National Programme for the Development of Renewable Energy Sources

1. Seminar The role of civil society in implementing the EU directives on the development of renewable energy sources in Lithuania 13 May, 2014 National Programme for the Development of Renewable Energy Sources

2. Context • The Ministry of Energy commissioned a study intended to contribute to the drafting of the Programme for the Development of Renewable Energy Sources (RES). The main objective of the study was to determine national targets for energy consumption from renewable sources in the electricity, heat and transport sectors and propose measures for achieving those targets. • The study identified three problem areas where difficulties in achieving the 2020 targets set for the consumption of energy from renewable sources might arise, namely: RES consumption in the electricity generation and distribution sector, the transport sector and for individual household heating. • The strategic goal of the Programme for the Development of Renewable Energy Sources is to promote the use of RES and ensure that RES represent a significant share of national primary energy resources in 2020.

3. Energy consumption expected to grow by up to 8%before 2020in thousands of toe 7.8% 5.466 Sector • Main prerequisites for the estimated growth: • Predicted annual GDP growth of 3.9 per cent until 2020 • Growing efficiency of heat consumption and transmission • Growing efficiency of electricity transmission • Predicted energy consumption decrease in the district and household heating sectors • Predicted growth in the electricity and transport sectors – 13% and 10% respectively before 2020 5.0671 Electricity Transport Heat for households Heat for district heating Other heat Actual consumption in 2012 Estimated consumption in 2020 Sources: Statistics Lithuania, Ministry of Finance

4. RES targets still to be achieved in the sectors of electricity, transport and heat for householdsEnergy consumption, in thousands of toe - RES - Non RES - Proposed measures - RES shortfall Total energy A | Electricity3 C | Transport5 B1 |Heat for households 1,124 822 1,442 803 1,313 959 5,466 161 5,067 262 3,800 1,298 1,250 3,972 285 1 79 63 103 164 1,102 1,388 2012 2020 estimation 2020 estimation 2012 2020 estimation 2020 estimation 2012 2012 RES: 22% Target 23%1 RES: 11% Target 20%4 RES:4.8% Target 10%1 RES: 68% Target 80%4 Estimation 31%2 Estimation 23%2 Estimation 5.5%2 Estimation 74%2 B2 |District heating B3 | Other heat6 1 – The target set in accordance with EU Directive 2009/28/EC. 2 – The estimation based on the implementation of the proposed measures. 3 – In the electricity sector the RES share based on EU Directive 2009/28/EC was calculated as a share of total national energy consumption. This is the total indicated here. However, it should be pointed out that electricity generated in pump storage power plants (44 thousand toe) was not taken into account when calculating the RES share. 4 – The target set by the Law on Energy from Renewable Sources. 5 – In the transport sector the RES share based on EU Directive 2009/28/EC was calculated in respect of only part of the fuel consumed by the transport sector. The natural and petroleum gas consumed in the transport sector and the fuel consumed by air transport were excluded from the calculations. Thus, the diagram represents only the fuel that was used as a basis for calculating the share of RES consumed by the transport sector. 6 – The fuel used to produce heat by non-household consumers (industry, services, agriculture, fisheries and construction). 1,204 874 950 773 189 1.044 630 817 160 133 2020 estimation 2020 estimation 2012 2012 RES: 14% RES: 28% Target 60%4 Target undefined Estimation 13% Estimation 76%2 Sources: Lithuanian District Heating Association, Statistics Lithuania, Law on Energy from Renewable Sources

5. A | First target: to increase local electricity generation from RES. It is proposed that the shortfall in RES-based electricity be offset by new biofuel/biogas installationsElectricity generation from RES in 2020, in thousands of toe Capacities in 2013 Esamų galingumų gamyba Additional production under quotas by 2020 • Wind – 49 thousand toe • Hydro energy – 37 thousand toe1 • Biofuel – 22 thousand toe • Solar energy – 5 thousand toe • Waste – 4 thousand toe • Biogas – 4 thousand toe • Produced under allocated quotas: • Wind – 39 thousand toe • Biogas – 4 thousand toe 18 Infrastructure built in 2013 Infrastructure built before and in 2012 RES consumption in 2020 RES share 11% 4% 8% 23% • Proposal • In order to cover the shortfall it is proposed to subsidise the most cost-effective projects for electricity generation from RES. The most cost-effective projects are the initiatives to convert gas installations in Vilnius and Kaunas into biofuel and/or waste-based installations (in accordance with the National Programme for the Development of the Heat Sector) and to build new cogeneration installations using biomass and/or biogas in other Lithuanian cities. • Estimated demand for support – up to LTL1 133 million. 1 –Excluding the Kruonis pump storage power plant Sources: National Commission for Energy Control and Prices, Litgrid

