“Energy efficiency first!”, origin of natural gas and more: new energy package in Latvia

Latvia adopts a series of laws in the energy sector.

In summer 2022, Latvia adopted far-reaching amendments to its energy laws. The Energy Law, the Law on Energy Efficiency, and the Electricity Market Law were amended.

The principle of «Energy efficiency first!» is anchored in the Law on Energy Efficiency. This includes measures for improving energy efficiency in state authorities, municipalities, public companies, as well as in large companies and large energy consumers. The amendments also implement European law (in this case, the Energy Efficiency Directive) and to correct errors that the European Commission had identified, in that Latvia had not correctly implemented certain European legal acts.

The «energy efficiency first» principle states that planning or financing decisions must consider how energy efficiency can be improved, such as through energy savings by the end user, use of demand- response- initiatives, or through more efficient energy conversion, transmission, and distribution. This means that it is imperative for the state and large companies to take the issue of energy efficiency into account in their decisions. By December 31, 2022, the Ministry of Economy of Latvia will prepare relevant guidelines.

Also coming into force in August 2022 are amendments to the Energy Law. These were introduced to diversify supply chains for natural gas and strategic gas reserves, thereby strengthening Latvia’s energy market and reducing supply dependencies.

Gas imports from Russia are prohibited; a transitional arrangement is in place until January 1, 2023.

Furthermore, the public trader «Latvijas Gāze» is required to store the amount of natural gas needed for consumption by connected consumers in the period from October 1 of the year in question to April 30 of the following year – the deadline for doing so being no later than August 31 of each year.

Furthermore, an electronic certificate of gas origin will also be introduced, which producers of natural gas, bio-methane or synthetic gas from renewable energies can apply for. The certificate will be issued for one megawatt hour. These changes will come into force on July 1, 2023.

Finally – also at the beginning of August 2022 – amendments to the Electricity Market Law came into force. Here, too, it was a matter of implementing EU law, specifically the internal energy market directives and those on renewable energies.

The core of the changes is the transition from the so-called net metering system to the net billing system. This involves recording electricity produced, consumed and released to the grid by the consumer. The net billing system will not only record the amount of electricity generated and consumed from renewable sources, but will also determine the value of the electricity. Surplus energy will be monetized and credited for the next billing period. It is also envisaged that electricity generated at one user’s site can be used at other sites belonging to the same user. By September 30, 2022, Latvia’s Cabinet of Ministers will prepare a regulation on the net billing system.

Sources:

Amendments to the Energy Efficiency Law, OP No. 2022/137A.2 v. 07/19/2022.

Amendments to the Energy Law, OP 2022/144.5 v. 28.07.2022.

Amendments to the Electricity Market Law, OP 2022/137A.1 v. 19.07.2022.

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