Industry and energy conservation in East- and Central Europe

Latvia is importing all the fossil energy sources and a varying share of the electricity. Therefore there is a need to build new capacity to produce electricity and this could be done on co-generation plants. Today the district heating in Latvia is supplied mostly from old boiler houses with no electricity production. Either wood or gas fuels the individual heating. Electricity is produced on hydro power plants and two co-generation plants in the capital Riga. The installed capacity in Latvia is not sufficient to cover domestic demand for electricity. The rest of the electricity for the domestic demand is imported from the neighboring countries. During the last ten years the import has been between 20 (1998) and 83% (1996) of the final consumption of electricity. One of the main obstacles for a Latvian energy system based on domestic renewable energy sources is the possibility of importing inexpensive electricity form the neighboring countries. However this might change in the future. Even the Cabinet of Ministers suggest that it is only possible to foresee the stability of the foreign supply of electricity on short-term basis. When calculating the socio-economic feasibility for new production capacity it is necessary to include the risk of a future shortage of electricity or a significant rise in the import prices for the electricity. The Latvian economy is both an obstacle and a chance for a sustainable development in the energy sector. It is an obstacle because GDP is still low - 35% GDP per capital in purchasing Power Standards compared to EU average. It is also a chance because of the growth rate, which is among the highest in Europe. Hardly any new electricity production capacity has been built since the independence in 1991. A centralized electricity system dependent on import of both electricity and fuels obviously becomes very vulnerable to damage, destruction an fall out of import. Therefore new electricity production capacity is needed. In 200120% of the electricity consumption in Latvia was produced on co-generation plants. A comparable number is 53% in Denmark which has the highest share of co-generation in Europe. It therefore seems obvious to increase the number of co-generation plants in Latvia. This shortage of electricity generation capacity is also a chance - because the need to build new capacity can be combined with the need to modernize the district heating plants, most of which has still not been renovated. One obstacle for the establishing of co-generations plants is the uncertainty about the future electricity price. This price is one of the determining factors when calculating the business economic feasibility of a future energy supply system. The conclusion is that renewable energy sources should be utilized as much as possible and there should be a political will to promote these order to make them business feasible. Also it is important to substitute the existing outdated heating plants with co-generation plants and not just to restructure them to modem heat plants