Renewable energy project development in the Baltics

Due to the technological development and the possibility of selling the generated electricity without state-aid, which has been historically an issue due to feed-in tariff support scheme, last year was a turning point for the renewable energy industry in Latvia transforming it from an industry, in which the implementation of projects was hindered by the complicated bureaucratic process, to an industry where development has been set as a priority at the state level.

 

The bureaucratic aspects of the green investments are managed by the government initiative – “Green Channel”, which provides the investors a fast-track to access various state services needed for the project development. To qualify for the Green Channel the planned business has to meet at least three of the four following conditions: 

 

On the 14th of July 2022 Saeima [the Parliament of Latvia] adopted “Amendments to the Electricity Market Law” in the third reading implementing a new regulation which will affect the wind park development process:

 

It is expected that adoption of the “Amendments in Electricity Market Law”, which Saeima has approved in the second reading on July 14th, 2022 will make the use of solar energy by households the most affordable form of renewable energy. The changes will make it possible to share self-generated electricity, as well as to create electricity communities. Furthermore, the electricity net payment system will also be available to legal entities generating electricity for own consumption, while removing the current capacity restrictions for electricity generation equipment installed at the facility. 

 

Along with adoption of the “Amendments to the Electricity Market Law”, on the 14th of July, 2022 Saeima adopted the long awaited “Amendments to the Energy Law”. Taking into account the huge potential for biomethane and hydrogen production in Latvia, which historically has arisen from the construction of CHP plants, for the maintenance of agriculture and various industrial plants, under the new regulation biomethane producers will be able to receive guarantee of origin (GO). GO can be requested and received both for the gas produced from renewable energy sources and injected into the gas network, as well as for the gas that is produced, traded and used outside the network. This is a definite step forward for energy diversification and motivation to make investments in existing CHP plants in order to produce biofuels and in future green hydro­gen. 

 

According to the data of the electricity transmission system operator Litgrid, in the first quarter of this year Lithuania imported 65 percent of its electricity. Meanwhile, the Government of the Republic of Lithuania has approved ambitious plans to make Lithuania an energy exporting country by 2030, with its electricity needs met by local generation, all of it green. The total installed capacity of green energy in Lithuania would reach 7 GW, of which 1.4 GW would be generated by offshore wind, 3.6 GW by onshore wind and 2 GW by solar power plants. With such ambitious plans, Lithuania needed to speed up the implementation cycle of renewable energy projects, which had been unreasonably long due to bureaucratic hurdles, taking up to 3 years. 

 

Projects were significantly delayed due to the requirement to changes in land usage type (e.g. from agriculture to other uses suitable for energy facilities), the preparation of detailed plans and their compliance with muni­ci­pal master plans. An additional obstacle was the resistance of local communities and their desire to obtain tangible benefits from energy projects in their neighborhood. In order to remove the above mentioned barriers and to encourage the development and expansion of green energy through fundamental reforms in the Lithuanian electricity sector, the Government has prepared a package of law amendments, called the “Break­through” package. Some of the amendments to the law entered into force as of 02 July 2022.

 

The changes introduced a new model of “hybrid power plants”, which are based on the possibility to connect different renewable electricity plants and/or storage facilities at the same point, without aggregating their capacity. Solar power plants now no longer require screening and a full environmental impact assessment and, like hybrid power plants, can be built on agricultural land without changing its land usage type or limiting the size of the plant. There is also no longer an obligation to include wind farms in spatial planning documents, but permission will be required from the municipality on whose territory the wind farm is to be built. In addition, the amendments to the law set out clear criteria for when the development of wind farms requires an environmental impact assessment screening, as well as for when a full environmental impact assessment is required. Wind farms will no longer be recognized as having a significant impact on the landscape in the context of an environmental impact assessment, unless they are to be built in critical landscape areas approved by the Ministry of the Environment.

 

As regards wind farms, the requirements to set up sanitary protection zones are also dropped and instead a maximum distance to buildings criterion is introduced, which is defined as the height of the mast of a particular power plant multiplied by 4.

