Latvia (2012)

Degree of reliance on imported energy: 

<p>
Latvia is one of the most energy import dependent countries in the EU.<br />
<br />
With the exception of peat and timber, Latvia had no significant domestic energy resources and received 93% of its imported energy from Soviet republics in 2007.&nbsp;<br />
<br />
Electricity imports from Lithuania, Estonia and Russia have a quite substantial role in the electricity supply. The Ignalina Nuclear Power Plant, located in Lithuania, close to the Latvian border and some 30 kilometres from the Latvian town of Daugavpils (126,000 inhabitants), provided an important amount of the imported electricity in Latvia. Ignalina has been closed down, as of December 31st, 2009.<br />
<br />
In 2008, the imports/exports balance by energy source was as follows (all units ktoe, source: IEA):<br />
Solid Fuels: 107.0 /&nbsp; 2.0<br />
Crude Oil: 23.0 / 0.0<br />
Oil Products: 1844.0 / 132.0<br />
Natural Gas: 1095.0 / 0.0<br />
Electricity: 399.0 / 183.0<br />
Combustible Renewables and Waste: 11.0 / 387.0<br />
&nbsp;</p>

Main sources of Energy: 

<p>
Total installed electricity capacity (2007, source: Ekodoma): 2,463 MW<br />
- Thermal: 36%<br />
- Hydro-electric: 63%<br />
- Wind: 1%<br />
<br />
Share of Total Primary Energy Supply* (2009, IEA): 4220 ktoe</p>
<ul>
<li>
Oil: 29.4%</li>
<li>
Natural Gas: 30.1%</li>
<li>
Hydro: 7.3%</li>
<li>
Biofuels and Waste: 31.1%</li>
<li>
Geothermal/ solar/ wind: 0.1%</li>
<li>
Coal/ peat: 2.1%</li>
</ul>
<p>
*Share of TPES excludes electricity trade<br />
<br />
Latvia has limited domestic energy resources. Peat land areas cover 9.9% of the country&rsquo;s territory. Renewable energy sources accounted for roughly 31% of the primary energy share in 2008, predominantly from biomass sources.<br />
<br />
The electricity production by fuel source type in 2009 was as follows (source, Enerdata):<br />
Hydroelectric: 62.0%<br />
Natural Gas: 36.2%<br />
Biomass: 0.7%<br />
Wind: 0.9%<br />
&nbsp;</p>

Country: 

Latvia

Extent of the network: 

<p>
National electrification rate (2000):&nbsp; 98%<br />
<br />
In 2008, the High Voltage Electricity Network had fourteen 330 kV sub stations; 1,248 km of 330 kV lines; 41.83 km of 110 kV overhead line, 3,428 km of 110 kV cable line and 117 110 kV substations. The electricity grid is managed by a daughter organization of Latvenergo, SC Augstsprieguma tikls.&nbsp;<br />
&nbsp;</p>

Capacity concerns: 

<p>
Currently installed capacity amounts to roughly 35% of Latvia&#39;s primary energy demand, and the country has limited domestic energy resources. As such, the reliance on imported energy, primarily from FSU countries, is a problem. Also, Latvia&#39;s fossil fuel consumption is rising, in particular coal, consumption, having risen from 102 kilotonnes in 2002 to 162 kilotonnes in 2007. Electricity imports in 2009 amounted to 4.26 TWh.<br />
<br />
Transmission and distribution losses in 2009 were 13.26%, indicating a need for improvements in the transmission sector with regards to efficiency and effectiveness.<br />
&nbsp;</p>

Potential for Renewable Energy: 

