Enterprises Generating Electricity And Thermal Energy Commerce Essay

AS Latvenergo is dominant, vertically-integrated 100 % state-owned electricity public-service corporation in Latvia. The endeavor generates electricity and thermic energy covering all procedures from energy coevals, distribution and transmittal.The company owns two heat and power workss – Riga TEC-1 and Riga TEC-2 which generate 2.067 MW, stand foring about 90 % of the entire electricity coevals capacity of Latvia.[ 1 ]As of 2007, electricity market in Latvia is liberalized which means that in order to follow with the Electricity Market Law other power coevals companies theoretically could come in the market.

In world Latvenergo remained monopoly until May 2008 when amendments of Electricity Market Law were adopted and Estonian national energy company Eesti Energia came in the market. Presently at the terminal of 2009 E.Energy has managed to obtain 5 % portion of the market.The market liberalisation still concerns merely big costumiers.

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Although, the Electricity Market Law allows free pick of electricity supplier for any family, there are no other companies but Latvenergo who would offer their services to families. There are 1300 big companies that consume about one tierce of the entire sum of electricity in Latvia. 90 % of them are the clients of Latvenergo and merely approximately 10 % have chosen to buy electricity from Estonian public-service corporation.Although, in theory there should be much more competition in the electricity market, Latvenergo more or less remains the monopoly of Latvian electricity market.[ 2 ]1.2.3. Quota DataIn conformity with EU Directive on nursery gas quota both AS Latvenergo power workss Riga TEC-1 and Riga TEC-2 have a capacity that requires mandatory engagement in the allowance trading strategy.

In January 2005 Latvenergo received GHG emanation licenses issued by Lielriga Regional Environment Board and the quotas confirmed by the European Commission for the first trading period ( 2005 – 2007 ) were allocated.In the creative activity of Latvian quota distribution program for the old ages 2005 – 2007 the basal twelvemonth of 1997 was taken into history. Given that a batch of betterments refering greener engineerings were implemented since 1997, AS Latvenergo was able to cover bing emanations with the allocated quota and sell the fresh quota in the emanation trading market.The fresh emanation allowances of 2005 and 2006 were sold together in 2006 and it gave the company important net income of about 19.5 million Euros ( 13.7 million Lats ) . The net incomes from emanation trading accounted for more than a half of entire AS Latvenergo net incomes in 2006 that were about 34 million Euros ( 24 million Lats ) .

[ 3 ]In 2007 Latvenergo strength of the power coevals increased, hence more emanation quotas were needed and compared to two old old ages, smaller sum of allowances were available for selling on the market. From the entire net income of 13.4 million Euros ( 9.4 million Lats ) 1.02 million Euros ( 0.73 million Latss ) were obtained by merchandising emanation allowances. The twelvemonth 2007 was the last one of the first trading period and fresh allowances could non be saved and transferred for the 2nd period, therefore companies with quota excess traded them on the market. Supply was much bigger than demand doing allowance monetary value to fall and as a consequence, AS Latvenergo collected significantly smaller net incomes in 2007.

The first trading period showed that the market was flooded with excess quotas, thereby in the 2nd period the European Commission looked at the national allotment programs much stricter.The allowance allotment for the 2nd trading period from 2008 to 2012 was in favour for of industry. The sector of industry compared to the base twelvemonth received 6 % more quotas and as a consequence, the sum of allowances that was granted to the sector of energy was cut by 20 % compared to the basal twelvemonth.

Consequently, AS Latvenergo production installations were allotted 80 % of the needed emanation quotas, but the largest power works Riga TEC-2 merely 20 % . In order to follow with the Kyoto marks, for the 2nd trading period the company is obliged to get losing part of the allowances on the market. In 2008 AS Latvenergo was short 350A 1000 allowances that were purchased on the market.

200620072008Allocated quota at the beginning of the mention twelvemonth3A 938 0461A 328A 012187A 537Used emanation quota( 1A 138A 034 )( 1A 028A 475 )( 1A 026A 900 )Purchased emanation quotas

350 000Sold emanation quotas1A 472A 000112 000110A 000Revenue/loss from selling/buying of GHG emanation quota ( ‘000 Ls )13A 737 00073 000( 1A 914A 000 )-lowered electricity coevals = & gt ; Baltic states have small chance to import electricity from other states due to the deficiency of transmittal linesEUA monetary value driver – supply and demand- The 2nd consequence of energy strength on costs affects non-ETS participants and is based on the fact that the system could bring on higher electricity monetary values given chance cost logical thinking of public-service corporations. This refers to a particular instance of the general consequence that for certain sectors or houses input monetary values may lift due to the debut of an ETS. Such a rise of input monetary values is supposed to be particularly relevant for electricity in the EU ETS instance-The 2nd consequence of energy strength on costs affects non-ETS participants and is based on the fact that the system could bring on higher electricity monetary values given chance cost logical thinking of public-service corporations. This refers to a particular instance of the general consequence that for certain sectors or houses input monetary values may lift due to the debut of an ETS.

Such a rise of input monetary values is supposed to be particularly relevant for electricity in the EU ETS instance. The more efficaciously monetary values can be passed on, the less companies or sectors will endure from losingss of gross revenues due to an ETS. Determining factors in this context are the monetary value snap of demand and the competitory state of affairs. The less snap and competition the less impact the ETS will hold on gross revenues and end productA partial equilibrium theoretical accounts of the energy market PRIMES, POLES, GETS 3, SIMAC s and general equilibrium theoretical accounts DART, GTAP-E, GTAP-ECAT were used to measure the impact of GHG emanation trading on fight of economic system and other sectors- Excess of the allowances lessening effectivity of the system- A correlativity can be found between electricity and emanation allowance monetary values. This is natural as a company that produces electricity has to cover its emanations with emanation allowances [ 9 ] Kruger J, Pizer WA. The EU emanations merchandising directive-opportunities and possible booby traps, resources for the future treatment paper 04-24. Washington ; 2004.