 

In order to reduce community opposition, the approved amendments will require green electricity producers to pay a so-called “production premium” for the amount of electricity fed into the grid equaling €0.0013/kWh or €1.3/mWh, and the money collected will be used to meet the needs of communities. The obligation will apply to all solar power plants connected to the transmission grid, wind and biogas plants operating commercially. 

 

It is encouraging that the approval of the “Breakthrough” package is just one of the changes taking place in Lithuania in the development of green energy. Back in early 2022, the Seimas adopted a package of laws to develop offshore wind energy in the Baltic Sea and gave the green light for the first offshore wind farm in Lithuania. In total, at least 4 offshore wind farms are planned for Lithuania's coastline, with at least one of them expected by 2028.

 

In Q1 2022, more than half of Lithuania's energy generation was green, and this growth was mainly driven by the proliferation of solar power plants. Nevertheless, efforts to develop solar power plants continue, with remote developers offering 38 MW of capacity in solar parks to Lithuanian residents by the end of the year, and the possibility to receive a state subsidy for the purchase of a remote power plant in a solar park. The aim is that by 2030, one in three households will generate their own electricity, thus ensuring energy independence and low electricity bills.

 

In today's reality, there is no doubt that the changes underway will make a significant contribution to increasing energy security and implementing the Green Deal strategy in Lithuania. And if the green energy developments continue to be targeted and successful, it is clear that 2030 will be a truly significant year for Lithuania.

 

According to the Estonia's National Energy and Climate Plan, Estonia has taken up an to reach 42 percent of renewable energy in total final energy consumption by 2030. In 2020 the aim of renewable energy in total energy consumption was 17,6 percent and in in fact in 2020 Estonia’s total share of renewable energy in total final energy consumption was over 38 percent. For period 2021-203, the aim is to have in average 24 percent of the renewable energy. Estonia is in a good way to reach its aims and in 2021 the total installed net generation capacity in Estonia was around 2360 MW in 2021, of which around 1710 MW is managed capacity. 

 

All together in Estonia there are currently 1,355 MW of power plants, 351.8 MW of combined heat and power plants, 4.1 MW of hydroelectric plants, 310.3 MW of wind power plants and 335.2 MW of solar power plants.

 

In order to increase the production of electricity from renewable energy sources, as of 2019, Estonia organizes renew­able energy tenders under the Electricity Market Act. The aim of the tender is to bring additional electricity from renewable energy sources to the market in a calendar year. The volume and timing of the auctions will be correlated with the trajectories for meeting Estonia’s renewable energy targets (including intermediate targets). The second tender took part in 2021 and third tender will take place in 2023 – during which the tendered capacity shall be 650 GWh. 2023 tender is expected to start in January, 2023. 

 

Estonia has seen rapid growth in field of solar energy which was ensured by expiry of the renewable energy subsidy for generating installations with an electrical capacity of less than 50 kWh, as well as by the announce­ment of low tenders for renewable energy, cheaper technologies and improved availability. In 2022 Estonia has 10 000 small solar producers and nearly 500 megawatts of small solar plants in Estonia. Installed solar capacity has increased from 128 megawatts (1 January 2020) to 335 megawatts (October 2021). 

 

In order to promote and facilitate the hydrogen as an energy source, Estonia introduced in 2021 a pilot project with introduction of green public transport. The value of said project is EUR 5 million. Further steps include a plan to introduce in Estonia with the help of European Regeneration and Resilience Facility, a support measure which will promote deployment of integrated hydrogen technologies (production, supply, consumption). 

 

Seeing the potential in hydrogen production Estonia is currently working on preparing an Estonian Hydrogen Roadmap outlining the actions needed to develop the hydrogen market in Estonia. The aim of the roadmap is to map the current situation and needs (including volume and potential) for the deployment of hydrogen techno­logies in Estonia and to agree on strategic options where it is most promising for Estonia to develop and deploy hydrogen technologies. It will also map the actors, their roles and key activities needed to achieve the objectives, both in Estonia and with key partners across the region. 

 

Under the legislative changes in all three Baltic states to ease the way for renewable energy investments the best time to invest in renewable energy projects is now!