GLOBAL CLEAN ENERGY TECHNOLOGY / PROFILE

PV Geographic Profile: Latvia

Latvia supports PV installations

to improve energy security

Susanne von Aichberger / Commodity Insights / Senior Analyst

July 27, 2023

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 PV Geographic Profile: Latvia | July 2023

Market summary
Latvia‘s PV market will be dominated by utility-scale PV projects during the next five years.
Drivers PV market 2023–27
• Net-metering/net-billing, self-consumption, subsidies,
merchant, power purchase agreements (PPAs),
Utility-scale Commercial Residential
relatively low labor costs

22%
Policy
• The Green Channel initiative, launched in 2021, reduces
admistrative hurdles for large green investments. 10% 2.4
2.4GW
GW
• In August 2022, amendments to the Electricity Market Law 68%
introduced net-billing for prosumers.
• In order to facilitate power plant connection projects,
starting from Jan. 1, 2023, a fee applies to capacity
reservations for plants of more than 50 kW .

Large-scale PV Forecast
• Boosted by a volatility of electricity prices and recent • While we project more than two-thirds of demand in the
policy improvements that seek to increase energy next five years is to come from utility-scale projects, the
security, large-scale PV projects are emerging in Latvia. future of the solar park segment will depend on the build-
The first large utilty-scale projects are planned to start out of Latvia’s power grid.
construction in 2023.

Data compiled July 27, 2023.

Source: S&P Global Commodity Insights.

Copyright © 2023 S&P Global. 2

Overview

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 PV Geographic Profile: Latvia | July 2023

Basics

Geographics Currency
• Size: 94,490 km² • Currency: Euro (€)

• Population (2021): 1.9 million

Economics Languagues
• GDP nominal/capita 2022: $22,120 • Official language: Latvian

• GDP growth real 2022: 2.0%

Electricity Corruption Perceptions Index

• Electricity consumption per capita 2014: 3,507 kWh • Rank 2022: 39 out ot 180

• Access to electricity 2019: 100.0%

Source: S&P Global Commodity Insights; Worldbank; Transparency International

Copyright © 2023 S&P Global. 4

 PV Geographic Profile: Latvia | July 2023

Electricity market structure

In 2023, Latvia has stopped purchasing gas from Russia.
Power generation mix Power generation mix 2021 (TWh)
– Latvia’s electricity generation is mainly based on hydro power as well as
thermal generation (coal, cogeneration and natural gas), which together
accounted for more than 80% of the power mix in 2021. The share of PV in Natural gas Hydro Wind Biofuels Solar
electricity generation is negligible.
– In July 2022, the Latvian parliament adopted amendments to the Energy Law,
which provide that from Jan. 1, 2023 Latvia will stop purchasing Russian gas.
Latvia
Power system
– AS Augstsprieguma tīkls (AST) is an independent transmission system operator 0% 20% 40% 60% 80% 100%
in Latvia.
– The Public Utilities Commission (PUC) is an independent body governed by
public law, which carries out regulation of public services among other things on
energy. Market liberalization
– Latvia needs to invest into the power grid, in order to enable more renewable • Latvia‘s electricity market is completely liberalized since 2015.
energy capacity additions. The Recovery and Resilience Plan is to provide €80
million for the modernization of the transmission and distribution grids, to make Renewable energy targets
them fit for electric mobility and prosumers. • Latvia targets to reach a share of renewables on gross final energy consumption of
– Latvia is part of the Baltic Energy Market Interconnection Plan (BEMIP), which 50% by 2030.
aims to integrate the Baltic electricity market with the European market and • Latvia has an indicative share of more than 60% of renewables in electricity
improve energy security in the region. production by 2030.

Source: S&P Global Commodity Insights; International Energy Agency (IEA)

Copyright © 2023 S&P Global. 5

Policy and
incentives

Copyright © 2023 S&P Global. 6

 PV Geographic Profile: Latvia | July 2023

Policy timeline
The war in Ukraine has intensified the efforts of the Latvian government to promote the use of renewables.
Apr. 1, 2020
Regulatory
changes for
Jan. 21, 2014 microgeneration
Electricity systems
Market Law and Aug. 2, 2022 Sep. 29, 2022
• Plants <11.1 kW
Cabinet need no permit; Amendments to The parliament
Regulation No. net-metering the Electricity Saeima passes
50 Regulations plants are Market Law new legislation
on Electricity exempt from effective • Simplifies
Trade and Use average • Net-billing procedure for
effective mandatory introduced as construction of
• Defines rules for procurement alternative to net- energy supply
net-metering component fee metering structures

