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The energy sector of Latvia, how green are we willing to be?

The energy sector of Latvia, how green are we willing to be?

Green energy is an almost ideal solution for a better day-to-day life: it’s environmentally friendly, has great potential and is a good investment in the future that can operate without State subsidies even now. Meanwhile in Latvia the maintenance of renewable resource balance has been entrusted to hydroelectric power plants, there are few new green energy projects and a small percentage of people choose to use renewable energy on a daily basis, whereas the neighbouring countries are developing wind parks and a third of all households use energy that’s generated in an environmentally friendly way. What’s keeping us from living greener and creating a sustainable power industry?

Alongside the active development of renewable resource power plants in Estonia the demand for green energy from companies and society has also grown significantly. In the beginning of 2019 only every twentieth Estonian household opted for green energy, but this year every third household that concludes a contract with the largest energy trader of the state – Eesti Energia, chooses energy generated from 100% renewable resources. Lithuania will open its energy market for households only next year, so it’s too early to draw comparisons here, but the company sector shows similar trends – in both neighbouring countries hundreds of companies use renewable energy sources and the number increases each year.

Meanwhile in Latvia both households and businesses paint quite a modest picture. We want to be the greenest country in the world, we take pride in our untouched resources of nature and we strive for a healthy lifestyle, but whenever there are talks about green energy, these ambitions are greatly slowed down by our prejudices, lack of knowledge and past baggage. What are the main reasons why the demand for green energy in Latvia has stayed at the same spot as it was five years ago?

Differing views and generations

Societal views, social status, knowledge of green energy and climate issues in general play a significant role here. Historically, most of electricity in Latvia has been generated in hydroelectric power plants, that’s why there’s a belief that we already are quite friendly towards the environment. However, it is important to understand that placing all development bets on hydroelectric power alone is dangerous. Yes, there are periods when Daugava HPP can cover all electricity consumption of Latvia. That doesn’t mean, however, that the HPP can ensure 100% of consumption in Latvia every day. For example, on a hot summer’s day when the rivers are dry, electricity generation via a HPP just does not cut it. We must understand that the green energy sources are inconsistent. Hence, also the production amounts are changeable. That’s why it’s crucial to diversify the production capacities and availability: water, sun, wind, etc.

Also, generational opinions and possibilities make certain corrections. Older people, much like with the issue of energy efficiency of buildings, don’t see a significant gain in purchasing green energy, because sustainability is not their priority – especially, if they would have to pay more for it for a brief period. There’s also quite a firm view that the wide forest territories and proportionally small amount of industrialisation makes almost any sector in Latvia green, and thus the energy sector must also fine. At the same time, we see that the younger generation cares about the climate and sustainability issues significantly more and they are prepared to practically support the efforts in finding solutions for environmental issues.

Baggage of bad reputation

For many years now the attempts to solve the issues regarding the most famous renewable energy production support programme in Latvia also known as the mandatory procurement of electric power have resulted in strong, negative associations with green energy and this creates a serious, prejudice driven obstacle for any new initiative regarding renewable energy. Most inhabitants in Latvia think that they have supported green energy quite sufficiently with payments of the mandatory procurement component in electricity bills and they aren’t willing to spend a cent more for this cause. Knowing the whole history regarding the issue of mandatory procurement, it is hard to judge anyone for that. This is the reason why every new initiative in producing green energy is automatically followed by the argument – “I don’t want to pay for this from my pocket”. Even though most new projects nowadays don’t have basis for this.

For some time now the technological development has led us so far that the modern wind and solar energy power plants can operate successfully without additional State funding as full-fledged business projects that produce and sell green energy. The climate of Latvia is also well suited for this. In comparison with the southern countries, the lower average air temperature in our latitude even increases the efficiency of solar panel production.

From the perspective of sectoral development, it is necessary to develop a new regulation that is fitting to the current situation, which would promote investments in new and modern renewable energy resource technologies. Commercially viable renewable energy projects don’t need subsidies or other type of support from the State. At the same time, they play a significant role in ensuring lower electric energy prices in Latvia in the long run. However, the prejudices rooted in past situations and the prolonged battle with mending the issues created by the mandatory procurement component currently slow down the further development of the market and the sector greatly.

Lack of positive motivation

Sometimes movement into a new direction requires a push in the form of positive stimuli. Currently there is no such demand from the society or regulations that would promote the transition to more extensive use of renewable energy sources, as it is, for example, in Scandinavia. At the moment mainly exporting companies in Latvia consider the source of their energy, since most of them work with the Scandinavian market and their cooperation partners require for the production to be made using renewable energy sources.

Companies working in other markets receive such requirements less often. Mostly these are individual cases, the basis of which are the requirements from their cooperation partners that arise from the environment goals set by the company. Hence, at the moment there is no real motivation to be greener because it doesn’t exactly make the company situation better or worse in the market. In the business environment everything depends on the price per kilowatt-hour, that’s why in pursuit of expense reduction and not seeing a significant added value or not receiving the relevant requirements from cooperation partners, companies don’t exactly strive to be greener and friendlier to the environment.

Of course, the introduction of such greener approach on the level of laws and regulations can be seen differently – it can be an additional burden for entrepreneurs. However, it possible to implement this with positive support facilities for those entrepreneurs that choose to decrease their impact on the environment. For example, in the form of decreased loan interest rates for new investments or by not applying the tax on energy, if the company purchases 100% green energy.

Can we create a truly green and sustainable future regarding the energy sector in Latvia? Yes, absolutely, if we can overcome our historical prejudices and learn from mistakes rather than let them dictate our future. It is clear that in introducing renewable energy sources in our everyday life, both the actions of the State, as well as the understanding of each inhabitant are of importance. However, together we can make a demand for better environment and future now. Transition to renewable energy sources is a priority in all of Europe and it is high time to make those carefully thought out steps that we will benefit from in the long haul from the perspective of the environment and electricity prices alike.