Country profile and actions in BiogasAction. Latvia

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1 Country profile and actions in BiogasAction Latvia Page 1 of 8

2 Country profile and state of departure The history of biogas production in Latvia started in the early 1980 s in several dairy plants and pig farms with experimental studies on new methods for wastewater treatment and production of natural fertilizer. After a period of silence, over the past decade, the biogas sector has started to develop again. The development of the Latvian biogas market was initiated by the introduction of new RES support policy - electricity feed-in tariff, guaranteed payment for installed capacity and investment grants. The installed biogas capacity has increased from around 7 MWel in 2005 to MWel in However, the construction of biogas is still unused for 33 licenses with a total installed capacity of MWel. In 2013 the Ministry of Economics had set temporary limits within which additional subsidies for electricity producers were no longer submitted, it was planned that restrictions will be in force until the end of Most of the biogas stations are supported with feed-in tariff. All support for new biogas stations temporarily was stopped (no new licenses are available), but support for existing biogas stations didn t change and interest for new investments in existing biogas stations remained fairly high. In April 2015 the ministry of Economics started preparation of the technical standards for injection of gas into national grid. By approving the amendments on Energy Law at February 11, 2016, government of Latvia stated that on April 3, 2017 natural Gas market opening will take effect. At this point opening process just begins starting with legal entities and afterword s households. At 7th October 2016 came in to force The Cabinet Rules Nr.650, October 4, 2016 Requirements for injection and transportation of bio-methane and liquefied natural gas in the natural gas transmission and distribution system. However, there is still debate on the requirements imposed. Chairmen of the board of Latvian Biogas Association Andis Karklins, posit that biomethane quality requirements mentioned at this Cabinet Regulation No.650 is too high, and almost impossible to guarantee. So, from one side it is made possible for biogas actors to upgrade and sell Biogas in national natural gas grid, but in the same time quality requirements are so high and financial support are not at all, so the biogas operators are not interested in upgrading for biomethane production. Also, existing natural gas grid infrastructure Page 2 of 8

3 are not widely available for biogas stations, so without significant financial investments in natural gas grid infrastructure, it is impossible to connect to it. The use of biomethane in transport is also difficult because no compressed natural gas (CNG) stations are operating in Latvia and all infrastructure needs to be built from scratch. Due to the lack of infrastructure, there is no demand for CNG cars in the market and therefore also supply of cars Bioziedi Ltd. Biogas plant, cattle farm and fish farm. supporting CNG or compressed biomethane gas (CBG) use is very limited at the moment. However, farmers have shown interest in biomethane and its possibilities, but there is not much expertise in Latvia on the biogas and even more on biomethane business models and support schemes. No projections regarding use of biomethane in transport sector or for substitution of natural gas in heating sector are made. 1st May 2017 has come in to force the amendments adopted at 5th July 2016 on Cabinet Regulation No. 221 Adopted 10 March 2009 Regulations Regarding Electricity Production and Price Determination upon Production of Electricity in Cogeneration and Cabinet Regulation No. 262 Adopted 16 March 2010 Regulations Regarding the Production of Electricity Using Renewable Energy Sources and the Procedures for the Determination of the Price Amendments in regulations determine the limits of internal rate of return (IRR) 9% for those enterprises that produce electricity from renewable energy sources or high-efficiency cogeneration. If power plant has an IRR above 9%, then ministry will reduce the amount of mandatory procurement according to price correction factor. And in order to ensure that mandatory procurement price of electricity doesn t drop under the price necessary to provide operation of supported power stations in case of natural gas tariff decrement, and to adapt to regulations about natural gas market opening, Cabinet regulations intend to fix natural gas price at 234,77 euro/thousand n.m3. level, which is average price in period from august of 2007 until September of 2012 (natural gas price is used to calculate mandatory procurement price of electricity). At 2015, there was a rule that from 26 May 2011 until 1 January 2016 the Ministry [of Economics] shall not organize tenders for the acquisition of the right to sell electricity produced in biomass, biogas, solar or wind power plants within the scope of mandatory procurement, Page 3 of 8

