Long-term Forecasting Problems of the Latvian Energy Sector Development

1. Long-term Forecasting Problems of the Latvian Energy Sector Development M. oec. E. Zeberga, Prof., Dr. habil. ing. V. Zebergs, Prof., Dr. habil. ing. N. Zeltins Institute of Physical Energetics of Latvian Academy of Science  Aizkraukles St.21, Riga LV-1006, Latvia Phone: (371)7558636 or 9363105; Fax (371) 7557671 E-mail: zeltinsh@edi.lv

2. Population (in million 106) 2.37 GDP 109 US$ off. 7.16 GDP 109 US$ ppp 16.8 GDP/c US$ ppp 7088 TPES [PJ] 157 TPES/c [PJ] x 10-6 66 Electricity Supply [TWh]* 4.93 Electricity/c [MWh]** 2.08 General Data (2000)Notes:1.     GDP in US$ (1995) off. – Official Bank Exchange Rate Average Per Year,2.     ppp – Purchasing Power Parities,3.     TPES – Total Primary Energy Supply,4.     /C – Per Capita5.     *19956.     ** Final Energy

3. Natural Resources Forests – cover 45% of the state’s territory, timber product reserves increase per year – 16.5 mill. M3. Swamps – cover 4.9% of the state’s territory, peat bogs form 0.4% of the state’s territory. Water resources – there are more than 12,400 rivers. Longest river in Latvia– Gauja, 452 km; Largest river – Daugava, total length of 1005 km: 352 km in Latvia. 8.7% of Latvia’s territory has been classified as specially protected areas. Highest point: Gaizinkalns, 311.6 metres. Latvia’s weather is governed by a moderate oceanic climate, with pronounced cyclone activity and a considerable amount of precipitation. Summer: June - august. Winter: December - February. The average temperature in summer is 15.8°C (in the capital 16.1°C), the average temperature in winter is –4.5°C (in the capital –3.8°c). The average precipitation amount in summer is 195 mm, in winter - 116 mm.

4. Basic Goals As it moves into the 21st century, Latvia is clearly on a path to convergence with the EU. For Latvia, membership in the European union and NATO are not ends in themselves, but simply means to accomplish a greater goal – participation in a united Europe, whole and free. Latvia has sought membership in NATO in order to make its contribution to the formation of European security policy. In the development of Latvia’s security policies, Latvian governments have focused on regional co-operation and European integration, while building a special relationship with the united states in order to strengthen the transatlantic aspect of its security policy.

5. Year GDP bill. Lats GDP per capita (th. Lats) Inhabitant milj. people 1980 4.20 1.67 2.51 1985 4.99 1.93 2.59 1990 6.31 2.37 2.66 1991 5.52 2.08 2.65 1992 3.74 1.43 2.62 1993 3.32 1.29 2.57 1994 3.39 1.34 2.53 1995 3.36 1.35 2.49 1996 3.48 1.41 2.47 1997 3.77 1.55 2.43 1998 3.95 1.64 2.41 1999 4.06 1.70 2.39 2000 4.34 1.83 2.37 2001 4.86 1.98 2.36 GDP in Year 2000 Average PricesLatvian National 1 lats (LVL) = 100 Centimes = 1,69 EUR.

6. Dinamic of GDP

7. Consumption of Energy Resources (th. tce) 1999 2000 2010 2002 Energy consumption – total of which: Natural gas and liquefied gas Light fuel products&other oil products Heavy fuel, oil shale Firewood, peat, coke&other fuel Coal Electrical power (HPS, wind generators and imported from abroad) 5730 1495 1335 900 1300 120 580 5259 1560 1366 406 1267 94 566 5740 1980 1313 269 1475 123 580 6466 1847 1610 233 2084 99 593 Consumption of Energy Resources in Latvia

8. Structure of TPES (2000)

9. Components of electricity supply (billion kWh) 1999 2000 2001 2002 Total electricity Generation – total of which: Large scale HPP CHP Block stations&other equipment Small HPS Wind generators Import of electricity – total 6.065 4.110 2.744 1.222 0.128 0.014 0.002 1.955 5.922 4.136 2.799 1.163 0.150 0.020 0.004 1.786 6.163 4.280 2.801 1.246 0.198 0.032 0.003 1.883 6.32 3.98 2.43 1.24 0.26 0.03 0.01 2.35 Electricity Supply in Latvia

10. Year Total electricity consumption TWh Production of HPP TWh % 1995 6.2 3.2 52 1996 6.4 2.2 34 1997 6.3 3.5 56 1998 6.3 4.1 65 1999 6.1 3.1 51 2000 5.9 3.2 54 2001 6.2 3.1 50 2002 6.3 2.8 44 Production Electricity by Latvian HPP

11. The Electric energy produced by the Latvian HPP

12. (th. toe) Solid Liquid Gas Hydro RENs Other Total Production 1008 1 - 240 0.172 - 1249 Imports 114 1134 1116 - - - 2364 Exports -172 -31 - - - - -203 Consumption 950 1104 1116 240 0.172 - 3410 Stocks - 69 - - - - - Latvian Primary Energy Balance (2000)