<p>
RE sources represented 34% of the primary energy share in 2003. In order of importance and relevance to Latvia, the production of RE energy resources is as follows: hydro energy, fuel wood, peat, and wind energy.<br />
<br />
In the Energy Policy of the Electricity Sector, peat is considered as a renewable energy source; however that is not the official position stated in the Latvian Energy Policy. There is a technical potential for power generation based on renewable resources, especially wood and wind, but there is not an official detailed study available.<br />
<br />
<u>Wind energy</u><br />
Latvia has very good potential for wind energy development. The total installed wind energy capacity in Latvia in March 2007 was about 27 MW. This figure represents an eight percent increase on the figures for the end of 2005.&nbsp; At the current development level wind farms cannot compete with hydro power stations and thermal power stations on the cost criteria.&nbsp; There is great potential for development however, and several projects are reportedly planned, including a 100 MW project currently under preparation. According to the data from the Renewable Energy Program of the country, technical potential for wind energy production has been estimated at around 1,277 GWh, however the practical potential is estimated at 1,000 GWh/year, and represents about 2,000 MW of wind technical/economic potential. A wind atlas was recently produced for the country, identifying several areas with average wind speeds of 6 m/s at 30m.&nbsp;<br />
<br />
<u>Biomass energy</u><br />
Biomass is the main resource for heat production in Latvia, mostly outside large towns. According to the State Revenue Service&#39;s data, biofuels accounted for 0.22 % of the total fuel used for transport in Latvia in 2006. In 2006, 71 % of the biodiesel and 93 % of the bioethanol produced in Latvia was exported to EU Member States. In 2008, wood and wood waste products were used in about 700 boiler houses all around Latvia, 300 of which have capacities of more than 1.5 MW. Biogas installations, including municipal waste recycling, total roughly 7.5 MW. Over half of the wood resources produced in the country are exported to other European member states, which is part of the reason for the slow development of the sector. Timber wastes alone are estimated to have a potential of 700,000 t/a (4,700 TJ).&nbsp;<br />
<br />
<u>Hydroelectric power</u><br />
In the year 2008, hydropower accounted for 88% of the total electricity generating capacity. The total produced hydroelectricity was 4,127 GWh in 2007.&nbsp;<br />
<br />
Latvia has three major hydropower plants and 150 small-scale local facilities and there is still unused potential for electricity production. Currently, 65 percent of the technical potential of the hydro energy has been exploited. The remaining economically feasible hydroelectric resource potential is estimated at around 3.9 TWh/a.<br />
<br />
<u>Geothermal energy</u><br />
At the moment, the low heat prices for district heating, and the limited experience are barriers to the development of geothermal resources in Latvia.&nbsp;&nbsp; Geothermal energy is becoming more popular in Latvia due to the constant increase in tariffs for heat energy and electricity. A wide offer of heat pumps is presented on the market, predominantly for private use. Total potential for Latvian geothermal energy is evaluated at approximately 175MW.&nbsp;<br />
<br />
<u>Solar energy</u><br />
The solar energy resource potential in Latvia is small compared to other European countries due to the geographic location and to the climatic conditions. The average irradiance per year is 2.6 kWh/m2.&nbsp;<br />
&nbsp;</p>

Potential for Energy Efficiency: 

<p>
In November 2000, the government approved the National Energy Efficiency Strategy and in January 2001, a set of legal measures to implement this strategy.<br />
<br />
Implementing legislation was adopted in 2002 to promote the use of renewable energy sources and domestic production of heat and electricity in combined heat and power plants.<br />
<br />
The Energy Efficiency Action Plan of 2000 identified numerous measures to improve energy efficiency, with a goal of reducing primary energy consumption per GDP unit by 25% by 2010.<br />
<br />
Energy demand per capita stood at 1.98 ktoe in 2008. The residential sector contributed most to final energy consumption, at 1,452 ktoe, or 34.8%, indicating the potential for EE in the sector. The Latvian Government has identified a number of areas contributing to inefficiency, including ageing apartment buildings, the increase in private car ownership and the increase in electric appliance use.<br />
&nbsp;</p>

Ownership: 

