How Will the Breakthrough Package Change Renewable Energy?

The Lithuanian Parliament (Seimas) has passed the package of energy law amendments, widely known as the Breakthrough Package. The Government believes that this new legislation will encourage the stable development of renewable energy in Lithuania and will help to secure our energy independence. However, there are the energy market players who think the opposite – the new legislation puts extra harnesses on the market-driven development of renewable energy.

At this stage, until it is not as clear as a bell how the measures will work and what mechanisms will be applied for their implementation and maintenance, we refrain from passing a judgement on the Package’s merits. Instead, for a time being, we want to introduce what major changes the Breakthrough Package will bring to us::

Establishment of total maximum solar capacity. Following the new Law, solar power generating capacities shall be limited to a total of 2 GW. However, this max capacity amount does not include capacities developed by producing customers, renewable energy, and citizen energy communities. If 2 GW are policy makers shall make reached  (A quick reminder – total allocated installed capacity for producing customers is 1 GW). Once the total installed capacity of 2 GW is reached, the government-authorized body shall carry out a technological and economic assessment of the development of solar power plants and submit a proposal to the Government for further development of solar power plants, taking into account the strategic energy policy goals and/or progress targets. It is not yet confirmed but these 2 GW are already reached, so respective steps by the Government towards solar development should be made. However, this obstacle does not limit the development of solar generating capacities for energy societies and producing customers.

Requirements for the new buildings introduced. When designing new public, industrial and commercial, residential buildings, it has to be planned to install a renewable generation facility and the permissible usable power of the facility would be no less than the permissible usable power given to the real estate developed. When there are no technical possibilities for the installation of a renewable generation facility with the specified permitted generation capacity, the developer of the building has to ensure that the electricity needed should be covered by renewable energy provided in some other way. How these new requirements will be implemented in reality? Most likely we need to wait for secondary legislation.

Wind and/or solar power plans may be developed in non-urbanized territories without changing the purpose of the land if the land can be still used for its primary purposes. Therefore, the developer may build a solar power plant of any capacity as long as the land can still be used for agricultural purposes. Basically, the agricultural solar model, where agriculture and solar energy production combination is promoted.

The “electricity storage” period in the grid for producing customers is extended for an additional one year (2 years in total). This legislative change will give more flexibility to the producing customers in case the customer has excess electricity production and is willing to consume it rather than get a compensation. For example, if you are an energy-producing customer during the seasons between March 31 2022, and March 2023, you will be compensated after two years of production and consumption.

Deadlines for extending permits for wind power development. In case of the renewal of permits for the development of electricity generation capacity through the construction or installation of a wind power plant, a solar power plant with a generating capacity higher than 6 MW, or a hybrid power plant using wind energy for electricity generation, the permit shall be renewed for a 12-month period once.

For wind farms higher than 30 kW installed capacity, the distance from the central axis of the wind turbine mast to specific buildings is subject to requirements. These plants must be installed in such a way that the shortest distance from the central axis of the wind turbine mast to garden houses, dwellings, hotels and other premises defined in the Law is at least equal to the height of the mast of the wind turbine in meters multiplied by 4, except the cases, when an additional agreement between the developer and the owner of the aforementioned building is concluded, as mentioned below.

Obtaining the consent of building owners to allow a wind turbine to be sited at a shorter distance than that defined above. Subject to the agreement of the building owners and their written confirmation, wind farms with an installed capacity of more than 30 kW may be constructed at a shorter distance than that specified above, but not closer than the distance specified in the provision below, subject to the conclusion of an agreement with the person interested in the production of electricity by the wind farm for compliance with the requirements of the public health and safety.

Application of production fee. Renewable energy producers will have to pay a production fee, which shall be allocated to the local communities. The fee is calculated in a way of applying EUR 1,3 for 1 MW of the energy delivered to the grid. Active producers, renewable energy and citizen energy communities, and offshore wind producers shall be exempted from the fee.

Producing customers. They may have several energy generation capacities for one point of consumption (for example if a producing customer has an apartment (in case of a consumer is a household) or factory (in case of business-consumer) the consumer may have several power plants allocated for one point of consumption.

Renewable energy and Citizen energy communities. Principles of membership in Renewable energy and Citizen energy communities and establishment and operation are changed providing a much more flexible and easier establishment and management of such communities.

Hybrid power plant. The concept of the hybrid power plant is introduced, i.e. producers may mix solar, wind and storage technologies and connect hybrid power plants. The combined capacities of several technologies shall be considered to be the total installed capacity of such a hybrid power plant. However, different production facilities of hybrid power plants shall be connected to the grid at the same connection point. For example, if the producer has an X MW wind power plant connected to the grid, he can connect a 20 MW solar park to the same connection point.

The rules of connection to the grid have been modified. A quick overview of the most substantial changes: the so-called reservation fee for the grid is increased from 15 000 EUR for 1 MW to 50 000 EUR (for the offshore development – 75 000 EUR per 1 MW) and a letter of intent with the grid operator is to be executed only with a person who received preliminary conditions. Initial conditions for connection and letter of intent with grid operator are not transferable. It means developers have to plan ahead of the model and structure of the project.

• Rules for the connection of storage facilities are introduced.
• Regulations on issuing and rejecting permits to develop/produce energy are amended.

The above-presented introduction to the essentials of the Breakthrough Package has been written in an accessible way. Often the devil is in the details, therefore in forthcoming articles, WALLESS will introduce a more detailed description of what is coming into the Lithuanian energy market, with a particular focus on significant changes to business and consumers.