Study: A faster electricity consumption increase is expected in Latvia

Development

The green transformation of the European Union is moving society towards a modern and competitive economy, to achieve the climate neutrality goals in 2050. With the significant increase of the amount of renewable energy sources and the simultaneous development of electrification, a faster electricity consumption increase is expected in Latvia after 2030. In the period from 2030 to 2035, the increase of consumption can reach up to 100%, according to the results of the study on consumption development trends in the Baltic and Nordic countries, prepared by the KPMG consultant and exercised by AS "Augstsprieguma tīkls" (AST).

Minister of Climate and Energy of Latvia, Mr. Kaspars Melnis has stated: "We are moving towards the status of a stable electricity exporting country, providing consumers with cheap and green electricity. Europe, including Latvia, has undertaken to implement the transition to a climate-neutral environment, which we will achieve by 2050. In order to implement it, is necessary to reduce emissions dangerous to nature, what can be done in two ways - by replacing fossil fuel utilising energy resources with renewables, or by using less on existing resources, with increasing the energy efficiency. During preparation of the National Energy and Climate Plan 2030, we expect the increase of renewable energy resources in final consumption till 57%, where the development of wind, solar and hybrid projects in Latvia will play a significant role."

The results of the consumption study, prepared by KPMG, were jointly discussed with AST and Ministry of Climate and Energy, which, as the energy policymaker in Latvia, responsible for the green course implementation in Latvia.

"During the last 10 years, the average annual consumption of electricity in Latvia has been around 7 TWh and currently it has a tendency to decrease in further. At the same time, looking at the ambitions of renewable energy sources (RES) developers, the amount of generation capacity requested to be connected to the transmission network exceeds Latvia's maximum consumption more than five times. In order to realize the optimistic scenario mentioned in the study and to double  electricity consumption in Latvia, a faster development of RES generation projects and support mechanisms for the development of Power-to-X (P2X) technologies are needed. All would be beneficiaries from this – the RES developers and the economy, where new business opportunities would be developed, as well as society in general, which would get lower electricity prices," says Chairman of the AST Management Board Mr. Rolands Irklis.

Although there are differences between the countries studied in the study, in general, an increase of electricity consumption is expected in all of them in the long term. Forecasts were made by KPMG experts, assuming that the development of P2X technologies will be economically viable from 2030.

"The methodology proposed in the consumption study by KPMG experts will allow AST to prepare the assessment of power adequacy, which AST prepares by developing the TSO annual statement, covering the electricity production and consumption trends and determines the future development of Latvia's electricity system for at least 10 year period. The P2X technologies were evaluated in the study, especially hydrogen electrolysis technologies development opportunities in Latvia. Although there is great uncertainty regarding the development of these technologies, the interest in investing in them is already high. This technology will significantly influence the development of Latvia's electricity consumption in the long term period. The results of the study will allow to plan the power adequacy of Latvia's electricity system more precisely, as well as to evaluate and justify power transmission network development projects," emphasizes AST Board Member Mr. Arnis Daugulis.

Until 2029, consumption growth is expected to be slow, which will be stimulated by electromobility, i.e. the use of electricity in transport, heating, as well as a general increase in the welfare of the society, while the factors slowing down consumption will be the improvements in energy efficiency, the decrease of the demographic situation and the development of microgeneration. As a result, consumers will receive less electricity from the grid, preferring local generation solutions such as solar panels, is mentioned in the study.

 

The study analysed possible consumption trends in five sectors - industry, public and commercial sectors, households, transport, and energy, evaluating them according to eight factors that can change the demand of electricity - demographic trends, changes in energy efficiency, the amount of microgeneration, welfare level, development of electromobility, heating solutions, as well as in the development of technologies that allow converting electricity into fuel, or P2X. The study costs are 100% covered by the RePowerEU program granted by European Union.

A summary of the study can be found here.