Krists Mertens: 400 million – the cost for a lack of priorities in energy
The moment when the government finally decides on support to offset price rises seems hopeful for many, like a long-awaited respite from the stress of energy price hikes. It is important to remember that the support measures implemented and still to be planned will cost more than 400 million euros. There is no doubt that support is needed – in this situation it is inevitable. However, it feels like this is one big, expensive bucket of water to put out the fire, if only for a while to mitigate the consequences of ill-considered management practices and a lack of clearly defined priorities in the energy industry.
At the moment, money is mainly being burned to alleviate the consequences of old problems. Given that the Latvian electricity market has an annual turnover of around 1.2 billion euros, the failures of previous years and the decisions not taken to develop new, cheaper energy production capacity will cost us a third of that. And that's just for now. The essence of any support measure is short-term assistance. It does not address the problems that exist. Investments are another matter – if we managed to attract 400 million for the development of the energy industry early, we would already have new renewable energy plants in Latvia that would produce at least one terawatt of electricity per year. This amount of energy can cover the annual consumption of all Latvian households.
Yes, there is a fast-moving discussion on how to support the installation of solar energy solutions for end-users. Meanwhile, households and businesses are starting to adopt solar energy, realising that it is up to the drowning people to save themselves. One would think that such a revival would at least add some value to this price crisis. It is a pity that action usually comes too late, and only when there is no other option. The lack of targeted and focused development in the industry that forms the backbone of the national economy is unacceptable.
Energy is a strategic national industry that has so far had only a formal priority status. For the last three years, the government has not seriously addressed the development of the industry. While other countries are building renewable energy production capacity, attracting investors and setting clear development targets for all market players, we have only visions and plans, without clear progress in their implementation. We need to understand that any changes in the energy industry need to be planned well in advance, because a large power plant cannot be built in a few months. Even if decisions are taken today, real change can only be achieved in a few years' time.
Support mechanisms are only a temporary patch, which is why we need to start working on solutions to reduce energy prices in the future. We need to move from reactive and pothole-patching tactics to building new roads, setting our own course for the country's economic development. The country must prioritise and actively engage in the development of new energy production capacity. This can have a fundamental impact on the growth of the whole economy – lowering average electricity prices, increasing network capacity and distribution costs, reducing environmental impacts and increasing competitiveness and energy independence.
The procrastination so far has led to a setback that will be felt for a long time – in the private sector and in business. Moreover, by continuing this way, we are losing money that could be invested in the development of the industry. Latvia has all the right conditions for renewable energy – we have sufficient amounts of both sunlight and wind, which are the cheapest and most efficient energy sources of the future. The only question is a clear development plan for acquiring these resources, because even for us, as a long-standing player in the industry, it is not clear what is the national action plan to support new energy production capacity.
I encourage the Government to be brave and to enter into an active dialogue with representatives of the sector to work on real action plans with concrete responsibilities and targets that will lead to the necessary results. We need to start acting like responsible businessman who plan for the long term and are able to build effective partnerships across the sector. By setting guidelines for the development of the energy industry and supporting their implementation in practice, the country would send a clear signal that the market would follow, and therefore attract investment.