics:

Energy sector
• Water sector
Creative industries sector


Energy

Baltic Energy Market

The Baltic (Lithuanian, Latvian and Estonian) energy market is interlinked, but is still dependent on Russia as its major supplier. However, the implementation of several important projects (such as Estlink 1 and Estlink 2) provides the option of importing some electricity from Scandinavia. The opening of the Lithuania’s LNG terminal since December, 2014 means that the Baltic countries are also able to import natural gas.

Since the Baltic nations joined the EU several projects have been implemented to end the isolation of the region's markets. Many of these are projects of common interest (PCI) adopted by the European Commission. The main projects are still under implementation with their completion foreseen in 2015-2019.

The main aim of the Baltic countries is to create an energy market in the region with multiple choices, a secure supply and transparent prices.


Energy Sector in Estonia

The Estonian energy sector is based on a wide use of the domestic energy source – shale oil - which offers  the country considerable strategic independence. In  the last 10 years the domestic share of  primary energy resources has been about 65-70 % and, a third has been imported. The most important imported primary energy resources are natural gas from Russia and engine fuels.

In order to diversify the region's natural gas supply, the construction of an LNG terminal is foreseen in Estonia and Finland.

There has been intense competition between Finland and Estonia about the location of the new LNG terminal.  In November 2014, the two countries finally reached an agreement to build two terminals, connected by a pipeline across the Gulf of Finland by 2019.

Furthermore an upgrade is foreseen to the electricity connection between Estonia and Latvia. 


Energy Sector in Latvia

During the creation of a unified energy system (the former Soviet Union's system), base-load power plants were historically constructed in Estonia (shale power plants) and Lithuania (the Ignalina nuclear power plant, which is now closed for decommissioning). Most of Latvia’s electricity output is generated at the country's three largest hydropower plants. The Daugava river hydropower plants were designed for peak, half-peak and emergency modes in which it is possible to relatively quickly and easily implement a  sudden increase or decrease in capacity in line with  necessity. Latvia has the EU's largest share of renewable energy in its energy mix. Furthermore, the biomass sector has very good potential for the production and processing of biomass into biofuels.

Latvia has the only functioning underground gas storage facility in the Baltic states, which ensures the stability of the regional natural gas supply. However, because Latvia postponed implementation of the Third Energy package until 2017, use of the Incukalns underground storage facility by other companies is rather limited.

Several projects are foreseen to for upgrading Latvia's energy system. The major ones are the   modernisation and expansion of Incukalns Underground Gas Storage Facility and the upgrading of gas and electricity interconnections between Latvia and Lithuania.


Energy Sector in Lithuania

Because of closure of the Ignalina nuclear power plant in 2009 Lithuania became heavily dependent on natural gas and electricity imports from  Russia. To diversify the energy supply, several strategic projects will be implemented:

-      The LNG terminal in Klaipeda was completed in December 2014. Lithuania was no longer dependent on a single external gas supplier. In the future Estonia and Latvia would be able to use the LNG terminal as an opportunity to diversify supplies.

-      The Gas Interconnection Poland-Lithuania (GIPL) project is due for completion in 2019. The GIPL will ensure diversification of the gas supply to Lithuania and enable integration of the Baltic states into the EU gas market.

-       Completion of the Lit-Pol Link – electricity interconnection between Lithuania and Poland is expected at the end of 2015. The new power interconnection will allow Lithuania and other Baltic states to integrate the electricity network in to the European Continental Network.

-       The start of operations of the electricity interconnection with Sweden's NordBalt is scheduled for December 2015. NordBalt will be an alternative channel for electricity imports and exports not only for Lithuania, but also for Latvia and Estonia.

-       Shale gas - an open public tender for the exploration and extraction of unconventional gas in Western Lithuania will be announced soon.

-      A new nuclear power station (a regional nuclear power plant in Lithuania)

In 2012, the Lithuanian government and Japan's Hitachi initiated a concession agreement for the new nuclear plant to be built with the  participation of strategic investor Hitachi-GE Nuclear Energy and regional partners of Latvian and Estonian energy companies.  It is planned that investment in the project will reach up to € 5 billion. According to the model, investors in the Visaginas NPP will receive electricity at cost price in proportion to the amount of shares they have. However this project is still in a very early stage.