13. Specification Generation [TWh] 4.1 Coal - Oil 0.1 Gas 1.2 Nuclear - Hydro 2.8 Other - Imports (+) +2.1 Exports (-) -0.3 Consumption 5.9 Electricity Production (2000)

14. Specification Power Stations [MW] 2027 Coal - Oil - Gas 515 Hydro 1510 Other 2 Peak Demand [MW] 1226 Installed Capacity and Peak Demand (2000)

15. Installed Power Capacity (2000)

16. Year Bill. m3 1990 2.89 1995 1.16 1996 0.89 1997 1.27 1998 1.25 1999 1.10 2000 1.32 Dynamic of Consumption Gas in Latvia

17. Dynamic of Gas Consumption

18. Country Existing Perspective Latvia 2.12 50 (8 UGS) Poland 0.56 5.23 Slovakia 1.60 4.39 Hungary 1.92 2.52 Czech Republic 20.1 1.20 Romania 0.57 1.45 Slovenia 0.07 0.07 Bulgaria 0.60 0.60 The UGS Capacities in Eastern Europe [in Bill. Cubic M (109 M3)]

19. Fuel % Gas 65 HFO 16 Wood 15 Coal 2 Other 2 Total 100 Total Consumption for Heat Production (2000)

20. TPES Consumption for Heat Production

21. 1990 1995 2000 DHS 70 55 31 Local 40 20 19 Total 110 75 50 Dynamic of Heat Consumption in Latvia (PJ)

22. Dynamic of Heat Consumption

23. Emission Summary Burning energy and transport fuel CO2 7.1 7.0 CH4 0.124 0.025 N2O 0.004 0.003 SO2 0.018 0.018 NOx 0.038 0.037 CO 0.283 0.251 Emission in Latvia in Year 2000 (milj. T.)

24. Emission Unit 1990 1995 2000 CO2 Milj. t 22.9 10.0 6.9 CH4 th.t 63.7 29.1 25.1 N2O th.t 1.1 0.3 0.3 SO2 th.t 118 59 18 NOx th.t 102 42 37 CO th.t 499 436 251 Emissions Dynamics in the energetics Sector

25. The Maximum Limits of All the Sources of Emissions Allowed for Latvia in 2010 have been fixed by the Regulation of the Latvian Cabinet of Ministers No.33 (2002) Regulations on the total maximum allowable emissions in the air in the country: ·sulphur dioxide 107 thousand tons ·nitrogen dioxide 84 thousand tons ·non-methane volatile organic substances136 thousand tons ·ammonia 44 thousand tons In the period from 1998 till 2000 the level of the above-mentioned emissions was significantly lower than the level allowed by the Göteborg protocol.

26. Emissions Dynamics

27. Emissions Dynamics

28. Legal Regulations: Security of Supply and Creation of Oil Product Reserves On August 14, 2001 the Cabinet of Ministers adopted the Concept on Formation of the State Oil Product Reserve. According to the Concept, a package of regulations and amendments to the current legislation had to be drafted. The Cabinet of Ministers on January 29, 2002 adopted Regulations No.40 “On Statutes of the Energy Crisis Management Centre”, on March 12, 2002, Regulations No.106 “On theprocedure of energy supply and fuel sale to users during energy crisis” and on March 26, 2002 Regulations No.138 “Onthe procedure of creation and use of oil product stock”. On May 28, 2002 the Cabinet of Ministers adopted Regulations No. 218 “On Energy Information System”

29. Legal Regulations:electricity Sector ·The Energy Policy in the sector of electricity was adopted in the Cabinet of Ministers on September 11, 2001. On the basis of the amendments to the Energy Law adopted in the Saeima on May 10, 2001, the Cabinet of Ministers on January 8, 2002 adopted Regulations No. 9 “Requirements for co-generation plants and the procedure ofsetting the price for purchase of excess electricity”. On January 15, 2002 the Cabinet of Ministers adopted Regulations No.28 “ On the total capacity for installations in 2002 and specific volumes of each type of electricity production, ifrenewable energy sources are used in electricity generation” and Regulations No. 29 “The procedure of installationand dislocation of electricity production capacities if renewable energy sources are used for electricity generation”. On December 24, 2002 the Cabinet of Ministers approved Regulations No.713 “On annual consumption of electricity toobtain the status of a qualified user in 2003”. In 2003 the status of the qualified user may be obtained by energy users with annual electricity consumption of not less than 20 million kWh per year. Draft regulations “On total volumes ofcapacity installation in 2003 and concrete volumes of each type of electricity production is renewable energy sourcesare used for electricity generation” has been developed and submitted to the Cabinet of Ministers

30. Legal Regulations:gas Sector The Cabinet of Ministers during the meeting on October 23, 2001 accepted the concept developed by the Ministry of Economics “On liberalisation of the gas market in the Republic of Latvia in connection with the Directive 98/30/EC of theEuropean Parliament and Council “Concerning common rules for the internal market in natural gas”. The aim of the concept is to encourage competition in the area of natural gas supply in Latvia and to harmonise the regulatory documents with the requirements of the European Union. The Action Plan to implement the concept has been developed.

