Latvenergo's investments address climate change
Ensuring a national basis for electric power generation is essential from both an economic and a security point of view, says Karlis Mikelsons, chief of Latvia’s national energy company Latvenergo A/S.
Latvia is the only Baltic country with a negative electricity balance. Its own power generation capacities cover slightly more than 60% of its domestic needs. This is why Latvenergo, a state-owned joint stock company, sees its primary objective as increasing this capacity and minimising electricity losses in its transmission and distribution networks.
Boosting output
Since the mid-1990s, Latvenergo has been implementing a series of investment programmes aimed at modernising the cascade of three hydropower plants on the Daugava river. With 65% of all electricity produced on water currents, Latvia is one of the EU leaders in using renewable resources in this industry. Currently, the company’s priority is to invest in boosting output from its two combined heat and power plants in Riga.
“Thanks to these investments, Latvia will be able to meet up to 80% of its electricity needs by 2011. But I am sure we will not stop at this limit,” says Mr Mikelsons.
“Larger generation capacities will give us more leverage to stabilise the energy market in Latvia, which to a large extent depends on external power supply.”
Losses down, reliability up
“Power resources are too expensive to waste in network losses. All our efforts are aimed at increasing efficiency,” Mr Mikelsons continues. The target is to cut the losses to below 4% (current rate: over 6%).
The investment programme being developed includes replacing 760 kilometres of overhead distribution lines with underground cables. This part of the modernisation effort is in line with the aims of NIB’s Climate Change, Energy Efficiency and Renewable Energy loan facility, CLEERE. The facility was launched earlier this year to bring economic, ecological and social benefits to our member countries and to the entire Baltic Sea region.
“We cannot afford to ignore climate change. This is an infrastructural improvement that will largely affect the reliability of the power supply to our customers in parts of the country that are most vulnerable to climate changes,” says Latvenergo’s CEO.
New technologies being implemented at the combined heat and power plants will help cut greenhouse gas emissions, while the modernisation of the transmission grid will reduce the risk of harmful substance leakage from transformer stations.
New loan agreement with NIB
To finance this investment programme, Latvenergo has received a 15-year-maturity loan from NIB totalling EUR 50 million. This is NIB’s fifth loan to the Latvian power utility, which is by far the Bank’s largest customer in the Baltic countries.
Karlis Mikelsons explains that involving an international financial institution such as NIB in financing an investment programme is not only a matter of prestige for his company.
“We cooperate with large international banks. It obviously strengthens our position in the region and gives us more confidence in meeting our targets,” he concludes.