Jan. 28, 2020 2021 Aug. 11, 2022 Dec. 31, 2023
Cabinet passes Launch of Green Amendments to End of
National Energy Channel the Electricity application
and Climate Plan initiative Market Law option for net-
2021–30 • Reduces effective metering
bureaucratic • Limit for • New prosumer
hurdles for high exemption of projects after this
value-added permit mandate date will run
green raised from 11.1 under the net-
investments kW to 500 kW billing scheme
• Fee for capacity
reservation for
plants >50 kW
from Jan. 1, 2023

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 7

 PV Geographic Profile: Latvia | July 2023

Incentives and business models

Incentives for PV installations in Latvia are mainly available for distributed generation.

PV incentives
and business
models

PPAs and other

Incentive
unsubsidized
schemes
models

Net-metering
Residential PV
plants <11 kW Net-billing Solar grants
Applications until
end of 2023

Emission Development
Central Finance
Allowance Financial
Residential Companies, and Contracts
Auction Institution Altum
Mandatory from farms, Agency (CFLA)
Instrument (EKII) (ALTUM)
Jan. 1, 2024 organizations Legal entity or
Owners of private Families with
natural person
houses children

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 8

 PV Geographic Profile: Latvia | July 2023

Net-metering and net-billing

An amendment to the Electricity Market Law, effective Aug. 2, 2022, introduces the new net-billing option.
• The amendment of the Electricity Market Law, effective Aug. 2, 2022, introduced the option of net-billing. Residential systems will continue to be able to run under
net-metering, if they are registered by Dec. 31, 2023. After Dec. 31, 2023, applications for net-metering installations will not be accepted anymore. Households will
have the option once to switch from net-metering to net-billing.
• Non-residential prosumers only have the net-billing option.

Net-metering (Neto uzskaites sistēma) Net-billing (Neto norēķinu sistēma)

• Net-metering is netting the kWh • Net-billing is netting the value of the kWh
• The conditions of Latvia’s net-metering scheme are defined in article 30.1 of the • With the amendment of the Electricity Market Law, effective Aug. 2,
Electricity Market Law and Cabinet Regulation No. 50 of Jan. 21, 2014 2022, the new option of a net-billing scheme was introduced.
“Regulations on Electricity Trade and Use”.
• Net-metering is available for private residential rooftop systems for up to 11 kW.
• The net billing system does not only record the amount of electricity
generated and consumed but will also determine the value of the
• On April 1, 2020, the conditions for microinstallations were improved: electricity. Excess electricity will be monetized and credited for the next
• PV systems of up to 11.1 kW do not require a permit anymore. Before that, PV plants billing period.
needed a permit from the Ministry of Economics.
• Net-billing is available both for residential prosumers and for companies,
• PV installations under the net-billing scheme do not anymore pay the average farms and organizations.
mandatory procurement component (MPC) fee anymore for produced electriciy.
• After amendment, the cycle starts on March 1.
• According to amendments from Feb. 16, 2023, the electricity produced by
households and accumulated within the net-metering system on Feb. 28, 2023
is moved to the next year of net savings, which ends Feb. 29, 2024.
• Households can join the net metering system until Dec. 31, 2023.

Note: Net-metering has previously been called net-billing in Latvia.

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 9

 PV Geographic Profile: Latvia | July 2023

Policy changes for large-scale PV

In 2021, the Latvian government set the development of PV power plants as a priority in Latvia.
Green Channel initiative Simplification of procedures for large PV plants
• In 2021, Latvia launched the so-called Green Channel initiative, which • On Sept. 29, 2022, Latvia’s parliament Saeima passed an urgent law,
reduces bureaucratic hurdles for high value-added green investments. The Law on the Construction Procedures of Facilitated Energy
– The Green Channel initiative provides the investors a fast-track to access Supply Structures Necessary for the Promotion of Energy Security
various state services needed for the project development. and Independence.
• To qualify for the initiative, the project has to meet at least three of the – The purpose of the law is to promote the production of renewable energy, to
promote the energy security and independence of the Republic of Latvia, as
four following conditions:
well as to reduce the processes of negative climate and environmental
• The investment amount should be at least €5 million within 3 years (in Riga — changes.
at least €10 million).
– The law stipulates, among other things, a simplified procedure for the
• The investment project should create 75 new workplaces (in Riga — 100). construction of structures required for PV installations of at least 10 MW.