4 and the producer may not qualify for selling electricity within the scope of mandatory procurement and for acquisition of the right to receive a guaranteed payment for the installed electric capacity. But at the beginning of 2016 Ministry of Economics extended the moratorium until RES producers were strictly against this moratorium, pointing out the mechanism for reducing overcompensation should be done without moratorium. Also, regarding both Cabinet amendments industry has 2 main objections: to determine IRR 12% instead of 9%, to fix natural gas price at 256 euro/thousand n.m3 instead of 234,77 euro/thousand n.m3. Taking into account reduced support according to the market players at the moment it is hard to expect new investment in biogas market. Chairmen of the board of Latvian Biogas Association Andis Karklins at government meeting argued We haven t seen any researches or calculations on which 9% are based. And mandatory procurement price of electricity according to this regulation is too low, it is at cost price level. At the moment policy makers in Latvia lacks strategy regarding biogas (green technologies in general) development in the future and it is hard to tell if the further actions will be in the direction to support the use of biogas to produce electricity or to promote its use in transport and entering in the natural gas network. Additionally, cooperation between different ministries according to policy on renewable resources, including biogas, is lacking. Also commercial banks are reluctant to give any loans for biogas projects as well. Summarizing, situation at market is complicated, because many biogas stations in Latvia was created by taking into account that there will be support from government for 10 years. For some biogas stations changes in regulations are critical. But for those biogas operators which built the stations at existing agricultural enterprises, Agroiecava Ltd. Biogas plant produce heat for local municipality. situation is not that critical. After the opening of natural gas market, it should be possible to inject biomethane in natural gas grid, but still it will take time to develop all technical specifications and arrangements to make it possible. Most biogas plants operating in Latvia are using biogas in CHP units thus generating both - electricity and heat. Since only electricity is supported by the feed-in tariff, heat is considered as a by-product. Usually part of the heat is used on site to heat the digesters and to provide heating for farms and local buildings. First attempts to use excess heat in district heating systems have been made. However, the cooperation between biogas plant owners and district heating system operators is difficult. DH system operators are not motivated to purchase cheaper heat from biogas plant because they are not allowed to increase their profit over 9%. Moreover, the existing regulation does not Page 4 of 8

5 allow them to purchase the third-party heat at the price that is below the price of resources that is needed to produce this amount of heat energy. In fact, biogas operators cannot sell their heat at low price even if it is a waste heat. New biogas plants could be a solution for a several challenges which are related with environment, climate, employment, agriculture, resource management. The rapid development of the Latvian biogas market has brought more competition among biogas producers for the feedstock and has increased plant operation costs. More and more biogas plant owners realize that additional income from heat use would help improving the economic performance of their plant. Only few biogas plants have found a solution for useful heat utilization, e.g. greenhouse heating or using heat in drying facilities. Furthermore, in 2016 was developed the first car which is powered by biomethane. Biogas upgrading until fuel quality is carried out in facility which has been developed in cooperation with Latvian and Swedish scientists. What have been done in BiogasAction in Latvia? During the BiogasAction project Ekodoma has been working on different tasks in order to promote and fulfill the targets in BiogasAction and the different challengers in Latvia especially with focus on WP3. The following initiatives has been established: Institutional building Several individual discussions have happened between Ekodoma and Biogas association of Latvia, Transportation association and Ministry of Regional Development and Environmental Protection. Due to changes in legislations, different stakeholders have different issues. At October of 2017 first stakeholder forum/ discussion Potential of biomethan use in Latvia was held. It was attended by The Ministry of Environmental Protection and Regional Development, Ministry of Transport, Riga Technical University, Latvian Biogas Association and other stakeholders. Main conclusions was that, such meetings are a good way to exchange important opinions and knowledge, but all ministries involved in biogas sector should participate, including Ministry of Economics and Ministry of Agriculture. It is important for creating unified strategy for biogas sector instead of providing many different support mechanisms from four main ministries. Also, for starting biomethane production in Latvia, adequate support mechanisms should be created. At the beginning of February stakeholder forum/discussion about renewable energy in transport were organized in cooperation with Zemgale planning region. Ekodoma attended as the expert and consultant for potential biomethan use in transport. The aim Page 5 of 8

6 of the meeting was to discuss development of the RES energy strategy for transport sector at Zemgale planning region. Afterword s at May 15th 2018, a conference Clean energy for all Europeans for stakeholders were held, which was divided in 3 sections. Afternoon section, with four presentations and a discussion, was devoted for biomethane and biogas situation in Latvia and Europe. Strengthening the biogas sector framework In order to raise the public acceptance in cooperation with Riga Technical University, Ekodoma and Latvian Biogas Association have organized a seminar Heating systems today and tomorrow for heating companies, municipalities, students and enterprises. Another event took place at Alūksne city - Energy info day, where Ekodoma representatives were informing local society about energy saving, energy efficiency, energy production and role of renewable energy sources in energy production Participation on International Power Industry, Energy Efficiency, Infrastructure and Environmental Technology Fair Environment and Energy In cooperation with Zero emission mobility support society information about biomethane potential in transport were placed at the stand about zero emission transport. In cooperation with Zemgale planning region event for municipalities were held, to discuss potential energy resources for Green Transport. Another workshop took place at Madona, Latvia. The aim of the workshop from the biogas perspective was to inform Short Rotation Woody Crop (SRC) operators about biogas industry itself and possibilities to them to take part in this industry. Taking in to account lack of financial support and issues with legislation it is necessary to rise public acceptance, more importantly to inform about environmental benefits of biogas production. Optimizing business models and financing of biogas projects As there is no interest on developing new projects at this point in Latvia, because of the very unstable political situation, it is important to strengthen the value of biogas industry in planning documents at state, regional and municipal level. To motivate municipalities to cooperate with local biogas operators and search for mutual benefits in biogas production, Ekodoma did calculations to identify a biogas production potential for 16 municipalities in Latvia. Results and possible measures were included in all 16 SEAPS (Aizkraukle, Aknīste, Auce, Bauska, Dobele, Iecava, Jaunjelgava, Jekabpils, Jelgava, Krustpils, Ozolnieki, Plavinas, Sala, Tervete, Viesīte municipalities). Based on all 16 SEAPS (and 6 SEAPS already in force) Zemgale planning region developed regional plan for development of sustainable transport. Main objective of Zemgale is to reach 12% RES in transport until As one of the activities to reach that goal is to switch to biomethane in public transport at least at one municipality Page 6 of 8