<p>
Privatisation has proceeded gradually since 1994 when the Latvian Privatisation Company was formed to privatise all state owned businesses.&nbsp; To date, only a small percentage of companies, other than the electricity sector, remain in government hands.<br />
<br />
The state-owned electric company, JSC Latvenergo (<a href="http://www.latvenergo.lv/portal/page?_pageid=80,729522&amp;_dad=portal&a...)<br />
owns 97 percent of the generation capacity in Latvia.&nbsp; The primary source of electric generation is hydroelectric power. Additional generation and district heating is provided by two large thermal plants and several smaller privately owned facilities.&nbsp; In 2000, a reorganisation program with the aim of separating production, transmission and distribution was adopted by the government. A separate High Voltage Electricity Network was set up within Latvenergo as an independent transmission operator due to this.&nbsp;<br />
<br />
The most important changes in the electricity market were introduced in 2007 when end-users were allowed to choose any supplier among the existing offers in the market. This meant the transition to an open electricity market. However, there have not been major changes in the market since the market innovation was introduced.<br />
<br />
<u>Oil Market</u><br />
Ventspils Nafta (<a href="http://www.vnafta.lv/?lang_id=2">http://www.vnafta.lv/?lang_id=2</a>) is a public joint stock company, responsible for the operation of the two oil terminals in the country, Ventspils Nafta, and Butinge Nafta. The two primary owners of Ventspils Nafta are the Latvian government and a private concern, Latvijas Naftas Tranzits, itself a privately-owned derivative of state distribution company, Latvijas Nafta. Latvijas Nafta is responsible for distribution of oil and products within the country. Private companies (Neste, Lukoil, Statoil, Shell, etc) also operate in the distribution sector.<br />
<br />
<u>Natural Gas Market</u><br />
Exclusive license for natural gas supply is issued to JSC Latvijas Gaze (<a href="http://www.lg.lv">http://www.lg.lv</a>). This company, according to licenses issued by the Public Utilities Commission (PUC) carries out distribution, storage, supply and retail throughout Latvia. The company is completely privatized (47.23% E.ON Ruhrgaz International AG, 34% Gazprom, 16% Itera-Latvija, 2.77% - others).&nbsp;<br />
&nbsp;</p>

Structure / extent of competition: 

<p>
In September 1997, the Latvian Government adopted the National Programme for Energy which detailed power and heating policies up to 2020.<br />
<br />
The <i>Energy Law 1998</i> aimed to increase competition in the sector, as well as address pricing and tariffs, third-party access, emergency planning, conservation and environmental protection.<br />
<br />
In 2000, the Latvian power market was opened to competition.<br />
<br />
Electricity Market<br />
<u>Production/transmission</u><br />
Latvenergo (the state-owned electric company) deals with both production and sale of electricity and heating energy. Latvenergo owns the HVEN (High Voltage Electricity Network) which receives electricity from hydroelectric and thermoelectric centrals located in Latvia, as well as from Lithuania, Estonia, Russia and Belarus, and passes this onto distribution network companies.<br />
<br />
Distribution<br />
There are seven regional companies, which are all 100% subsidiaries of Latvenergo.<br />
<br />
<u>District heating</u><br />
Latvenergo produces and sells heat energy to the district heating system of Riga.<br />
<br />
Even though the market was fully liberalized in 2007, the dominant role in the electricity supply is still played by the state company JSC Latvenergo, which provides approximately 90% of all electricity generated in Latvia and ensures imports, transmission, distribution and supply to consumers. In addition there are more than 100 small power plants and 10 licensed distribution and sales companies.&nbsp;<br />
<br />
<u>Oil Market</u><br />
Refining and production are the sole responsibility of Ventspils Nafta, a partially state-owned company. However, exploration contracts are being awarded to private consortiums and companies as of 2002. Private companies are also involved in the distribution sector, although the state-owned distribution company Latvijas Nafta plays a dominant role.<br />
&nbsp;</p>

Existence of an energy framework and programmes to promote sustainable energy: 

