The European Commission has launched an investigation to determine whether the strategic reserve measure implemented in Lithuania distorted competition within the European Union's single market in favor of state-owned company Lietuvos Energija UAB.

Strategic reserves allow certain generation capacities outside the electricity market to operate only in emergencies to ensure security of electricity supply during market transitions and reforms. The Lithuanian government selected AB Lietuvos Energija-owned Lithuanian Power Plant to provide strategic reserve services.

The commission already reached a preliminary conclusion that the measure constituted state aid. It will now assess whether it had been in line with EU state aid rules, including on whether it was appropriate for Lithuania to not consider other potential capacity providers.