7 Optimizing biogas production In cooperation with Riga Technical university Ekodoma organized Biogas summer school. It was organized in cooperation with Institute of energy systems and Environment from Riga technical university. Moto of summer school was Biogas has a future. Target audience was all stakeholders public, students, academics, biogas operators, policy makers, professionals. Trainings were free of charge and open to every interested. During 4 trainings 7 different sessions were held: Planning of biogas plant Practical aspects of implementation of biogas plant Economic aspects of biogas production Role play implementation of new biogas station Economic and political aspects of Biogas production Practical aspects of Biogas production (use of different substrates and experience from existing biogas plant) Field trip to to biogas plant Agro Iecava, which is one of the few examples, where biogas plant has arranged cooperation with local town and are providing heat to district heating system at Iecava town. Assistance to specific high quality biogas project development Since 2015, the political situation in Latvia has been very unfavorable for new biogas plant development, therefore no new biogas plant has been developed, and there are not intentions to develop new projects in near future. During this activity Ekodoma was helping the existing Biogas plants to fulfill the new regulative requirements and find a solution for increasing energy efficiency. During the project Ekodoma was working with 4 biogas stations. Replication: Ekodoma is sharing their knowledge and experience through public information published during BiogasAction project. For further information please contact: Ekodoma Ltd.; ekodoma@ekodoma.lv EKODOMA Ltd. is an engineering consulting company, whose main activities are related to energy-efficient solutions and sustainable energy sources. Our aim is to achieve economic growth without causing harm to the environment. This can be achieved in every phase of project planning, taking into account both sustainable climate and energy planning concepts as well as providing our advice on the most appropriate technical solutions. Page 7 of 8

8 About BiogasAction: Biogas Action aims to promote the production of sustainable biogas throughout the EU, especially by exchanging best practice, creating new business models, and increasing investments in biogas production. The project s purpose is to serve as a vehicle for a rapid development of the European biogas/biomethane sector. This undertaking will contribute to the EU 2020 targets, by focusing on the removal of non-technical barriers to the widespread production of biogas from manure and other waste. The project is based on a deeper cooperation between the different policy levels (European, national and regional), and on its implementation in various EU regions. What actions will be undertaken, and what objective will they serve? To identify and disseminate proven support strategies and guidelines, to fulfil the potential for biogas and biomethane development in Europe. The partners will define a strategy for the global promotion of biogas in the EU, and will provide comprehensive tools on how to exploit the potential of biogas and biomethane in Europe, based on proven support strategies. In order to achieve this goal, a comprehensive inventory of support tools will be outlined and summarized in an interactive database. To define and implement a specific biogas/biomethane intervention strategy in each target country/region. The strategies will consist of a range of specific activities and measures, focusing on the removal of non-technical barriers for the widespread production and use of biogas/biomethane from codigestion of manure and organic wastes. These measures will include institutional building through the creation/improvement of the national and regional platforms for biogas deployment and development ; the improvement of dialog and interaction between stakeholders, decision makers, financing institutions, energy companies, other major biogas/biomethane actors, as well as a cross sectorial biogas network of collaboration and communication ; the optimization of business models and project financing ; an increase of investments in biogas/biomethane production in the EU ; an optimization of biogas production and use, including new biogas/ bio-methane distribution systems and the exploitation of biogas potential through project generation and concrete assistance to farmers and entrepreneurs. The project plans 50 specific quality, sustainable biogas projects in the intervention regions. To exchange knowledge and experience within and beyond the target areas and the project life time. The project will establish systematic knowledge sharing, through learning and networking, so that the actions could be replicated at the European level, and after the project lifetime. What could the project achieve? Through its various actions, Biogas Action could contribute both to the increase of the share of sustainable bioenergy in the final energy consumption, and to a reduction in the transaction costs for project developers and the authorities. To finish, the project could also actively contribute to the development of better policies, financial frameworks and market support at national and regional levels. Page 8 of 8