In the majority of EU Member States, only small hydro energy resources have remained unabsorbed. Meanwhile, in the new EU Member States, an average of 40 % of all hydro energy resources is used. In Lithuania, having regard to the technical–economic potential, approximately 25–35 % of these resources is used, and the situation in Poland is similar as well. However, taking due account of the absolute prohibitions to dam up the majority of rivers as applicable in Lithuania, only around 5 % is left for development.
The last decade of the 20th century saw the small-hydro boom in Lithuania. Businesspersons started to buy dams and install low-capacity hydroelectric plants. However, particularly strict environmental requirements, the prohibition to damp up rivers and competition from other energy sectors do not allow developing this energy sector further.
Currently, there are 82 small hydroelectric plants and two large hydro-electric plants (Kaunas Hydroelectric Power Plant and Kruonis Pumped Storage Hydroelectric Plant) operating in Lithuania. Small hydroelectric plants produce around 68 m kWh of electricity. Meanwhile, the annual production of electricity at the Kaunas HPP totals 330 m kWh.
In 2008–2009, the Kaunas Hydroelectric Power Plant was upgraded and became more eco-friendly: conventional oil was replaced with a harmless solution and the sealing of equipment was modernised. The other large hydroelectric plant in Lithuania, namely, the Kruonis Pumped Storage Hydroelectric Plant (Kruonis PSHP), is being upgraded as well. The planned expansion of the production capacity of the Kruonis PSHP will be implemented by commissioning construction of the fifth 225 MW hydro unit.
The fifth hydro unit of the Kruonis PSHP will be much more efficient and flexible, compared to the four old units. The main purpose of the installation of auxiliary unit No. 5 is to compensate and balance the power deficit in the energy system when there is a sudden drop in power generation, including from renewable energy sources, within the energy system and to ensure the connection of the Lithuanian electricity system with the European Continental Network for synchronous operation (preliminarily in 2020–2024).
Technology for the new unit at the Kruonis PSHP was chosen, having taken into consideration future energy market trends, particularly the development of renewable sources in the region. The new unit of the Kruonis PSHP will provide more flexibility in balancing power fluctuations from wind farms real time because power fluctuations will become more common as the countries in the region intend to increase the share of electricity generated from renewable sources. The launch of NordBalt and Litpol Link interconnections is also favourable for the development of the Kruonis PSHP. A difference in prices in the markets of neighbouring countries will allow the Kruonis PSHP to economically use its capacities in electricity trading, i.e. by converting night time electricity generation into more expensive day time electricity generation.
Furthermore, with the emergence of new production capacities, the generation of base load electricity will increase and demand for electricity reserves will grow. So, the flexible units of the Kruonis PSHP will ensure the largest share of the secondary active power reserves. In 2013, the project was included into the EU list of projects of common interest which includes regional energy infrastructure projects.