Litgrid AB

Business and Financial Review • Jan 14, 2025

Strategy Table of contents

1	Litgrid at a glance	5 – 7
2	Our strategic context	8 – 11
3	Mission and commitments	12 – 16
4	Strategic framework & strategic pursuits	17 – 24
5	Key enablers	25 – 27
6	Strategic roadmap and KPIs	28 – 30
7	Financial outlook	31 – 34
8	Value for Lithuania	34 – 35

Strategy Legal disclaimer

This document aims to establish the long-term (until 2035) priorities, objectives, measures of Litgrid AB, Lithuanian electricity transmission system operator (hereinafter referred to as "Litgrid" or the "Company"), to determine the strategic performance indicators based on which the Company will assess its operational efficiency in the short and longterm.

The strategic document is drafted in view of the strategic commitments to stakeholders: developing future-ready infrastructure, ensuring security and reliability, being reliable strategic partners and the fourth commitment which combines measures to enable the implementation of the strategy – creating conditions for sustainable and efficient progress. These elements are key to achieving strategic and financial targets set by the shareholder.

The document lays down the targets and indicators that are expected to be achieved in the future. The disclosed information is based on Litgrid's current knowledge, expectations and assumptions regarding future events and tendencies that may affect the Company's operations.

The forward-looking targets comprise information about Litgrid's projected performance, business strategies, international relations, competitive environment, operating conditions, potential growth opportunities, impact of future regulation, competitive outcome, etc.

Although the Company expects that the presented valuations and forecasts are substantiated, however there are risks, uncertainties and other significant factors that are beyond its control. This may cause a material difference between the actual and projected performance or achievements.

The implementation of the objectives laid down in this document may be affected by changes in legal requirements, results of the cost and benefit studies and other related analyses. Investment scopes and financial forecasts have been assessed based on information currently available to Litgrid. Aiming to retain a successful performance of the Company and value created to stakeholders, the decision-making process may change depending on external circumstances that cannot be influenced by the Company.

Litgrid's management and employees are not responsible for any damage resulting from the use of this document or its contents.

The Company is not obliged or committed to update or review any forward-looking statements to reflect new information, future events or other circumstances, except when such an obligation is established by the legal acts.

According to legislation, this document is reviewed and updated annually considering the most relevant information or other circumstances that have occurred.

Introduction

The activities conducted by Litgrid are closely related to the Lithuanian economy and geopolitical situation. Historically being dependent on the import of energy resources, Lithuania is determined to become a sustainable and energy independent state. In developing a reliable and climate neutral energy system and high added value industry, we aim to create conditions for the export of green energy and its products.

By contributing to the implementation of the National Energy Independence Strategy (the "NEIS"), we are at the forefront of the most significant energy projects. We thereby increase the integration, reliability, safety and stability of the electric power system.

Some of the major projects carried out by Litgrid are the synchronisation of the Lithuanian electricity grid with the Continental European networks, the construction of the electricity interconnections with Poland, Sweden and Latvia.

The electricity transmission infrastructure developed by the Company ensures sustainable, diversified and efficient energy exchanges in the Baltic Sea region. Therefore, Lithuania has a choice of sources of electricity import and is able to strengthen its energy independence.

A rapid development of renewable energy brings changes to the Lithuanian energy sector and creates possibilities to replace the import of energy and fossil fuel with locally produced green energy.

Aiming to achieve Lithuania's vision of becoming a climate neutral country that exports energy and its products, it is necessary to expand and upgrade the existing electricity transmission infrastructure, the operation of the power system and energy exchange models.

This requires the development of competences in the area of green energy and creation of new groups of energy sources. The ambition of Lithuania is to achieve the transition to the low-carbon economy, therefore, we should focus our efforts on energy security. Such transition requires the electrification of the transport and other important sectors, assurance of flexibility of sources and integration of the systems.

Moreover, aiming to maximise benefits created for the society and its security we need to explore cooperation possibilities with other energy sectors.

Our employees are the main success factor in this journey. Their leadership, responsibility for the transformation of the energy sector and competence will contribute to meeting the challenges.

