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Latvia’s energy sector is undergoing significant changes with new regulations, updates on major projects, and legal developments. Below are the latest updates across the wind, grid, and gas sectors.
WIND
Regulations on Compensation Payments to Local Communities Published
The regulations which provide for compensation payments to the budget of municipality for discomfort caused by wind farms came into force at the end of August this year. The payment will be split 50:50 between the municipality on whose territory the wind farm is located and neighboring landowners within a 2 km radius of the onshore wind farm boundary. The regulations are applicable to wind farms that are completed and connected to the grid after 30 August 2024.
Compensation payment to the community is EUR 2,500 per year (without VAT 21%) for each megawatt of the nominal capacity of the wind power plant.
Ministry of Defense Updates Map of Permitted Wind Park Locations
The Ministry of Defense has updated the map of permitted wind park locations in Latvia.
Since the last report, updates have been made to the map to clarify areas where wind farm construction could significantly hinder national defense operations, highlight zones with potential restrictions that may require mitigation, and identify regions where wind parks do not impact national security or defense capabilities.
However, the map has yet to receive government approval, and the report remains subject to potential changes.
Special Law Developed for Offshore Project ELWIND
A new draft law has been developed to successfully implement the ELWIND project and the Fourth Interconnection, establishing the status of objects of national interest for those.
Latvian-Estonian co-project ELWIND is envisaged in research area E4 in Latvian part with expected installed electricity production capacity of 1000 MW. Draft law provides for TSO’s
obligation to implement and finance the Fourth Interconnection with the interstate transmission system connection in the sea waters of Latvia and Estonia. However, developer shall reimburse the costs for the design and construction of substations and connection reinforcements located in Latvian sea waters and on land in Latvia. The developer also pays for the construction of the radial connection and the connection of the ELWIND project to the Latvian transmission system in Latvian sea waters and on land in Latvia.
The competent authority shall organise and finance feasibility and study work of the ELWIND project, including an environmental impact assessment.
The developer acquires the right to design, build, commission and operate the ELWIND offshore wind farm in Latvia for 70 years.
State Forest Entity to Auction Wind Power Park Construction Rights
A total of 44 territories will be up for an electronic auction. The auction for the build-up rights of 30 years period for installation and operation of wind farms is starting on 20 November 2024 and ends on 20 December 2024. Applications for participation in the auction are open until November 4 of this year.
GRID
Update on Flexible Grid Connection Options
New amendments to the Electricity Market Law have been developed proposing new procedure for the producers for connecting to the grid by applying for the flexible/switchable capacity product.
The TSO shall publish information on the free transmission system capacities on its website at least once a quarter. Technical requirements for flexible transmission system service or to install other types of electricity production unit within the framework of an existing connection will be issued by the TSO in a comparative procedure. This comparative procedure is to be developed and published by the TSO and shall include modalities and conditions of the auction, as well as the comparison and exclusion criteria, which shall respect at least the following principles:1) interoperability of production profiles of different electricity production units; 2) compatibility of electricity production and consumption within the framework of one connection; 3) the technical possibilities of electricity production unit to provide ancillary services; 4) the degree of readiness for the introduction of electricity production unit.
By applying this flexible capacity product TSO will be entitled to limit the transmission service to 876 hours within one calendar year.
The draft amendments also provide for remission of the paid grid bond. The developer can request reimbursement of the grid reservation fee (or release of the guarantee) until 30 November 2024 if it wishes to terminate the connection to the transmission system.
It is expected that the draft regulations and amendments to the law could enter into force in October.
GAS
Reforms in Natural Gas Market Procedures
In order to facilitate both the system operator’s ability to immediately respond to changes in the natural gas market, and the access to storage by energy supply merchants of neighboring countries, amendments to the Energy Law have been developed.
It is intended to replace the regulated procedure with a negotiated procedure. The Inčukalns Underground Gas Storage (UGS) will be divided into two parts – the solidarity part, which will be the part of the storage with a capacity of 4 terawatt hours, and the market part (the remaining part of the storage).
The negotiation procedure will be applied to Finnish, Estonian and Lithuanian operators who will store natural gas in the solidarity part of the Inčukalns UGS to ensure the supply standard set in Regulation 2017/1938.
It is planned that from 2026, the tariffs set by the Regulator will not be applied to the storage system service, as the capacity reservation of the Inčukalns UGS market share and the determination of the fee for the natural gas storage system service will be carried out as part of an auction.