31. 1999 2000 2001 2002 Average electricity sales tariff Residents, users of a united tariff Night tariff Day tariff 0.03028 0.033051 0.02574 0.03678 0.03028 0.033051 0.02574 0.03678 0.03028 0.033051 0.02574 0.03678 0.03028 0.033051 0.02574 0.03678 Electricity Tariffs (LVL/kWh), Tariffs Are Listed Without VAT.

32. Unit 1990 2000 2010 2020 2030 Electricity consumption TWh 10.2 5.9 7.2 8.8 10.7 Peak demand MW 1685 1226 1440 1760 2140 Future Energy Demand: Electricity

33. Energy Demand

34. Unit 1990 2000 2010 2020 2030 Primary demand M toe 8.65 3.74 4.38 5.02 5.35 PJ 349 157 184 211 225 Primary Energy Demand

35. 2000 2010 2020 2030 Population (in million) 2.37 2.36 2.38 2.46 GDP 109 US$ off 7.16 11.3 16.7 22.4 Total Primary Energy Supply [PJ] 157 184 211 225 TPES/c [PJ] 66 78 89 92 Electricity Supply [TWh] f 4.93 6.05 7.39 8.99 Electricity/c [MWh] (final energy) 2.08 2.56 3.11 3.67 Future Energy Demand: General Data

36. Electricity and TPES Demand

37. Electricity (TWh) 1990 2000 2010 2020 2030 Generation (total) 6.7 4.1 6.69 8.82 10.95 Coal - - - 2.1 1.8 Oil 1.0 0.1 - - - Gas 0.9 1.2 4.2 4.2 2.4 Nuclear - - - - 4.2 Hydro 4.6 2.8 2.44 2.46 2.48 Other 0.2 - 0.05 0.06 0.07 Imports (+) +3.9 +2.1 +0.51 - - Exports (-) -0.4 -0.3 - -0.02 -0.25 Consumption (total) 10.2 5.9 7.2 8.8 10.7 Energy Supply of Electricity Production

38. Prognoses of thePossible Technologies of Base Capacity Electric Power Stations in Latvia Evaluation of technologicalpossibilities: + + very high; + high; - low; - - very low

39. Global Energy Consumption Forecast in The 21st Century IIASA Options, Winter 1998

40. Specification Unit 1990 2000 2010 2020 2030 Power station MW 2017 2027 2145 2460 3750 Coal MW - - - 300 300 Oil MW 390 - - - - Gas MW 125 515 600 600 600 Nuclear MW - - - - 600 Hydro MW 1502 1510 1520 1530 1540 Other MW - 2 25 30 35 Peak demand MW 1685 1226 1440 1760 2140 Installed Capacity and Peak DemandNot Included Reduplicate Gas Turbines in Pick Power Plant for Reservation Pick of Hydropower Planning by Low Water in 2010-700MW, 2020-900MW and in 2030-900MW

41. Primary Energy Supply 1990 2000 2010 2020 2030 Indigenous Production Nuclear Hydro Other (solid fuel) Total production - 0.387 0.375 0.762 - 0.24 1.01 1.25 - 0.243 1.1 1.343 - 0.245 1.2 1.445 0.362 0.247 1.3 1.909 Imports (+) Coal Oil Natural Gas Other (electricity) Total imports 0.61 4.49 2.45 0.34 7.89 0.066 1.20 (2001) 1.09 0.18 2.72 0.07 1.40 1.63 0.04 3.24 0.49 1.60 1.69 - 3.78 0.43 1.80 1.43 - 3.66 Exports (-) Coal Oil Natural Gas Nuclear Hydro Other Total exports - - - - - - - - 0.031 - - - 0.2 0.231 - - - - - 0.2 0.2 - - - - - 0.202 0.202 - - - - - 0.22 0.22 TPES [PJ] TPES [Mtoe] 349.02 8.65 157.08 3.74 184 4.383 211 5.023 225 5.349 Primary Energy Balance(Mtoe)

42. The Proposal for Co-operation in Research Project (I)Integration of Post Transition Countries in European Free Energy Market: ·        Existing national and regional energy market in Central and Easter Europe ·        European union (EU) agenda for implementation free energy market ·        Integration in European free energy market ·        Promotion off CEE countries power system competition possibilities ·        Possibilities to protection national energy market

43. The Proposal for Co-operation in Research Project (II) Joint Researches of Energy Efficiency and Energy Saving Strategy of Post Transition Countries Central and Eastern Europe ·Application of mathematical models for the economic and ecological assessment of the gains from efficient and rational use of energy. ·        Energy efficiency and energy saving in industry and the sector of public buildings, and innovative technologies for their raising. ·        Energy efficiency and energy saving in the sector of public buildings. ·        The study of the physical processes and simulation for raising energy efficiency. ·        Significance of the renewable and local energy resources for raising energy efficiency and the development of balanced energetics. ·        Economic and institutional methods and mechanisms for the management of energy efficiency and energy saving programmes.