We direct out attention to the reliability and flexibility of our operated systems aiming to ensure optimal use of the emerging opportunities. We are open to strategic partnerships and cross-sectoral integration to enhance the capital base and to use partnerships for a successful implementation of the updated strategy.

| = Strategy

01 | Litgrid at a glance

Our core business –

to ensure energy transformation and supply security

Key indicators for 2023

370 mln. revenue, Eur

37 mln. adjusted EBITDA, Eur¹

22 mln. Adjusted net profit, Eur¹

¹Regulated revenue, costs and profitability indicators are restated due to temporary regulatory deviations from the regulated profitability indicator approved by NERC, revaluation of long-term assets and other profit or loss from non-operating activities

Electricity transmission infrastructure

By developing and managing critical infrastructure, we ensure system security and sustainability We connect electricity consumers and producers to the transmission network

Power system operation

We ensure a safe and reliable operation of the integrated power system

Imbalance trade

By trading imbalances, we ensure the national balance of electricity production and consumption

System of guarantees of origin

By issuing and canceling guarantees of origin, we create favorable conditions for the development of electricity generated from RES

Our people

Are strategicallyimportant for the energy security of Lithuania

Ensures integrated and efficient operational management

Enable sustainable energy strategies implementation of Lithuania and European Union

We are part of the state-owned energy transmission and exchange group EPSO-G

7

Strategy We have enabled

A sustainable and effective energy exchange and secured solid ground for the energy transformation We demonstrate a willingness and ability to step forward and deliver solid track record in large projects

Solid commitment to sustainability in enabling a climate-neutral energy transition and creating a progressive and sustainable organisation

NordBalt – 2016¹ Lithuania – Sweden subsea power interconnection

Accelerating renewable energy 3.8 GW of RES wind and solar capacity integrated into the system, 5 fold increase compared to 2020

LitPol Link – 2016 Lithuania – Poland power interconnection

Interconnecting energy system We have entered the single EU electricity market

Synchronisation – 2025 with continental European grid

1 eksploatavimo ar komercinio naudojimo pradžia

02 Our strategic context

O

Baltic sea region has strong potential for significant RES and decarbonisation technology additions 2020-2023 m.

Transformation of the Baltic energy system is underway, creating the potential for a vast interconnected region

Annual new wind and solar capacity installation per capita in selected European countries from start 2021 to end 2023 (kW/cap) ¹

REGIONAL TRENDS

• The Baltic region is currently the leader in Europe for RES capacity additions per capita
• Risk to peace, supply chain issues and volatile commodity prices are major concerns, but balanced by increased policy certainty
• Regional cross-border integration, new transmission infrastructure, growth of demand via electrification and flexibility resources are needed to maintain development of RES and zero-carbon technologies

Source: ENT SO-E Transparency Platform; PCI-PMI Transparency platform; Lithuania Energy System Transform ation to 2050 study, LITGRID (for Lithuania only), and other sources. *Note: data takes the first day of the year. Lithuania 2020: additional 72 MW, 2,809,977 population. Lithuania 2023: additional 934 MW, 2,857,279 population.

Complex global dynamics are shaping our environment

Geopolitical tensions put pressure on energy security and supply

chains Climate actions are increasing in ambition and broadening in scope Low carbon and digital technologies stimulate investment, jobs and decarbonization

Energy transition extends from renewable energy sources to security and resilience, transmission, cross-sector integration and flexibility

Lithuanian National Energy Independence Strategy

Significant growth in renewable generation to meet demand growth and create exports alongside a transition away from fossil-based methane to hydrogen. Growth in renewables requires enhanced system flexibility, through interconnections and other cross-sectoral flexible resources.

Ambitious national strategy

To become the state producing energy for its own needs and exporting it, having developed a climate-neutral and high added value energy industry by 2050.

03 | Mission and commitments

OUR PURPOSE

To power a confident and green future in an everchanging world

OUR VISION

To enable the transformation of the energy industry while simultaneously safeguarding national security interests

OUR MISSION

To accelerate energy independence and enhance system security

Infrastructure, Security, Strategic partnership

Our three fundamental commitments

Driver of tomorrow's infrastructure

We see the transformation of the energy sector as a fundamental change. Our goal is to provide the infrastructure upon which the netzero energy system will be based.

Provider of security and reliability

1 2 3 We aim to enhance security and reliability within and beyond the energy sector, strengthening national and regional security. Our work is essential for a reliable future.

Vital and skilled strategic partner

Energy transition requires a systemic and close cooperation of various industry peers, investors and governments. Our goal is to be a vital partner in developing lowcarbon infrastructure and markets

Strategy Our key guiding principles and sustainability targets for creating positive impact

Our business strategy directly targets 7 UN SDGs while contributing to all the others

Strategy Building a stronger organisation for our people

We are targeting:

100% sourcing of competences necessary for the implementation of the energy sector transformation

100% completion of highquality performance evaluation and development conversations

Being the employer of choice

We develop competences that allow to implement the energy transformation. We improve our work environment and processes and cooperate with educational institutions.