6. A | Proposed electricity generation from RES by 2020MW installed capacity Proposed capacity,to be achieved with EU funding1 Planned capacity (promoted through public interest services) Potential Estimates for 2020 Comment Capacity in 2013 • 350 • 02 1. Biofuel • 52 • 198-2413 • 250-293 • The construction of new installations and conversion of existing gas-based cogeneration installations into biogas installations was taken into account. 2. Hydroenergy • 128 • 30 • 1 • 0 • 129 • The potential in the Nėris segment of Kaunas-Jonava was included, but could only be exploited following amendments to the Law on Water. 3. Biogas(landfills) • 9 • 0 • 0 • 0 • 9 • According to the draft National Waste Management Plan, waste processing will contribute to the reduction of fuel (waste) accumulation in landfills. 4. Biogas (anaerobic degradation) • 9 • 75 • 12 • 0-433 • 21-64 • Biogas production potential in agriculture was indicated. 5. Wind energy (on-shore) • 278 • 222 • 0 • 500 • The impact of further development on electricity grids is not clear. In the Law on RES the Lithuanian government undertook to draft a procedure for further development after achieving the capacity of 50 MW4. • n.a. • The economic potential is not known. After the off-shore areas are added to the general plan of the territory of Lithuania, research will be conducted regarding specific marine areas. 6. Wind energy (off-shore) • 0 • n.a. • n.a. • 0 • n.a. 7. Solar energy • 69 • n.a. • 0 • 0 • 69 • The impact of further development on electricity grids is not clear. In the Law on RES the Lithuanian government undertook to draft a procedure for further development after achieving the capacity of 10 MW4. 1–Proposed capacity to achieve the targets with the support of the EU structural funds. 2 – Ministry of Energy data.3 – Kaunas Technology University is currently conducting a study commissioned by Litgrid on Possibilities of connecting power plants using RES to the 330-110 kV transmission grids by 2030, focusing on the impact of further development of wind and solar plants on transmission grids. 4 – It is proposed to build new cogeneration installations with 43 MW total installed capacity using biofuel or biogas in Lithuanian towns and cities other than Vilnius and Kaunas. The total installed capacity has been planned, but it is not clear how the capacity will be shared between biofuel and biogas installations. Sources: National Commission for Energy Control and Prices, Litgrid

7. B1 | Second target: to increase the total final RES consumption in the thermal energy production sector from 35 per cent in 2020 to at least 45 per cent in 2020. Households. It is estimated that without additional measures the share of RES in households will amount to 68 per cent in 2020RES consumption in households with individual heating in 2020, in thousands of toe Shortfall in RES (to achieve the target would cost LTL80-110 million) RES consumption in 2020 Estimated RES consumption • It is predicted that the increase in gas and biofuel prices will improve heating efficiency • Greater efficiency will mean that actual RES consumption will change very little in absolute figuresas compared to 2012 • Biofuel will remain the main fuel for individually heated households • On the basis of 2009-2012 trends, it is estimated that without additional measures there will be no change in RES share in total consumptionbefore 2020 Estimated RES consumption Proposed measures RES consumption in 2020 RES share 74% 6% 68% • Proposal • To actively promote the conversion of installations using fossil fuel into installations using biofuel, to support the installation of geothermal heating and the development of solar panels that would not produce surplus heat in the summer season. • Estimated demandfor support – LTL70-112 million. Sources: Statistics Lithuania

8. B2| District heating. If the measures proposed were implemented, only a quarter of the fuel consumed for district heating would come from sources other than RESRES consumption by district heating producers in 2020, in thousands of toe Increase in consumption Current RES consumption • A total of 244 thousand toe:: • 241 thousand toe of solid biomass • 1 thousand toe of biogas • 2 thousand toe of geothermal energy • A total of 196 thousand toe:: • 195 thousand toe of solid biomass • 1 thousand toe of biogas RES consumption in 2020 Proposed measures Current RES consumption Increase in consumption 32% 24% 19% 75% RES share in district heating • Proposal • In accordance with the National Programme for the Development of the Heat Sector it is proposed to allocate additional support to new biofuel installations. • Estimated demandfor support – up to LTL420 million. 1 – National programme for the development of the heat sector Sources: Statistics Lithuania

9. B3| Other heat. The main heat consumer –industryRES consumption for individual heating by non-household consumers in 2020, in thousandsoftoe 160 Current RES consumption Increase in consumption • A total of 133 thousand toe : • 130 thousand toe of solid biomass • 3 thousand toe of biogas • 2 thousand toe of straw • A total of 27 thousand toe: • 23 thousand toe of wood biofuel • 4 thousand toe of biogas Current RES consumption Increase in consumption RES consumption in 2020 11% 2% 13% RES share in the sector of other heat • There are no measures provided for in the programme to increase the RES share in the individually heated non-household consumer group.

10. C | Third target: to increase the use of RES in the transport sector. It is proposed to reduce the shortfall in RES to 65 thousand toeRES consumption in transport sector in 2020, in thousands of toe Shortfall in RES (to achieve the target would cost LTL1.4-1.6 billion) Dabartinis vartojimas Consumption in 2012 Growth of consumption • A total of 62 thousand toe: • Blending of biofuels into fuel: 5% into petrol, 7% into diesel fuel • E85 vehicles • Public transport (trolleybuses and electric trains) • Electric vehicles (there were up to 4 such vehicles in Lithuania in 2012) • A total of 16 thousand toe, main preconditions: • Increase of biofuel blending into petrol to 10% • Growth in the volume of blended biofuel proportionate to the increase in total fuel consumption • Increased consumption of RES-based electricity in the transport sector1 RES consumption in 2020 4.3% 1.1% 0.1% 5.5% RES share • Proposal • To encourage the buying of E852vehiclesby setting a target that 1% of new cars should be powered by E85; to promote the use of biogases in public transport by setting the target of ensuring that biogases make up 3% of the fuel used in CNG3-powered buses. • Estimated need for support: LTL27 million. 1–The formula for RES-based electricity share in the transport sector is: the amount of electricity consumed by transport x 2.5 x RES-based electricity share in the EU; 2 – a fuel mix containing 85% of bioethanol and 15% of petrol; 3 – compressed natural gas. Sources: National Commission for Energy Control and Prices, Litgrid.

11. Thank you for your attention!