[ 9 ] . This increases the production costs. Emission allowances have in fact become one of the major factors, besides the H2O degree in the Northern reservoirs, which influence electricity monetary values in the Nordic market.Kopenhagen conference – failure to perpetrate to a binding understanding, monetary value autumn, marks are non reachedPietrA«ka kvotas energouzA†A“mumiem, kad latvenergo pelnA«ja no pA?rpalikumaOne of the five major constituents of electricity monetary values is emission allowance monetary value.Chart X illustrates the Emission allowance monetary value from August 2009 to November 2009.

CO2 Emission Allowance Price ( Eur/t )

Beginning: Latvenergo

Electricity Price Components

Figure Ten shows the dislocation of the factors that influence the monetary value of electricity that is manufactured by Latvenergo. Import and gas are the chief subscribers to electricity monetary value.

As the 3rd one comes CO2, intending that company in order to follow with the Kyoto Protocol marks must buy emanation allowances and these costs constitute 17 % of the electricity monetary value.Beginning: Latvenergo1.3.X. Latest Latvenergo trade on Emission allowances1.2.XVejonis claimed that the grosss from allowance trading were non invested in electricity coevalss.

Did non look in monetary values.Latvenergo denied these things.2. 2nd period – learned a lesson. Latvenergo has to buy allowances.1.3.

Latvia selling AAUs1. Latvia ‘s Government trading GHG emanation allowances1.1. Overview1.5. Planned vs.

Actual grosssGrosssIt was planned to sell 10 million emanation allowances in 2008 and 2009. Assuming that the monetary value of one allowance in the international market was 5 Euros, the estimated grosss for 2008 and 2009 would be 50 million Euros or 35 million Lats ( harmonizing to exchange rate 1 Euro = 0.7028 Ls ) .For the clip period from 2008 to 2012 it is estimated to merchandise 40 million emanation allowances that would give the grosss of 200 million Euros or about 141 million Lats.

1.6. Emission trading system costsIn order to implement emanation trading system in Latvia, it was necessary to set up and keep such institutional system that would guarantee Latvia ‘s ability to maintain the rights to take part in GHG emanation trading system harmonizing to the Kyoto Protocol, every bit good as guarantee the analytical and administrative capacity for minutess of emanation allowance readying and realisation, income monitoring, undertaking application rating, monitoring of the undertakings ‘ execution, emanation monitoring and confirmation, and other maps sing emanation trading system in Latvia. It was required to develop processs for legal, institutional, commercial and recognition hazard direction in conformity with Latvian legislative Acts of the Apostless. In add-on, the scheme for the selling and dialogues with possible purchasers was of import. An constitution of such establishment required 70A 000 Latss in 2007 ( one clip costs ) . System keeping needed 50A 000 Latss in 2008 and get downing with 2009 it costs 30A 000 Lats yearly.

Extra costs of 3.5 thousand Lats ( one clip costs ) and 24 1000 Lats yearly get downing from 2007 due to the two new occupation places at the Climate and renewable energy section in the Ministry of Environment.Thereby estimated entire fiscal impact on province ‘s budget is:200794 thousand Latss200874 thousand Latss200954 thousand Latss[ 4 ]1.2. An Example of Individual Company selling emanation quotaLatvia together with Czech Republic is the state that has had already five minutess with AAUs.1.

3.3. AAU trading with “ greening ”Latvia and Hungary were the first two East European Countries that established models for “ green ” AAU trading. The choice procedure of greening undertakings is normally stipulated in the AAU purchase contract.

Latvia has decided to transport out choice with the aid of stamp procedures.Latvia has its ain attack to GIS strategies. It has created country-driven strategies that put an accent on the inside informations that ensures the unity of these strategies. Buying states can either accept the prepared strategies or take non to collaborate with Latvia in AAU trading trade. It is non cognize for certain if this rigorous place helps in trading trades and it seams that purchasing states value transparence of the strategies the most.1.3.

1. AAU DealsPortugal – 4 milAAU MinutessLatvia was negociating contracts with purchaser states for several old ages. The contracts with Netherlands and Austria were closed in March 2009, so came the contract with Spain in September 2009 and eventually in Oktober 2009 Latvia signed the merchandising contracts with Japan and Portugal. After the really successful 10 million Euro trades with Netherlands, Austria and Spain, Latvian authorities received a authorization which allowed it to negociate farther trading agreements for 30 million Euros.

[ 5 ]



Volume, AAUs

Price ( a‚¬ )



LatviaNederlands3A 000 00010 a‚¬ scopeNoUndertakings SelectedLatviaOesterreichs2A 000 00010 a‚¬ scopeYesUndertakings selectedLatviaSpain5A 000 00010 a‚¬ scopeYesPendingLatviaJapan1A 500 00010 a‚¬ scopeYesPendingLatviaPortuguese republic4A 000 00010 a‚¬ scopeHard rejuvenationPendingBeginning: Point Carbon1.X.X. Impact on State ‘s Budget1.X.X. InvestingsThe new jurisprudence provinces that companies must turn out that the grosss form emanation allowance trading are invested in green engineerings, otherwise companies can acquire mulcts.

These new limitations are adopted in order to guarantee that money is truly used for intended to extenuate emanations non for other intents. Latvian AAUs are backed by Green Investment Scheme ( GIS ) undertakings, thereby vouching that grosss are spent for energy efficiency, green engineerings and renewable energy undertakings.[ 6 ]Cik liela daA?a no latvijas budA?eta Ir kvotu pA?rdoA?anas ienA?kumi


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