Identification and application of future competences

Timely and balanced team growth

Promotion of the profession of an energy sector specialist, cooperation with universities

Focus on employee attraction and retention

Leadership and talent growth

We rely on our ability to continuously learn that will allow the organisation and its people to prosper. We will focus on creating opportunities to further develop talents and leadership skills.

Employee development through potential assessment and career planning

Continuous development of professionals

Employee engagement and empowerment

Transparent performance evaluation process

04 Strategic framework & strategic pursuits

Driver of tomorrow's infrastructure

We see the transformation of the energy sector as a fundamental change

We support increasing connectivity across existing and new energy vectors

We are leading the way for successful integration of the new energy vectors like hydrogen, CCUS, synthetic gases

OBJECTIVE is to build the infrastructure upon which the future of 1energy will be based

Driver of tomorrow's infrastructure

Lithuanian energy

≥ 74 TWh total electricity consumption

≥ 4,5 GW of connected offshore wind capacity in Lithuania

≥ 10,7 GW cross-border electricity interconnectors capacity We support increasing connectivity and are leading the way for successful integration of new and existing energy vectors

Energy transformation requires continuous Transmission system development and expansion:

We are preparing for electrification of energy system to be fit for future needs.

To empower the potential of renewable energy, we direct large attention to the planning of the projects on offshore wind power plants and electricity networks and coordination of their development

We will facilitate regional cooperation to unlock the full potential of offshore wind and onshore greenhydrogen

Potential investments until 2035 ~3 B EUR

Provider of security and reliability

Our work is essential for a reliable future

We will deliver a more resilient and flexible system

We are taking extra steps both within and beyond our current boundaries to support national security

OBJECTIVE

enhance security and reliability within and beyond the energy sector, strengthening national and regional 2security

We will deliver a more resilient and flexible system, taking extra steps both within and beyond our current boundaries to support national security

Provider of security and reliability

Safeguarding resilience of critical infrastructure and national security

We strengthen the safety of our assets against physical and cyber threats, and act as a strategic partner for national security initiatives

Cyber & physical security Electricity energy

National security Partnerships & projects

system

Development and use of the most efficient flexibility resources

Increasing levels of intermittent power generation requires significant development of system flexibility and cross-sector integration.

We will empower flexible technologies aimed at providing flexibility services to the energy system by ensuring the energy system's capacity to fully use periods of large-volume power generation from RES.

Flexible resources, GW¹

¹Lithuania National Energy Independence Strategy ²Lithuanian energy system transformation study

System flexibility development

Estimated needs for short duration flexibilities in Lithuanian power system, , GW/h²

Downward ramp

We will create a single Baltic balancing capacity market which will ensure the exchange and sharing of balancing capacities between the Baltic states.

Key stats:

~ 19 GW

~ 11GW

Required flexible capacity (2050)¹

Cross-sector (P2X) flexibility (2050) ¹

~5 GWh

Upwards/ downwards ramp needs (2050)²

Vital and skilled strategic partner

Energy transition requires a systemic and close cooperation of various industry peers, investors and governments

We will foster close cooperation to unlock the potential of renewables both at home and in the Baltic Sea region

OBJECTIVE be a vital partner in developing lowcarbon infrastructure 3and markets

Vital and skilled strategic partner

We will develop a clientfocused organisation

≥ 80 points

Global Customer Satisfaction Index (GCSI) among the leading companies in the world

Our main objectives:

• We will ensure a simple, fast and transparent process of connection to the transmission grid for potential users
• We have assumed obligations to our existing clients to ensure a reliable grid connection and stable electricity supply

• We will develop digital tools that improve client experience and will continue to facilitate cooperation between different stakeholders

Change of the electricity market design needs to drive and empower energy transformation:

Integration of cross-border markets

We will ensure a further integration of the related European markets, development of risk management products and expansion of the system of guarantees of origin

Cross-sectoral integration and flexibility We will encourage active users to use their environmentally friendly flexibility sources, we will promote the development of the market mechanisms supporting seasonal flexibility

Encouraging business environment

We will maintain a dialogue with the regulator and market participants regarding the grid tariffs and taxes to create the business environment that encourages provision of flexibility services and electrification

We will foster close cooperation to unlock the potential of renewables both at home and in the Baltic Sea region

Rapid growth of RES encouraged us to strengthen and extend our activities to support energy transformation

Key stats:

100 %

~ 13,4 GW

Target RES share in final electricity energy demand (2030)

Electricity generation capacity by 2035

| 25 Strategy

Force multipliers to empower change

To deliver our ambitious objectives we are unleashing a range of enablers across our business.