• The planned product and service export volume should be above €3 million in
three years after the launch.

• The planned investment in research and development and employee

competence development should be over €250,000.

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 10

 PV Geographic Profile: Latvia | July 2023

Investment subsidies
In 2022, several investment subsidy schemes for PV installations have been launched.
Subsidies for PV installations in Latvia
Program Authority Budget Subsidy Eligible Where Status of house Conditions

Reduction of EKII €40 Up to €15,000, • PV systems of < All Latvia Commissioned or to Installation 1. At least 80% of electricity generated is used for self-
greenhouse gas (Ministry of million if it does not 11.1 kWac be commissioned → Application consumption of the inhabitants of the residential house
emissions in Climate and exceed 70% • Owners of private within five years → Grant 2. The installed PV capacity allowed in the connection of the
households — Energy) of the total houses, who house
support for the use Until Dec. 31, project costs already clearly 3. Can be installed on the house, the ground or other
of renewable energy 2024 PV panels: know what adjacent structures
resources maximum equipment they
support want to install
€4,000

Energy efficiency of ALTUM €30 PV panels: • PV systems of < All Latvia Commissioned Application 1. At least 80% of electricity produced is used for self-
private houses (Ministry of million Maximum 11.1 kWac → Installation consumption of the house’s residents
Economy) support • Families with 2. Can be installed on the house, the ground or other
€4,000 children who want adjacent structures
to increase the 3. Reduction of primary energy consumption of at least 20%
energy efficiency of
their home

Support for the CFLA €12.44 50% of the • Legal entity under Territories of Placed in service for at Application 1. At least 80% of the annual electricity produced is used for
implementation of (Ministry of million costs, but not private law or a national least seven years prior → Installation the self-consumption of the residents in the house, using
measures to reduce Environmental more than natural person who cities and to submission and in the net accounting or settlement system established by
air pollution by Protection and €4,400 per owns a residential counties continuous use for at Electricity Market Law
improving Regional declared house least the last three 2. Maximum support of €4,400 per declared resident in the
household heating Development) resident years household of the residential house or apartment property
systems + VARAM of the project
3. Can be installed on the house, the ground or other
adjacent structures

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 11

Large-scale PV
projects

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 PV Geographic Profile: Latvia | July 2023

Large-scale PV project examples (1)

The reduction of red tape for solar parks has helped the emerging of several GW of PV projects in Latvia.
Large-scale PV project examples
Project Location Developer MW Status Comments
Located close to a high-voltage power line currently
Balvi PV project Balvi, Latgale PurpleGreen Energy B 400 Construction to start in 2024
connected to Russia, which is to be disconnected soon
In December 2022, Ignitis signed a conditional agreement
Ignitis Latvia solar portfolio I N/A Ignitis 300 COD 2025
for the acquisition of this project.
In September 2022, Ignitis signed a conditional agreement
Ignitis Latvia hybrid portfolio I (PV + wind) N/A Ignitis 200 COD 2027–28
for this acquisition of this hybrid project.
Tārgale solar park Ventspils, Tārgale European Energy 110 COD 2024 Electricity to be sold on market or via PPA; €66 million
Kurzeme PV project Kurzeme European Energy 50
Jēkabpils PV project Jēkabpils Green Genius 100 Construction to start in 2023 €90 million; announced in January 2023
Green Genius early Latvia PV pipeline N/A Green Genius 203
Merito Latvia PV project 1 - Zilupe Zaļesje, Ludza Merito Partners 2.7 COD H1 2023 Co-financed with European Investment Bank (EIB)
Merito Latvia PV project 2 - Brenguļi Brenguļi, Valmiera Merito Partners 7 COD H2 2023 Co-financed with European Investment Bank (EIB)
Merito Latvia PV project 3 - Inčukalna Inčukalns, Sigulda Merito Partners 3.1 COD H2 2023
Merito Latvia PV project 4 - Rūjiena Rūjiena Merito Partners N/A 2023
Merito Latvia PV project 5 - Kauguri Kauguri, Valmiera Merito Partners 7 2023
Merito Latvia PV project 6 - Carnikava Carnikava, Ādaži Merito Partners 12 2023
Merito Latvia PV project 7 - Koknese Koknese, Aizkraukle Merito Partners 5.3 2023
Merito Latvia PV project 8 - Kalkūnes Kalkūnes, Augšdaugava Merito Partners 14 2023
Merito Latvia PV project 9 - Priekuļu Priekuļu Cēsis Merito Partners 18.9 2023
Merito Latvia PV project 10 N/A Merito Partners N/A 2023

