Summary

1. EU requirements

The promotion of electricity produced from renewable energy sources (RES) is a high Community priority as outlined in the White Paper on Renewable Energy Sources. In order to create a Community frame work which will facilitate a significant increase in renewable generated electricity the Directive 2001/77/EC on the promotion of electricity produced from RES in the internal electricity market has been adopted. It concerns electricity produced from non-fossil renewable energy sources such as wind, solar, geothermal, wave, tidal, hydroelectric, biomass, landfill gas, sewage treatment gas and biogas energy.

The main requirements of the Directive are the following:

• to establish national indicative targets for electricity for electricity production from RES for the year 2010,
• according to these objectives to develop efficient and possibly simple national support schemes considering the different nature of RES, available technologies and geographic peculiarities,
• provide information about the origin of "green" electricity,
• simplify the administrative procedures
• ensure prior, undiscriminating and clearly defined access to the grid.

2. Policy, targets and planned measures to reach the targets in Latvia

According to the Directive 2001/77/EC the national indicative targets for electricity production from RES for Latvia have been established and negotiated with the European Commission. Until 2010 Latvia shall reach the increase electricity generation of gross electricity consumption of 49,3%. Comparing to other Baltic countries, due to high use of hydro energy, Latvia has the biggest share in renewable electricity production - about 43%.

The energy policy with regard to the use of RES and local energy sources (e.g., peat) is set in the:
One of the priority activities in the energy sector in Latvia is to encourage clean production of energy using both traditional and RES. The National Energy Program (1997) defines activities for reliable supply of energy resources in the country until the year 2020. The Program States that the energy has to comply in quality and quantity with the requirements of consumers, at the lowest possible cost and least impact on the environment. Increasing the use of local energy resources is a key issue of the Program. However, no particular target for energy production from RES is defined.

The main objective of Energy Policy in the Electricity Sector is promotion of the development of power sector in accordance with balanced and sustainable development of national economy. Promotion of the use of renewable and local energy resources as well as coordination of environmental protection and energy production , transportation and consumption costs are among the tools to achieve the objectives in the electricity sector.

3. Legislation

In recent years in Latvia legislation related to energy production from RES has undergone a number of changes. In 2001, the Law of Energy was amended particularly with regard to the use of RES in Latvia. On the basis of this law, a number of Cabinet of Ministers regulations (CMR) were adopted in 2001:

• Requirements for co-generation plaants (CHP) stations and the procedure of setting the price for the purchase of excess electricity (CMR Nr.(). It sets a higher power purchase price if domestic energy sources are utilized;
• Regulations on total installation capacities in 2002 and specific capacities for each type of electricity generation if RES are utilized (CMR Nr.28);
• Regulations for the installation and dislocation of electricity production capacities if RES are used for production of electricity (CMR Nr. 29).

4. Economic instruments for supporting renewable energy sources

In Latvia a feed-in tariff - double the average electricity sales tariff (AEST - 0.052 Euro/kWh) for electricity produced at small scale HPP and WPP was established in 1995. The tariff was successful in promoting the development of RES but only in the small HPP sector. Therefore, the conditions for the purchase of electricity produced from RES have been redrafted several times in order to promote the use of other RES as well.

Currently, the Energy Law sets obligation for the main operator (AS "Latvenergo") to buy from Wind Power Plants (WPP) as well as from biomass including wood and peat, biogas, sun sea tides and geothermal energy, for the competition price or the price established by the regulator. Current still purchase price in Latvia is set at the level of double average tariff 0.104 Euro/kW. License for construction of WTG can be obtained if a share of quota is received (currently the quota is 1 MW for 2003) or if there is certain purchaser of electricity.

Power plants using renewable energy sources (RES) for electricity production have priority to transmission and distribution systems. A total restriction for the installation of new capacities and the determination of an electricity procurement price for power plants, which utilize RES for electricity generation, shall be the increase of the average electricity sales tariff component intended for such purpose within limits of 5% in the territory of Latvia by December 31, 2005.

