Wind energy business review and perspectives in Lithuania

1. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Wind energy business review and perspectives in Lithuania Alvydas Naujekas President of Lithuanian Wind Energy Association; CEO Veju Spektras, Ltd.

2. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES • Facts chronology; • Lithuanian wind energy in EU context; • Wind energy goals in Lithuania; • Problems of wind energy project implementation; • Ways of problems solving; • Wind energy development perspectives.

3. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Facts chronology until 2002: • Absence of wind energy development background: • no grid connection rules; • no feed-in tarif; • no (still no) legal basis for renewable energy; • bad conditions for Western producers and investors; • Attempts to import second hand plants • Attempts to create own technologiess

4. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology • At the beginning of 2002 State Control Commission for Prices and Energy approves feed-in tarif for electricity from wind energy plants – 6,37EUR ct/kwh until2010; • In the middle of 2002 there’s mass agiotage about issuance of “advance technical conditions for grid connection”; • At the end of 2002 the wind research results made by REC according to UNDP programe was announced .

5. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology • In 2003 Lietuvos Energija and distribution companies receive lots of request to issue advance technical conditions for wind energy plants connection to the grid (power installed exceeds800 MW); • LE and distributions companies are alarmed; • when coordination EU admission agreement the aim of 7% electricity production from renewable resources until 2010; • Ministry of Economy prepares the order of tender; • “zone” idea occurs; • UAB “Dalis gero”begins construction of first new commercial 600 kW plant in summer 2003.

6. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology • UAB “Dalis gero” begins exploitation of first new commercial 600 kW plant in the beginning of 2004; • LE announces tenders for “Permission to develop electricity production” in zones III, IV and I in spring 2004; • New Law on detailed planning enters into force in summer2004;

7. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology • In 2005 the Government extends the term of 6,37 EUR ct/kwh until2020; • LE tenders for production extension are continued; • In autumn 2005 UAB “Vėjų spektras”receives permission for construction of 30 MW wind park and begins the road construction works;

8. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology • In 2006 LE tenders for production extension are finished for whole 200 MW in zones I-VI; • The following plants, parks are built and functioning: • UAB “Vėjų spektras” - 18 MW; • UAB SNP – 1,2 MW; • UAB “Kuprijus” – 0,8 MW; • In total 20 MW; • Few small second hand 50-150 kW power plants are built in Telšiai, Jurbarkas, Skuodas regions;

9. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology • In 2007 the following plants, parks are built and functioning: • UAB “Achemos hidrostotys” – 16 MW; • UAB “Vėjų spektras” - 12 MW; • A. Karapetiano – 2 MW; • total 30 MW;

10. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Fact chronology

11. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Wind energy electricity production 2006-2007

12. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Lithuanian wind energy in the context of EU • EU “White Paper” for Energy future: Renewable energy resources” (COM(97)599); • EU Directive 2001/77/EC “For promotion of energy production from renewable energy resources within domestic market”; • EU Energy policy 2007;

13. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Wind energy goals in Lithuania • On current grid conditions is possible to produce up to 2,8 TWh/year (Gross consumption in Lithuania is 14 TWh/year); • It is possible to install 1200 MW wind energy plants + offshoreplants; However present development is very slow.

14. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Problems • Since 2004 the investment costs into conditional MW are increasing rapidly: • WECs – from 0,7 to 1,2 mln. € (2007) 85%; • Construction works – 100%; • Transportation – 50%; • Designing-planning – 250-300%; • Land – no forecast.

15. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Problems • The official state energy strategy still fossil fuel and nuclear oriented, which have very negative consequences for development of renewables; • Despite formal declarations, strategy for development of renewables not supported by any governmental institutions; • High resistance from grid transmition utilities; • Low investment return (due to low wind electricity purchase price the term for investment return is increasing, it’s not worth to invest); • Due to strict environmental regulations and high price of land is not possible to develop wind farms on allocated areas; • Too long and complicated planning regulations, lasting 18 – 20 months; • Is very long-lasting time of wind turbines supply, due to extremely high needs; • These conditions blocking financial flows for investment projects, increasing interest rates, complicating conditions for loans;

16. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Ideas for solving the problems • To develop legal base for renewable energy: • Separate Law on Wind Energy; • or as a part of the Law on Renewable Energy; • To set wind energy as a priority; • To change current system of tendering for grid connection; • To increase the feed-in tariff to 7,5 – 9,2 EUR ct/kWh; • To cover entire country for development of wind energy (not only allocated sites near the Baltic Sea); • To form a budget for compensation of prices for renewable energy instead of current budget of public interest; • To simplify land use planning procedures;

17. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES Lithuanian wind energy development perspectives

18. WIND ENERGY – SURE WAY TO INCREASE ALLOTMENT OF RENEWABLES THANK YOU FOR ATTENTION!