<p>
<u>National Energy Program until 2020</u><br />
The Energy Policy for Latvia is formulated in the National Energy Program (adopted in 1997) until 2020. It gives priority to the rational use of energy resources, the development of renewables, energy diversification and the restructuring of the energy sector.<br />
<br />
<u>Energy Development Conception for 2007-2013 </u><br />
This is a policy-planning document, which was approved on August 1st 2006, and defines Latvia&rsquo;s state energy policy, objectives and actions for a period of 10 years, as well as indicating the long-term development route.<br />
<br />
<u>Guidelines for Energy Sector Development 2007-2016</u><br />
These guidelines set a number of implementation benchmarks in the field of energy efficiency, such as energy intensity improvement, increasing cogeneration potential, reduction of energy consumption in different sectors, boiler house energy efficiency improvements, and many others.<br />
<br />
The Strategy for the Utilization of Renewable Energy Sources 2006-2013<br />
This is a medium-term policy-planning document approved in October 2006, which was proposed to define policy measures, aims and strategies regarding the use of renewable energy sources in Latvia.<br />
<br />
<u>Latvian Sustainable Development Strategy (2002)</u><br />
This strategy defines tasks and objectives for ensuring sustainable development with regard to the increase of energy efficiency and the promotion of renewable energy use, developing biofuel production (biodiesel, bioethanol and biogas), using agricultural feedstock (rape and grain) and animal breeding by-products.<br />
<br />
<u>Energy Efficiency Action Plan (2000)</u><br />
The Latvian Ministry of Economy prepared the State Energy Efficiency Action Plan in 2000 with the goal to identify a set of measures for promoting energy efficiency which would help reduce the primary energy consumption per unit of GDP by 25% until year 2010.<br />
<br />
<u>The Regional Baltic Wind Energy Program</u>: was started in 1999 with funding from GEF, UNDP. This is the latest (2003) and most extensive study of the potential of wind energy in Latvia, containing analysis of wind energy use opportunities from the political, economic, legal, meteorological, energy, environmental and regional aspect.<br />
<br />
<u>The National Program for Production and Use of Bio-fuel in Latvia (2000)</u>: The program analyses the possibility to produce bio-fuel from rapeseed oil, as well as generation of biogas from industrial and household waste.&nbsp;<br />
<br />
Cabinet Regulation Number 503 &ldquo;Regulations Regarding Electricity Production from Renewable Energy Sources&rdquo; came into force in July 2007. This regulation ensures a fixed-price feed-in tariff for renewable energy systems, as well as regulating the size and compulsory generation of these systems. The regulation also offered support for biogas plants.<br />
<br />
Legislative support for these programs comes from the Energy Law 1998, the Law on Electricity Market (2005), which set and described the functioning of the electricity sector with free customer supplier choice, the Biofuel Law 2005, which defines the responsibilities of the government in achieving biofuel targets (5.75% share in transport by 2010).<br />
&nbsp;</p>

Current energy debates or legislation: 

<p>
There are no current discussions on energy policy in the Latvian government. Increased co-operation with Baltic and Central European countries is being discussed within Latvia. The construction of a LNG terminal, to ease summer dependency on Russian natural gas, is also being discussed.</p>

Major energy studies: 

<p>
The main studies available are detailed below:<br />
-&nbsp; The Baltic Wind Atlas developed by the UNDP/GEF in 2003. (<a href="http://www.lepe.ee/5327">http://www.lepe.ee/5327</a>)<br />
&nbsp;- Development of Wind Energy Utilization in Latvia. A study prepared by experts from the Institute of Physical Energetics and Latvenergo.<br />
- In-depth Review of Energy Efficiency Policies and Programs Latvia 2007 at <a href="http://www.encharter.org/fileadmin/user_upload/document/Latvia_EE_2008_E... ">http://www.encharter.org/fileadmin/user_upload/document/Latvia_EE_2008_E... </a><br />
&nbsp;</p>

Role of government: 

<p>
The Energy Department of Ministry of Economy (<a href="http://www.em.gov.lv/em/2nd/?lng=en&amp;cat=2828">http://www.em.gov.lv/e...) manages and analyses the energy resource balance development, prepares draft international agreements in energy, and coordinates the efficient use of energy resources.<br />
<br />
The State Energy Crisis Centre includes representatives of ministries and the largest enterprises, and is responsible for ensuring the supply of energy during a crisis to all users, as well as co-ordinating the utilisation of the state petroleum reserve, and the actions of local authority crisis centres. The Department of Energy of the Ministry of Economy is the Secretariat of the Crisis Centre.<br />
<br />
The Ministry of Environment (<a href="http://www.vidm.gov.lv/eng/">http://www.vidm.gov.lv/eng/</a>) is responsible for environmental and nature protection. Its main duties are to prepare and implement a national policy and draft legislation within its jurisdiction and ensure implementation.<br />
<br />
Municipalities have the authority to organise services to their residents (for example, heat supply).<br />
&nbsp;</p>

Government agencies in sustainable energy: 

