Over the past year, we’ve been hearing about plans for new solar and wind parks, fueled by positive changes in political attitudes and a willingness to keep pace with our Baltic neighbors and Europe on the path to more renewable energy acquisition. As a result, Latvia has become an attractive destination for local and foreign green power plant developers, actually exceeding the initial expectations of transmission and distribution network operators. Therefore, in purely arithmetic terms, it is clear that the announcement by the High Voltage Network that the projects of new power plants already in use exceed the capacity of the Latvian energy system, and the registration of new projects should be stopped. At the same time, this could be a dangerous step backwards in energy development, as the development of renewable energy production is effectively closed.
The initiative to address potential generation capacity ‘load’ is welcome and needed, but gasifier/brake operation will not create a balanced portfolio of renewable energy generation, which is also the goal of transmission system operators. By suspending the development of new projects, we are actually making all the bets on the projects of power plants that have been applied so far. It should be remembered that the implementation of a solar or wind energy project usually takes 4-5 years and requires tens and hundreds of millions of investments. From foreign experience it is quite clear that a significant part of the production capacities involved will not be brought to real production. The success of the project implementation will depend on the ability to attract the necessary investments, compliance with project development requirements, as well as free competition among developers. As in construction, reserving land for a skyscraper does not mean that it will be built there.
Currently, solar power projects dominate the volume of reserved power generation capacity – 80%, while wind farms occupy only 16% of the volume involved. For an efficient portfolio of renewable energy production, it is important to balance different energy production solutions because the wind does not always blow, the sun does not always shine, and hydroelectric power plants can have less water than they need. As a result, all these resources cover the necessary consumption of the country by combining their capacities. When applications for new energy generation projects are put on hold, the opportunity to promote a balanced distribution of plant types disappears. The development of hybrid projects is one way to promote a balanced energy system – we see this in the current development both in Europe and in the neighboring Baltic countries. This requires the solution of political issues, as well as a purely technical adaptation of the rules for the operation and management of the energy system to new realities.
In addition to dry, mechanical arithmetic calculations of connection capacities, it should be taken into account that, for example, solar parks and wind farms do not operate at full capacity all the time, moreover, the technical requirements for connecting new plant capacities already include a clause that the system operator can the need to limit the power transmitted to the network in order to avoid congestion. Accordingly, there is an opportunity to build a constructive dialogue with representatives of the renewable energy industry, taking into account foreign experience, to work on the preparation of specific rules for how this principle of power control will be implemented in practice, until the process is developed, new power plant projects have not been stopped for several years.
Yes, the regulatory environment of the industry was not ready for such a surge in demand, but this would not be a reason to completely stop the further development of renewable energy production. The energy balance of Latvia in seasonal terms still looks completely negative, and in the development of renewable energy we are far behind in the Baltic scale. Latvia has one of the highest electricity prices in the European Union, but renewable energy capacity, which is still beneficial for local energy production, is insufficient, increasing dependence on electricity imported from the Nordic countries. We simply cannot afford to slow down the development of the energy industry so quickly and wait for the ideas of power plant projects to be implemented.
The energy industry is an extremely dynamic field, and regulation of the industry must also be flexible in order to be able to quickly resolve such capacity bottlenecks while keeping development opportunities open to strong competition. Thus, the most enterprising and efficient in attracting investors developers will be able to replenish the energy production portfolio in Latvia, and we can be sure that the necessary green energy capacities will not remain only “on paper” at the level of ideas.
I urge the creators and makers of the Latvian energy policy and regulatory environment not to take hasty steps that significantly affect the development of the entire national economy of Latvia and, in particular, the energy sector. Latvia has a lot of experience in how to stimulate rather than slow down such development. We are a member of the European common internal energy market, which is clearly defined and from which we can draw valuable experience. Only in cooperation with the industry, openly and constructively, we will be able to jointly solve the current problems of renewable energy in Latvia.
Alnis Balins, Chairman of the Latvian Solar Energy Board