5. Natural resources of wind energy

Regular measurements of wind speed have been performed by national hydro-meteorological agency for a long period of time though until this moment Wind Atlas of Latvia does not exist. The resources are not distributed. Wind, containing energy, has a cyclonic origin, born on Atlantic. These frequent cyclones are moving over Scandinavia, Baltic States and Finland to orth-West Russia. In Latvia resource of wind is concentrated along the coastal area of the Baltic Sea and eastern part of the Riga Gulf. Large territory of Latvia is covered by forests and therefore is hardly acceptable for the wind energy usage. But there also could be places acceptable for wind energy production in the highlands area of Vidzeme which undoubtedly worthies further research. Average wind speed at 10m height in Liepaja is 5.3 m/s and along the western coast and near Ainazhi (territory over 1600 km2) is over 5 m/s.

6. Current wind energy production

Now there are several units in Latvia producing wind energy with total production capacity of 24.5 MW. Current total production of wind energy in 2002 was 11.24 GWh but the potential for wind energy production could be estimated at the level 1000 GWh/y (source:: Background study on Strategy and policy targets, current experiences and future plans in using RES in Estonia, Latvia and Lithuania. Conference of the Baltic Environmental Forum, Sigulda, 16 - 17 June 2003)! The share of wind energy in total electricity production in Latvia in 2002 was only 0.2%.

7. Future trends

Presently there are a number of projects on a preparation stage in Latvia, although due to the currently established quotas it is difficult to predict when these projects will start. In order to reach the targets of the Directive 2001/77/EC the further promotion of electricity production from wind energy has to be considered. For Latvia the optimum amount of electricity produced from Wind Turbine Generators (WTG) could be about 5% of the total electricity produced (in comparison with current 0.2% in 2002). The growth potential is 25 times!

8. Investment costs and prices

Estimated investment costs in construction of Wind Power Station are approximately evaluated as 1000 Euro/kW. Current purchase price in Latvia is set at the level of double average tariff 0.104 Euro/kW. License for construction of WTG can be obtained if a share of quota is received (currently the quota is 1 MW for 2003) or if there is certain purchaser of electricity. If a share of quota is obtained then the price is determined by regulator and the project will be beneficial. At the current development level wind farms cannot compete with existing large hydro power stations. In future, it is expected that WTGs will also contribute to the country's power generation. Notwithstanding that wind plants at present are too expensive comparing with traditional energy sources, they are considered being environmentally friendly and promote development of RES.

9. Conclusion

In Latvia wind resources are significant along the coastal areas. If the "right" policies were in place, wind could make an important contribution to Latvia's energy supplies. In order to promote electricity production from wind energy all relevant political, legislative and economic preconditions (e.g., clear power purchase conditions and agreements, access to the grid, construction of new lines) need to be ensured. Permitting procedures for the development of wind farms need to be fair and transparent. For the investigation of new sites suitable for wind energy generation state supported programs should be established. Also the level of awareness of local project developers and managers, officials and local community needs to be increased.

10. Next steps in order to promote the further use of RES

• National or regional programmes for evaluation the potential use of RES should be promoted. There should be state or public institutions, which will work for promotion of RE business activities in the country, lobbying and work on public awareness rising.
• There should be the promotion for use of RES through different public awareness campaigns such as TV shows, radio programs, leaflets and articles in newspaper and magazines. The study programs at universities should be revised and updated referring RES. Conferences, workshops for specialists and project developers concerning legislations, technologies, market and financial instruments on RES should be organized.

Energy market

The energy sector consists of four sub-sectors: electricity, gas, oil products and district heating.

1. Electricity

Depending on the dynamics of flow of the river Daugava, Latvian power plants supply 50-90% of the necessary electricity. Relatively high share (46%) of electricity used in Latvia is produced using renewable energy sources.

The capacity of Latvian transmission and distribution systems exceeds the current demands. It is capable of supplying more than 10 TWh a year, while the current domestic demand is around 6 TWh per annum. However, an economic handicap is mismatch of concentration of economic activity and the territorial coverage of the electricity supply network, due to the drastic change of centres of economic activity. For example, significant growth is observed in Riga and the Riga district, served by the Central network, the use of the electricity is growing significantly with increase of the intensity of use and amount of customers, the network may fail to supply sufficient amounts.

Figure. Growth of electricity demand in Riga and the Riga district (GWH)
* expected supplied amount for 2002.
Source: Ministry of Economics, 2002.