<p>
The Construction, Energy, and Housing State Agency (<a href="http://www.ma.gov.lv">www.ma.gov.lv</a>) is an institution operating under supervision of the Ministry of Economy, which was established in October, 2007. The main function is the development of energy programs and establishment of cooperation with local and foreign governmental and no-governmental institutions.<br />
<br />
The Riga Energy Agency (<a href="http://www.rea.riga.lv">http://www.rea.riga.lv</a>) is a municipal agency which was established in 2007. Their responsibilities involve the development of a concept for the Riga district heating system, the implementation of a program for increasing energy efficiency in the city, providing information on energy efficiency issues, and cooperating with local and foreign governmental and non-governmental institutions.<br />
&nbsp;</p>

Energy planning procedures: 

<p>
The Energy Development Conception for 2007-2013 outlines a number of strategies for securing Latvia&#39;s energy supply and defining state energy policy. These proposals include measures to reduce consumption through demand-side management, as well as proposed extensions to the grid under the ESTLINK scheme, a sub-sea Estonia-Finland electricity link, which Latvenergo has invested in.<br />
<br />
The Guidelines for Energy Sector Development 2007-2016 set a wide variety of targets for the energy sector in terms of energy efficiency, including the utilisation of co-generation potential in cities, the improvement of overall thermal plant efficiency to 80-90% by 2016, the reduction in building specific thermal energy consumption to 150 kWh/m2/year by 2020, and a reduction in thermal energy losses in transmission networks to 14%.<br />
&nbsp;</p>

Energy regulator Date of creation: 

<p>
The Public Utilities Commission (PUC, http://www.sprk.gov.lv/?setl=2) is an independent state institution responsible for regulation of energy, telecommunications, postal, and railway sectors in accordance with the Law On Regulators of Public Utilities and the corresponding acts in the regulated sectors. The PUC started its operation in October 2001.</p>

Degree of independence: 

<p>
The PUC is politically, financially, and institutionally independent. However, it is an institution supervised by the Ministry of Economy.<br />
<br />
In June 2001, the Latvian Parliament approved a recommendation from the Cabinet of Ministers to appoint five members of the Commission&rsquo;s board for a five-year period.<br />
<br />
In accordance with the Law on State Budget 2010, the Commission&rsquo;s budget is a line item in the budget of the Ministry of Economy. The Commission&rsquo;s operations are financed by fees from public service regulation. In the reporting year, the state fee in the regulated sectors was 0.17% of the net turnover of the public service provided by the company in 2009.<br />
&nbsp;</p>

Regulatory framework for sustainable energy: 

<p>
<u>Energy Law (1998)</u><br />
Latvia passed an energy law in October 1998 which brings practices into line with those in Western Europe. The law sets up a structural framework of rules and licensing for energy industry regulation and is designed to promote competition, introduce transparent pricing, and develop new energy sources, including renewables.<br />
<br />
<u>Amendments to the Energy Law (2001)</u><br />
Amendments prescribe protective impact on the environment and use of environmentally friendly technologies; provide rules for installation of generation equipment and purchase of electricity produced from renewable resources and in cogeneration plants.&nbsp;<br />
<br />
The PUC operates in accordance with the law on Regulators of Public Utilities, laws related to regulated sectors and regulations from the Cabinet of Ministers.<br />
&nbsp;<br />
The energy laws of Latvia are drawn up in accordance with EU Directives on sustainable energy.<br />
<br />
The Regulations on Electricity Generation from Renewable Energy Sources (2007), as previously mentioned, and the Regulation on Electricity Production in Cogeneration Cycle (2006) both define criteria for the sale of electricity within a framework of mandatory purchase at a fixed price. Both of these regulations were put in place by the Cabinet of Ministers, directly.&nbsp;&nbsp;<br />
&nbsp;</p>

Regulatory roles: 

<p>
The Commission&rsquo;s functions include the regulation of regulated sectors and companies, whilst balancing the interests of users and public service providers. It determines methodologies for calculating tariffs, approves tariffs, issues licenses, registers authorisations, promotes competition in regulated sectors, and performs out-of-court dispute settlements. The Commission also makes sure that service providers comply with their license conditions and quality requirements.</p>

Role of government department in energy regulation: 

<p>
Heating industries are regulated at local government level by institutions established by the respective municipalities.&nbsp;<br />
<br />
The Building Department of the Ministry of Economy is responsible for setting energy efficiency regulations in the Latvian building code.<br />
&nbsp;</p>

Regulatory barriers: 