Culture & Capabilities

Our success is driven by expertise, continuous learning and the ability to act in a constantly changing environment

We will grow our team by more than 40% with attraction of local and international experts

Lithuania's energy future is driven by our people with unified values

Powering a confident and green future in an everchanging world

Describing 2035 Success: Value proposition for our stakeholders

Our roadmap delineates three distinct time horizons, each with unique outcomes built on the successes of its predecessors

Unique outcomes	CREATING ENERGY SELF-SUFFICIENCY Now- 2029 1 Lithuania is synchronized with CEN, fully covers electricity demand by domestic generation, baseline of security of supply is developed		EXPANDING INTO NEW ENERGIES 2030–2035 2 The electricity grid ecosystem has been created allowing to further develop energy from renewable sources and to make first steps towards abandoning fossil fuels in principle		SCALING OUR ACTIVITIES 2036–2050+ 3 The region's connected for existing and new energy exchanges, Lithuania becomes an exporter of power and low carbon energy products
w's morro infrastructure Driver of to	Reliable infrastructure prepared for integration of RES in Lithuania	The planning and implementation processes for investments in the transmission network have been reviewed to ensure timely and sustainable, efficient upgrades	Harmony Link interconnection project between Lithuania and Poland	Increased electricity connection capacity between Lithuania and Latvia	Development of Energy hub, to unlock the full potential of offshore wind and onshore green hydrogen production
and reliability Provider of security	Finished synchronisation with CEN by 2025	Development and implementation of strategic partnership to support national security	Continue system integration to ensure flexible energy distribution between consumers and producers	Deployed measures to strengthen physical and cyber security	Long-term energy storage and flexibility volumes enabled
Vital and skilled strategic partner	Connection of a major part of the renewable energy projects, 100% RES in the total energy demand, to the grid	Increased customer value – achieving ≥80 GCSI across all customer segments	Electricity system prepared for the integration of up to 11 - 13 GW of RES	By 2035, ensure that at least 50% of operational partners have set GHG reduction targets that contribute to the Group's Climate Transition Plan.	Electricity network expanded and able to connect 25+ GW of RES capacity and 19 GW flexible resources	Achieving net zero target by 2050

|31 Strategy

07 | Financial outlook

Investment distribution for ensuring the energy independence of Lithuania

Our CAPEX investment ambition

We are focused Planned 2024-2035 investments by project., B EUR

Profitability

Financial status

We aim to maintain sustainable finances and a strong financial position

Net debt / Adjusted EBITDA

09 | Value for Lithuania

Glossary

Acronym	Definition
Adjusted EBITDA/ ROE	Regulated income, expenses and profitability ratios are recalculated due to temporary regulatory deviations from the regulated profitability ratio approved by the NERC, revaluation of non-current assets and other profits or losses from non-standard activities.
AIT	Average interruption time
B	Billion
BESS	Battery energy storage solution
CAPEX	Capital expenditure
CEN	Continental European Network
CO2	Carbon dioxide
EBITDA	Earnings before interest, tax, depreciation, and amortisation
ENS	Energy not supplied
EU	European Union
EUR	Euro
GCSI	Global customer satisfaction index
GDP	Gross domestic product
GHG	Green-house gases
GW / GWh	Gigawatt / Gigawatt hour
H2	Hydrogen
JT DVT	United Nations Sustainable Development Goals, SDGs
KPI	Key performance indicator
kW/cap	Kilowatts per capita
LT	Lithuania

Acronym	Definition
MW / MWh	Megawatt / Megawatt hour
NATO	North Atlantic Treaty Organization
OHL	Overhead line
OPEX	Operational expenditure
P2G	Power to gas
P2Heat	Power to heat
P2X	Conversion technology (Power to X), which uses electricity to convert it into carbon-free synthetic green fuels, such as hydrogen, synthetic natural gas, or liquid fuels.
RAB	Regulated asset base
RES	Renewable energy sources
ROE	Return on equity
SBTi	Science based targets initatives
Scope 1 emissions	The Group's direct GHG emissions that are directly controlled by the organization
Scope 2 emissions	The Group's indirect GHG emissions from uncontrolled sources, which result from the Group's consumption of externally sourced electricity and heat
Scope 3 emissions	Other indirect GHG emissions during the Group's operations (in the supply chain) from sources not owned or controlled by the Group (such as purchased goods and services, transportation, waste, etc.)
TSO	Transmission system operator
TW / TWh	Terawatt / Terawatt hour
V2G	Vehicle to grid

37