Energy independence is the key principle guiding Lithuania’s energy strategy. Lithuania moved with pace and determination to end its reliance on energy imports from the Russian Federation (hereafter, “Russia”). Thanks to strategic infrastructure investments, Lithuania is an important regional energy hub, and with the recently completed electricity grid synchronisation with the Continental European Synchronous Area (CESA), the Baltic states have successfully disconnected from the Russian-controlled system. While these are important achievements, Lithuania’s final energy consumption remains highly reliant on imported fossil fuels, notably in transport, and a significant share of electricity demand is met by imports. This report seeks to provide Lithuania with timely advice on how it can progress towards its energy goals, including in two focus areas: expanding the electricity system and decarbonising transport.

Lithuania outlines a long-term vision for an electrified energy system and new industrial development. The National Energy Independence Strategy (NEIS) is formulated around four strategic goals: 1) ensuring energy security, 2) achieving climate neutrality, 3) transitioning to an electricity economy with a high value-added energy industry, and 4) ensuring that energy is available to consumers in a fair and affordable way. Meeting these goals would require a broad electrification across the economy, and Lithuania aims to become a net exporter of electricity by 2030 and of energy by 2050. The strategy also includes fostering industrial development related to renewables-based hydrogen. This requires a lot of electricity, and in the NEIS main scenario, electricity demand will increase sixfold by 2050, half of which will be used for hydrogen production. However, hydrogen market development has been slower than expected, both in Lithuania and in other European markets. While the NEIS is a crucial guide for the energy policy, it should be implemented in well-defined steps, prioritising actions with clear benefits and low risks.

Electricity generation has nearly doubled in the last two years, driven by supportive policy for renewables, but the outlook is uncertain. Lithuania has introduced measures to improve permitting and subsidise investments in renewable electricity generation, which helped drive rapid growth. While this development is positive, the pace is not yet sufficient to meet its 2030 renewable electricity capacity targets of 4.5 gigawatts (GW) onshore wind, 1.4 GW offshore wind and 4.1 GW solar photovoltaic (PV) power plants. Onshore wind is being built without subsidies, but market conditions need to be monitored, and policy action taken if they become less favourable. Offshore wind progress is more uncertain, and Lithuania was not the only country to see an offshore wind auction cancelled in 2024 resulting from a lack of bidders – a sign that investors need greater policy and financial certainty. Beyond renewables, Lithuania is considering the possible role for small modular nuclear reactors (SMRs) in the longer term, which requires necessary preparations.

A rapid expansion of the electricity system will require a forward-looking approach that incentivises flexibility and proactive infrastructure buildout. Significant expansion and upgrading of transmission and distribution networks is crucial to accommodate the planned growth in renewable electricity generation and electricity demand. Lithuania has taken important steps to improve permitting processes, including designating transmission infrastructure as being of special national importance. However, the construction time for new grids remains long compared to new electricity generation or consumption. Lithuania should allow anticipatory investments in new grid capacity while shaping policy to use existing capacity more efficiently. Clearer price signals that incentivise flexibility and grid services are needed, including by expanding balancing markets and allowing dynamic grid tariffs. Another area for action is the net-metering system, which has succeeded in driving growth in solar PV investments but also reduced the incentive for providing flexibility and grid services. To enable future growth of distributed generation and self-consumption, without causing grid congestion problems, Lithuania should reform the net-metering system and replace it with a more grid-friendly approach.

Further investments are needed to improve efficiency in buildings and district heating systems. Lithuania’s Long-Term Renovation Strategy – targeting a 60% reduction in primary energy consumption in buildings by 2050 and eliminating fossil fuel use – successfully channelled European Union (EU) funding and private capital into energy efficiency renovation programmes. The renovation rate is not in line with Lithuania’s targets, however, and many people continue to live in old, inefficient buildings. To boost energy performance in buildings, Lithuania should adopt a neighbourhood approach to renovation, simplify decision making for multi-apartment buildings and look for cost-efficiencies from economies of scale. This needs to align with plans for district heating, which has already seen a rapid switch from natural gas to domestic bioenergy, resulting in lower fossil fuel imports, energy prices and emissions. To further improve efficiency and diversify the fuel mix, Lithuania plans to introduce more residual waste heat and power-to-heat solutions. For this to happen, policies must help district heating companies make the necessary investments in the network and substations, enabling modernisation and efficient operation of the system.

Transport is the largest source of emissions in Lithuania and requires focused policy interventions to drive electrification and efficiency improvements. The transport sector accounts for around 40% of total final energy consumption (TFEC), 75% of oil demand and one-third of total greenhouse gas emissions (GHG). Road transport dominates the sector, and the Lithuanian car fleet is one of the oldest and least efficient in the European Union. Electrification is the main option for replacing fossil fuels in road transport and aligns well with the expansion of renewable electricity generation. However, electric vehicle (EV) uptake in Lithuania is currently low, due to relatively high purchase prices. Electrifying transport while maintaining affordability requires a combination of targeted incentives, infrastructure investments and regulatory support. In addition to electrification, shifting transport activity to public transportation and railways can improve the overall efficiency of the transport system. Taxation should play a greater role in incentivising electrification and modal shifts, as fuel taxation in Lithuania is comparatively low and Lithuania is one of few countries in the European Union without annual ownership taxation for cars.

Lithuania should continue to prioritise regional co-operation – exchanging best practices, harmonising policy and strengthening energy supply chains. Lithuania is an active participant in Baltic and Nordic energy markets and works closely with other countries in the region on energy infrastructure projects. Further co‑ordination could increase electricity market liquidity and hydrogen offtake, inform building renovation strategies, facilitate potential nuclear development, and address the skills gap for the energy transition. More broadly, Lithuania’s energy security would benefit from diversifying sources and routes, strengthening interconnections, ensuring the collective resilience of energy infrastructure, maintaining essential reserves, and generally working closely with neighbours and partners. Implemented effectively, Lithuania’s strategies and plans can guide it towards a more secure, sustainable and prosperous energy future.