Latvenergo losing money to green power

  • 2000-06-08
  • Valters Medenis
RIGA - The construction of wind generators to produce electrical energy is the subject of scrutiny by energy experts and Latvenergo. The Latvian energy company, Latvenergo, is concerned it is losing money to subsidize the double tariff it has to pay for energy bought from wind generation suppliers. Article 40 of the Energy Law states a double purchase price is to be paid for wind generated energy produced by these stations as long as no more than 2 megawatts is produced. This law is effective for eight years.

Latvenergo's spokeswoman, Sandra Freiberga, said the company lost $4.690 million last year to these wind generation power stations and this effectively comes out of the consumers' pockets.

"The government's double tariff, which is government legislation, is all at the cost of Latvenergo," said Freiberga.

The Ministry of Finance said the payment is not a tariff, but a double payment.

"The government is trying to create a clean energy resource. The idea is to create a clean energy resource that is not detrimental to the environment," said Andrejs Birums, spokesman for the ministry.

The Latvian Wind Energy Association hopes the Energy Law will be amended so "crafty" operators do not spoil the possibility of producing energy that does not give off carbon monoxide. Paulis Barons, the president of the association, said there are currently operators who have over-stepped the law to benefit themselves.

"Juris Kaijaks placed a tender for one wind generator to be built in Liepaja. Kaijaks and three tenders were granted licenses to build one generator each capable of generating 1 megawatt of energy," said Barons. "Kaijaks has now gone about getting permission to build not one, but 20 wind generation power stations. He has done this by forming 20 separate companies."

The license in question was signed by the former Latvian Prime Minister and clearly steps out of bounds of the Energy Law. A copy of the signed document is in possession of Barons, who also acts an advisor to the Ministry of Economics in energy related questions.

"Skele has violated the Energy Law, article 79, by not advertising tenders for 20 wind generation power stations and by permitting Kaijaks to build 20 of these stations. Kaijaks plans to generate 1.5 megawatts of energy at each generator, and he was originally allowed to only produce one megawatt," said Barons.

Barons is confident the law concerning the double purchase payment will be amended before June 30. That is the date Kaijaks is due to receive his license.

"The law will most certainly be amended by the Saeima before June 30. If it is not, Latvenergo will not agree to purchase the wind generated energy from Kiajaks," said Barons.

Neither Kaijaks nor any of his 20 companies formed to build the generators, would give any comments.

"Amendments need to be made to the law. If this can not be achieved, then a compensation scheme needs to be introduced to solve the losses incurred by Latvenergo," said Freiberga. "Consumers need to be alerted of the situation."

Barons and Birums both said the losses by Latvenergo are not that extreme.

"The losses Latvenergo says it is experiencing is a hard question to answer. Maybe there are some wrong facts involved," said Birums.

"I think the figures by Latvenergo are exaggerated. There are only two wind power generators operating. I do however agree the double payment should be reduced. The business of wind generated energy can still be profitable for responsible businesses," said Barons. "People who are in the wind generation business to make quick money are giving responsible producers a bad name."

"There are overseas interests who are willing to produce at Latvenergo's buying price of $0.06 per kilowatt hour. Wind energy is clean, it employs local people and can be used to improve energy quality. Barriers need to be lifted so more wind generators can be built with a lower purchase price for the product," Barons said.