Challenges and Opportunities for Dutch companies in the Baltics

Baltic countries are implementing many strategic projects to upgrade or create new energy infrastructure. Many of the projects will be realised via public procurement and could be of interest for Dutch energy and industrial supply companies.

Lithuania has completed an LNG terminal that will be able to serve all three Baltic countries. With regard  to this, there are potential opportunities for Dutch companies in midstream, downstream and small-scale LNG activities.

Because Lithuania is trying to exploit opportunities presented by unconventional gas sources, the tender for shale gas exploration will be announced soon and would provide an opportunity for Dutch gas and exploration companies.

Furthermore, all three Baltic countries are using EU funds for 2014 -2020 designated for the shift towards a low carbon economy in all sectors, including sustainable energy and energy infrastructure. These EU-funded projects have huge potential for Dutch companies.

 

Creative Industries

During the last decade, creative industries have gained more and more attention in the Baltic states. The governments in all three countries have prioritised the sector and foresee investments in the future. In Estonia, €20 million will be invested in developing the creative industry sector in 2014-2020. The main focus is on improving  of the long-term competitiveness of businesses.

The sector is currently still small-scale in all the Baltic states and is dominated by a large number of tiny businesses. At the same time, the domestic market is limited and sustainability of the creative industries sector depends on the ability to export. The sector's main challenge for the future is to improve its ability to internationalise, which will demand more cooperation between companies in the creative industries and also with other sectors.  

In total, the creative industries account for 2.4 % of GDP in Estonia, 1.8% in Latvia and 1.7% in Lithuania (compared to 2.7% in the Netherlands).


Creative Industries in Estonia

To stimulate the further coordination and development of the creative industries development centres have been set-up in all the main subsectors: the Estonian Centre of Architecture, Estonian Design Centre, Estonian Music Development Centre, Estonian Theatre Agency, Estonian Contemporary Art Development Centre, and Estonian Literature Development Centre. These centres offer consultation and training as well as promoting their sectors both in Estonia and internationally.

The three most developed subsectors that also have the greatest potential for international cooperation are architecture, music, and design, including fashion. Gaming is a sector that has a lot of untapped potential, considering the capacity of the Estonian IT-sector.


Creative Industries in Lithuania

The creative industries form a priority branch of the Lithuanian economy and have growing implications for the country's economy. The sector has a competitive advantage in the international market, through its abundance of highly qualified professionals, significant creative potential, relatively low prices and favourable government policy for the creative industries.

Architecture

The main trends in the development of Lithuanian architecture as a creative industry are: dynamic offices that illustrate the rise in quality of the country's architecture and its growing potential, with explorations of public space and an understanding of architecture as a field of culture.

The Baltic countries are bright examples of potential countries for Dutch architects,  who together with local partners won a tender to design a state-of-the-art swimming pool in Lithuania.

Gaming

As in the Netherlands, the Lithuanian sector for computer games development is vibrant. Despite the fact the country’s game development industry was very small, but in recent years there has been a substantial increase in small companies in this sector.

In 2014, the country’s game development industry experienced a boom in software design, development and testing. This was closely linked to the arrival of a number of new investors in the computer games sector. Several top game-development companies opened offices for outsourcing in Lithuania


Possible Fields of Future Cooperation between the Netherlands and Baltic states

When it comes to the creative industries, the Netherlands has a lot of experience and could therefore be an interesting partner for cooperation with the Baltics. The most logical fields for collaboration would be areas in which both the Baltics and the Netherlands are most developed, namely: architecture, design, fashion, and gaming.

One problem that the creative industries face in the Baltics is a lack of business skills such as marketing, project management, and exports. Linking the potential of creative industries to the rest of the economy is still in its early stages and this sector's creativity has not been used to find solutions to the ‘grand challenges’ in our societies. At the same time, these are areas in which the Netherlands is quite advanced, with interest in the Dutch experience definitely noticeable in the Baltics.