<p>
The existing link between policy development and its implementation is very weak. A designated national implementing body/agency for energy efficiency with a clear mandate and responsibilities could respond to this challenge. The issue of an energy agency (energy efficiency agency) is being identified in Latvia. There is a need to consider the work of different agencies, such as the Latvian Development and Investment Agency and the Housing Agency in a coordinated effort to improve implementing powers and create tangible results.<br />
<br />
The lack of a dedicated national policy on renewable energy is hampering the development of appropriate regulation. Whilst a number of plans exist within the overall energy planning procedure, implementation has been slow due to the lack of coherent and directed policy.&nbsp;<br />
&nbsp;</p>

References: 

IEA Energy Statistics (2009). Available at: <a href="http://www.iea.org/countries/non-membercountries/latvia/">http://www.iea... [Accessed 16th September 2013]<br />
<br />
Austrian Energy Agency Country Profile - Latvia. Available at:&nbsp;<a href="http://www.enercee.net/countries/country-selection/latvia.html">http://w... 16th September 2013]<br />
<br />
US State Department. Latvia Background Note (01/07). Available at: <a href="http://www.state.gov/outofdate/bgn/latvia/79153.htm">http://www.state.go... 16th September 2013]<br />
<br />
European Renewable Energy Council. Renewable Energy Policy Review Latvia. May 2004. Available at: <a href="http://www.erec.org/fileadmin/erec_docs/Projcet_Documents/RES_in_EU_and_... 16th September 2013]<br />
<br />
EBRD. Latvia Country Profile. Available at: <a href="http://ebrdrenewables.com/sites/renew/countries/Latvia/profile.aspx">htt... 16th September 2013]<br />
<br />
Europa. Summaries of European Legislation. Latvia. Available at: <a href="http://europa.eu/legislation_summaries/enlargement/2004_and_2007_enlarge... 16th September 2013]<br />
<br />
ODYSSEE. Energy Efficiency Policies and Measures in Latvia. Riga, September 2009. Available at: <a href="http://www.odyssee-indicators.org/publications/PDF/latvia_nr.pdf">http:/... 16th September 2013]<br />
<br />
BIOGASIN. Permitting Procedures for Biogas Projects in Latvia. Intelligent Energy Europe. November 2010. Available at: <a href="http://www.biogasin.org/files/pdf/WP4/D4.2_Permitting-Procedure_in_Latvi... 16th September 2013]<br />
<br />
Public Utilities Commission. Annual Reports 2009. Available at: <a href="http://www.sprk.gov.lv/index.php?id=12196&amp;sadala=662">http://www.spr... 16th September 2013]<br />
<br />
Public Utilities Commission. Financing and Spending 2010. Available at: <a href="http://www.sprk.gov.lv/index.php?id=14206&amp;sadala=742">http://www.spr... 16th September 2013]<br />
<br />
Public Utilities Commission. Goals and Functions of Regulations. Available at: <a href="http://www.sprk.gov.lv/?id=1876&amp;sadala=133">http://www.sprk.gov.lv/?... 16th September 2013]<br />
<br />
Blumberga, A. et al. (2011) Residential Energy Efficiency Policy in Latvia: A Systems Dynamics Approach. Available at:&nbsp;<a href="http://www.systemdynamics.org/conferences/2011/proceed/papers/P1106.pdf"... [Accessed 16th September 2013]<br />
<br />
Ventspils Nafta.&nbsp;<a href="http://www.vnafta.lv/lv/">http://www.vnafta.lv/lv/</a> [Accessed 16th September 2013]<br />
<br />
Latvenergo.&nbsp;<a href="http://www.latvenergo.lv/portal/page/portal/Latvian/latvenergo/main">htt... [Accessed 16th September 2013]<br />
<br />
Baltic News Network (2011) Tumat: LNG Terminal Costs to Burden Customers. Available at:&nbsp;<a href="http://bnn-news.com/tumat-lng-terminal-costs-burden-consumers-26349">htt... 16th September 2013]<br />
<br />
Ministry of Economy (2002) By-laws of the State Energy Crisis Centre. Available at:&nbsp;<a href="http://www.em.gov.lv/images/modules/items/Cab__Reg__No__40_-_By-laws_of_... [Accessed 16th September 2013]