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 13

 PV Geographic Profile: Latvia | July 2023

Large-scale PV project examples (2)

The reserved capacity in the transmission grid for PV plants exceeds 5 GW, but not all of this will be built.
Large-scale PV project examples
Project Location Developer MW Status Comments
Rajas PV project Spundžani, Rezekne Bcdloft SIA 4.2 Completed 2022

Brocēni PV project Brocēni, Saldus AJ Power 6.33

Talsi PV project Talsi, Courland SKSolar 5.06

Tērvete PV project Tērvete, Dobele SKSolar 3.0 Completed 2023 Trina modules

Latvenergo Latvia PV project 1 Latvenergi 40

Latvenergo early Latvia PV pipeline Latvenergi 600-700

In 2023, the Port of Riga announced an auction for the
Spilvė PV project Spilvė, Riga 100 long-term lease of the territory of Spilvė, where the PV
project should be developed. Storage to be added.

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 14

 PV Geographic Profile: Latvia | July 2023

Competitive landscape
The competitive landscape for large PV projects in Latvia is dominated by Latvian and Lithuanian players.
We have identified more than 2 GW of large-
scale PV projects that are being developed or in
the planning phase in Latvia.
1%
• Most of planned large-scale PV capacity in
4% Latvia is being developed or planned by
8% domestic companies Latvenergo and
PurpleGreen Energy.
Latvenergo
34% • The Lithuanian renewable energy
PurpleGreen Energy B companies Ignitis Renewables and Green
15%
Ignitis Genius together account for around one
third of identified PV project capacity.
2 GW Green Genius
European Energy
Merito Partners
Others
19%
19%

Data compiled July 27, 2023.

Source: S&P Global Commodity Insights

Copyright © 2023 S&P Global. 15

Forecast

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 PV Geographic Profile: Latvia | July 2023

Annual PV installation forecast by segment (MWdc)

High power prices and removal of red tape support the emerging utility-scale segment.
• New subsidy schemes for net-metering systems and strongly risen electricity prices 800
in 2022 have resulted in strong growth of the residential segment last year, which
continues to be at a significant level.
– Installations of microgenerators have slightly slowed down in 2023, which is
mainly due to the falling of electricity prices.
– New policy, effective Aug. 2, 2022, introduces the new option of net-billing. The 600
new option is not only available for residential systems, but also for larger,
commercial plants. From Jan. 1, 2024, this net-billing scheme will be mandatory Large utility-scale
for new residential prosumers, which is likely to cause a slight decline of this Small utility-scale
segment in 2024.
400 Large commercial
• After power prices soared in 2022, a segment of large-scale unsubsidized PV
projects has emerged, fueled by a growing demand for energy security and Medium commercial
supported by the reduction of red tape. Small commercial
– Utility-scale installations benefit from the Green Channel initiative, which reduces Residential
bureaucratic hurdles for high value-added green investments, and from the 200
simplification of procedures for large PV plants, which was passed by the
government in September 2022.
– While the reserved capacity for PV projects in the transmission grid exceeds 5
GW, many reservations have not been made with the plan to build the projects,
but to sell the reserved grid capacity. The capacity reservation fee introdcued 0
effective Jan. 1, 2023, is limiting the attractiveness of this business model. 2023 2024 2025 2026 2027

Data compiled July 27, 2023.

Source: S&P Global Commodity Insights.

Copyright © 2023 S&P Global. 17

 PV Geographic Profile: Latvia | July 2023

Notes and definitions

• The installation numbers shown in this report refer to PV system

System size definitions
installations, and not to grid connections. This means that the market
numbers published by Clean Energy Technology can differ significantly Category Size
from official government statistics, if the latter are based on capacity
connected to the grid. Residential P ≤ 10 kW-dc

• Clean Energy Technology bases the PV system categories on the size Small commercial 10 kW-dc < P ≤ 100 kW-dc
of the installations. The definitions of the system categories are shown
in the table. Medium commercial 100 kW-dc < P ≤ 1 MW-dc
• All PV installation statistics are shown in MWdc, unless otherwise
Large commercial 1 MW-dc < P ≤ 5 MW-dc
stated.
Small utility-scale 5 MW-dc < P ≤ 20 MW-dc

Large utility-scale 20 MW-dc < P

Source: S&P Global Commodity Insights.

Copyright © 2023 S&P Global. 18

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Susanne.vonaichberger@spglobal.com

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