RES Integration for Increasing of Energy Supply Security in Latvia:

1. RES Integration for Increasing of Energy Supply Security in Latvia: Ivars Kudrenickis, Gaidis Klavs, Janis Rekis Institute of Physical Energetics, Latvia ENVIRONMENTAL AND ECONOMICAL FACTORS NEEDS FORUM 2 “Energy and Supply Security – Present and Future Issues”Krakow 5-6 July 2007 6th RTD Framework Programme Integrated Project

2. Plan of presentation Part I: Energy supply development trends and National Energy Strategy Part II: Integrated analysis of RES utilization, energy supply security and climate change mitigation factors in the national energy system development Part III: RES in Latvia power production and DH sector: assessment of employment effects and regional benefits

3. Part I:Energy supply developmenttrends andNational EnergyStrategy

4. Trends in primary energy supply

5. Primary energy flows in 2005

6. National Energy Strategy 2007-2016 The principal measures identified to increase energy supply security Increase in supply security and sustainability of national energy system has to be basic criteria for economic analysis and decision-making related to its development. • Diversification of fuels or fuel supply sources, relates both imported and local ones. • Latvia active participation in the common EU policy - power interconnection with European power systems (Nordel, UCTE), expansion of Incukalns underground gas storage; regional co-operation with Baltic sea region states, particularly, Lithuania and Estonia. • Effective use of resources in all stages: extraction, conversion, transportation and end-use.

7. National Energy Strategy 2007-2016 The quantitative targets: • Self-supply of total primary energy at the level of 37% (year 2025) • RES-E share of 49.3% in the electricity supply (year 2010) • Biofuels share of 10% (year 2016) and 15% (year 2020) in the transport sector

8. Local resources: future challenges • despite significant improvement of energy intensity indicator, further growth of total primary energy supply is expected • to meet the indicated target of self-supply, the challenging growth in use of local resources, especially RES, have to be reached: per 25% in year 2020 and 40%in year 2025, compared with existing one

9. Energy, economy and environment indicator interaction

10. Environmental indicators 2004 Source: Key world energy statistics 2005. IEA - CO2 emissions from fuel combustion only

11. RES-E share in power production

12. RES-E structure in year2005

13. Part II: Integrated analysis of RES utilization, energy supply security and climate change mitigation factors

14. Research Tasks • integrated analysisof national energy system development taking into account both: • RES wider utilization, • energy supply security, • climate change mitigation factors. • finding optimal structure of primary sourcesbalancefor power production • optimisation model MARKAL applied

15. Description of modelled scenarios

16. Modelling results: primary sources for power production

17. Modelling results: total GHG emissions in energy sector

18. Modelling results: division of GHG emissions among end-users of energy sector

19. Modelling results: RES-E share in the power production

20. Principal conclusions • Hydro and natural gas are the main primary resources for power production in all scenarios • In reference scenario (REF) coal use, together with 15% solid biomass co-firing, will be new important source for power production thus increasing supply security. However the reference scenario without defining particular environmental targets in conditions of increased power demand will not allow to fulfil the objectives of EU climate policy • RES-E target alone can not be enough effective instrument to mitigate climate change: RESE scenario target will allow in year 2030 to fulfil GHG emissions according Kyoto protocol only, but not be enough to fulfil strong obligations for post-Kyoto period. • To fulfil post-Kyoto obligation, RES-E target should be applied together with other climate change mitigation instruments, taking GHG emissions restriction obligation as a departure point (scenarios CAP & CCAP).

21. GHG emissions mitigation costs and RES-E additional costs • the highest costs are indicated at the beginning of the period; • the factor of fossil fuels prices and forecasted trends of RES-E technologies’ specific investments strongly influence the calculated additional costs.

22. Part III: RES in Latvia power production and DH sector: Assessment of employment effects and regional benefits

23. Research Tasks • To estimate economical benefits of RES integration into national power production system in accordance of the target to reach RES share 49.3% • To assess economical impact of potential wide use of non-traditional RES – straw – for district heating

24. New capacities assessed • Biomass(Wood) CHP - 70 MWel • Wind: onland (135 MW) and off-shore (77 MW) • Biogas – 8 MWel • Straw DH - 46 MWth

25. Possible approaches • Use of standard factors – the installation and operation of a given energy production capacity are associated with the specific number of jobs • Production chain analysis –identifying of the wages share in the value chain of a given energy production installation

26. Job places per 100 GWh annually produced electricity Source: R.E.H.Sims, “Biomass and Agriculture: Sustainability, Markets and Policies”, OECD Publication, Paris, September 2004, pp.91-103

27. Pre-feasibility study of employment, based on production chain analysis model Source: Tyge Kjær,Roskilde University

28. Production Chain AssessmentMethodology

29. Production Chain Assessment Methodology

30. Production Chain Assessment Methodology

31. Production Chain Assessment results: Employment effect and related tax revenues

32. Thank You ! Institute of Physical Energetics Aizkraukles 21, Rīga,LV-1006 Latviaenergy@edi.lv