In rural areas the structure and capacity of distribution networks is developed accordingly to the centres of economic activity of the Soviet period. Currently the activities are concentrated differently - more evenly, which results in a necessity to provide an average level of supply over the territory. In order to preserve the competitiveness of Latvia as a destination for investors, it is impossible to increase the distribution tariffs, which would allow hoarding the resources for restructuring of the distribution networks. This problem is especially significant for the industrial customers, as it is impossible to estimate the feasibility of network restructuring investments for the network provider.

2. District Heating

Due to climate conditions, concentration of population and historical development of the situation, role of the district heating system is very significant in Latvia (around 70% of the population are served). Technical and financial conditions of heating system in many municipalities are critical. It proves impossible to charge realistic tariffs (to cover the expenses of maintenance and development of the system), due to limited resources of the municipality. As a result of limited restructuring and renovation, inefficient equipment is used, which results in over-use of fuel and air pollution still failing to supply heating of the sufficient quality. Average fuel usage coefficient is 70%, while the best practice indicator is 92%. The average heat losses in the network are 22%, while the best practice indicator for this parameter is 12%. Three large district heating companies are on the edge of bankruptcy - the ones of Liepaja, Jelgava and Daugavpils. Limited financial resources prevent restructuring on the part of customers, which results in a low efficiency. As a result of this both residential and industrial customers tend to have too high use of energy. Latvia has to introduce the EC directive concerning emissions of dangerous particles from large (above 50Mw) burners until 2008. In order to be able to comply with the requirements of this regulation, the share of emissions has to be decreased improving burning processes or equipping burners with gas filtering devices, it is especially important for the burners that use heavy fuel oil. As a result of these measures heating tariffs of the enterprises using oil are deemed to rise by 30%.

3. Gas Supply

Latvia is fully dependent on the single supplier of gas - Russian concern 'Gazprom'. Gas supply system covers all the biggest Latvian cities excluding Rezekne and Ventspils. Share of gas as fuel in heating fuel balance exceeds 50%, and is more than 30% on the common energy resource balance. High share of gas usage allowed considerably decreasing emissions of dangerous particles, especially CO2 from energy industry objects. However, further growth of share of gas on the energy balance is not desirable from the point of view of security of energy supply in a country and diversification of the energy supply channels.

4. Supply of Oil Products

In the area of supply of oil products completely deregulated market is operational in Latvia, which provides both diversification of supply channels and competitive prices.

5. Share of different energy sources in primary energy supply in Latvia in 2001

Total primary energy supply in Latvia in 2001: 180 000 TJ

Natural gas: Oil products and Heavy fuel oil: Wood, peat Peat Coal and coke Wind and hydro Imported electricity Total:

28.7 % 26.6 % 8.0 % 24.6 % 0.7 % 2.1 % 5.6 % 3.7 % 100 %

From gross electricity consumption in 2001:

From large-scale HPP From small-scale HPP From WPP (2002)

39.0 % 0.5 % 0.2 %

6. Fuel consumption in Latvia 2001 - 2002

Gas Heavy Fuel Oil (HFO) Wood, peat and other fuels Coal

47 % 12 % 38 % 3 %

7. Anticipated electricity production balance for 2003:

Large-Scale Hydro Power Plants Termo Supported RES Co-generation plants (CHP) Imported electricity Total:

2780 GWh (46.7 %) 1300 GWh (21.9 %) 150 GWh (2.5 %) 231 GWh (3.9 %) 1487 GWh (25.0 %) 5948 GWh

Legal situation

No information available at the moment.

Acceptance among the population

The attitude of society towards promotion of wind energy production has been more positive than negative in Latvia. The main concerns are related to the potential increase in the price of electricity for consumers and potential negative impacts to the landscape and nature.

The key positive and negative aspects to be considered for wind energy production are summarized below.

Pro arguments

• "Green energy", no emissions
• Non-exhaustible resource
• No fuel costs
• Low operational costs
• Creation of new job opportunities
• High efficiency of electricity production

Contra arguments

• Disturbance of migrating birds
• More expensive technologies than for electricity production from conventional fuel
• Can increase electricity price for customers
• Not stable, unpredictable, therefore wind energy can only have an auxiliary function

Impacts in the economy

No information available at the moment.

Problems

No information available at the moment.

Statistics

No information available at the moment.