On 15 February 2020, the amendments to the “Electricity Market Law” became effective and strengthened the supervision of electricity producers receiving State aid in the form of compulsory procurement or guaranteed fees and eliminated their overcompensation.
Since 2012, economic operators have no longer been granted a new right to sell electricity within the framework of mandatory procurement or to receive the guaranteed fee for the capacity installed in the power plant. The amendments to the law required the government to develop a new wording of the conditions for the operation and control of power plants receiving aid.
“Adoption of amendments to the “Electricity Market Law” at the beginning of this year was an important milestone for the completion of the MPC system in order to reduce electricity costs for Latvian residents, businessmen and the state budget as a whole. Today, the government took the next step, by including the norms in the regulations of the Cabinet of Ministers that will increase responsibility of economic operators for complying with mandatory procurement conditions and will supplement the state aid conditions for biogas plants,” stresses Jānis Vitenbergs, Minister for Economics. “By the end of year, the Ministry of Economics will come forward with further additions to the regulatory framework, including the development of conditions for applying the principle of the single technological cycle. We will also submit a proposal to the government by the end of year to reduce the amount of MPC,” continues the Minister.
The following regulations of the Ministry of Economics were adopted at the meeting of the Cabinet of Ministers on 2 September:
“Regulations Regarding Electricity Production Using Renewable Energy Sources, Procedures for Determination of the Price and Monitoring (will replace current Regulation No 262 “Regulations Regarding the Production of Electricity Using Renewable Energy Sources and the Procedures for Determination of the Price” of 16 March 2010);
“Regulations Regarding Electricity Production, Monitoring and Determination of the Price upon Production of Electricity in Cogeneration” (will replace current Regulation No 221 “Regulations Regarding Production of Electricity and the Procedures for Determination of the Price upon Production of Electricity in Cogeneration” of 10 March 2009).
The most significant changes, as compared with the current framework, include the updated conditions for the production of biogas from raw materials. The regulations of the Cabinet of Ministers include additional requirements for biogas plants regarding the use of waste products, including manure. This means that, from 2022, biogas power plants will have to increasingly reduce, for instance, the use of agricultural products for human consumption, including corn, in the production of biogas.
In order to promote interest of economic operators in switching to the use of waste products in the production of biogas as soon as possible, the regulations include a link between the type of fuel used at the biogas plant and the price of electricity purchased within the framework of mandatory procurement. If an economic operator fails to comply with minimum requirements regarding the composition of fuel materials to be used during the year, the regulations of the Cabinet of Ministers provide for the revocation of the mandatory procurement right.
Similarly, the new regulation of the Cabinet of Ministers clearly defines the principles for energy generation efficiency or beneficial use of thermal energy. The amendments to the law have already imposed an obligation on the economic operator to ensure that the thermal energy produced in cogeneration plants and power plants is efficiently used, including the fact that the total amount of thermal energy used for self-consumption is not included in the total amount of thermal energy.
The current effective regulatory framework covered detailed rules for calculating the efficiency of energy production only in the regulations of the Cabinet of Ministers for cogeneration plants. With the adoption of the regulation of the Cabinet of Ministers today, the same rules will also apply to power plants operating under renewable energy rules. The new requirements for these power plants will take effect on 1 January 2021.
Requirements for beneficial use of thermal energy will be affected by the conditions for applying the single technological cycle principle, which will be developed by 1 January 2021, when the ETL rule with the definition of the single technological cycle principle will come into force. The Ministry of Economics will therefore develop amendments to the regulations of the Cabinet of Ministers by the end of this year, by supplementing them with the relevant legal provisions.
Detailed information about the Cabinet regulations adopted by the government is available on the website of the Cabinet of Ministers:
“Regulations Regarding Electricity Production Using Renewable Energy Sources, Procedures for Determination of the Price and Monitoring”;
“Regulations Regarding Electricity Production, Monitoring and Price Determination upon Production of Electricity in Cogeneration.”
Ministry of Economics
Public Relations Division
prese@em.gov.lv
T.: 67013193