WORKING DRAFT Last Modified 8/13/2010 4:05:09 PM Central Europe Standard Time Printed :22:48 Central Europe Standard Time Seminar The role of civil society in implementing the EU directives on the development of renewable energy sources in Lithuania 13 May, 2014 National Programme for the Development of Renewable Energy Sources

1 –The Ministry of Energy commissioned a study intended to contribute to the drafting of the Programme for the Development of Renewable Energy Sources (RES). The main objective of the study was to determine national targets for energy consumption from renewable sources in the electricity, heat and transport sectors and propose measures for achieving those targets. –The study identified three problem areas where difficulties in achieving the 2020 targets set for the consumption of energy from renewable sources might arise, namely: RES consumption in the electricity generation and distribution sector, the transport sector and for individual household heating. –The strategic goal of the Programme for the Development of Renewable Energy Sources is to promote the use of RES and ensure that RES represent a significant share of national primary energy resources in Context

2 Energy consumption expected to grow by up to 8% before 2020 in thousands of t oe Main prerequisites for the estimated growth:  Predicted annual GDP growth of 3.9 per cent until 2020  Growing efficiency of heat consumption and transmission  Growing efficiency of electricity transmission  Predicted energy consumption decrease in the district and household heating sectors  Predicted growth in the electricity and transport sectors – 13% and 10% respectively before 2020 Estimated consumption in % Actual consumption in 2012 Heat for households Other heat Heat for district heating Transport Electricity Sector Sources: Statistics Lithuania, Ministry of Finance

3 1 – The target set in accordance with EU Directive 2009/28/EC. 2 – The estimation based on the implementation of the proposed measures. 3 – In the electricity sector the RES share based on EU Directive 2009/28/EC was calculated as a share of total national energy consumption. This is the total indicated here. However, it should be pointed out that electricity generated in pump storage power plants (44 thousand t oe ) was not taken into account when calculating the RES share. 4 – The target set by the Law on Energy from Renewable Sources. 5 – In the transport sector the RES share based on EU Directive 2009/28/EC was calculated in respect of only part of the fuel consumed by the transport sector. The natural and petroleum gas consumed in the transport sector and the fuel consumed by air transport were excluded from the calculations. Thus, the diagram represents only the fuel that was used as a basis for calculating the share of RES consumed by the transport sector. 6 – The fuel used to produce heat by non-household consumers (industry, services, agriculture, fisheries and construction). RES targets still to be achieved in the sectors of electricity, transport and heat for households Energy consumption, in thousands of t oe Sources: Lithuanian District Heating Association, Statistics Lithuania, Law on Energy from Renewable Sources 5,466 1,388 3,800 5,067 1,102 3,972 Total energy RES: 22%Target 23% estimation , , ,298 1, , , estimation 2012 B1 | Heat for households RES: 68%Target 80% estimation 2012 A | Electricity 3 C | Transport 5 B2 | District heating B3 | Other heat estimation estimation estimation 2012 RES: 11%Target 20% 4 RES: 4.8%Target 10% 1 RES: 14% Target undefined RES: 28%Target 60% 4 - RES - Non RES - RES shortfall - Proposed measures Estimation 31% 2 Estimation 23% 2 Estimation 5.5% 2 Estimation 74% 2 Estimation 76% 2 Estimation 13% 285

4 A | First target: to increase local electricity generation from RES. It is proposed that the shortfall in RES-based electricity be offset by new biofuel/biogas installations Electricity generation from RES in 2020, in thousands of t oe Sources: National Commission for Energy Control and Prices, Litgrid 8%11%4% RES share Esamų galingumų gamyba  Wind – 49 thousand t oe  Hydro energy – 37 thousand t oe 1  Biofuel – 22 thousand t oe  Solar energy – 5 thousand t oe  Waste – 4 thousand t oe  Biogas – 4 thousand t oe 1 – Excluding the Kruonis pump storage power plant Additional production under quotas by 2020 Produced under allocated quotas:  Wind – 39 thousand t oe  Biogas – 4 thousand t oe RES consumption in % Capacities in 2013 Proposal  In order to cover the shortfall it is proposed to subsidise the most cost-effective projects for electricity generation from RES. The most cost-effective projects are the initiatives to convert gas installations in Vilnius and Kaunas into biofuel and/or waste-based installations (in accordance with the National Programme for the Development of the Heat Sector) and to build new cogeneration installations using biomass and/or biogas in other Lithuanian cities.  Estimated demand for support – up to LTL1 133 million. 18 Infrastructure built in 2013 Infrastructure built before and in 2012

5 A | Proposed electricity generation from RES by 2020 MW installed capacity 1 – Proposed capacity to achieve the targets with the support of the EU structural funds. 2 – Ministry of Energy data. 3 – Kaunas Technology University is currently conducting a study commissioned by Litgrid on Possibilities of connecting power plants using RES to the kV transmission grids by 2030, focusing on the impact of further development of wind and solar plants on transmission grids. 4 – It is proposed to build new cogeneration installations with 43 MW total installed capacity using biofuel or biogas in Lithuanian towns and cities other than Vilnius and Kaunas. The total installed capacity has been planned, but it is not clear how the capacity will be shared between biofuel and biogas installations. Sources: National Commission for Energy Control and Prices, Litgrid Capacity in 2013 Comment Planned capacity (promoted through public interest services)  69 00  The impact of further development on electricity grids is not clear. In the Law on RES the Lithuanian government undertook to draft a procedure for further development after achieving the capacity of 10 MW 4.  278  222  The impact of further development on electricity grids is not clear. In the Law on RES the Lithuanian government undertook to draft a procedure for further development after achieving the capacity of 50 MW Wind energy (off-shore) 00  n.a.  The economic potential is not known. After the off-shore areas are added to the general plan of the territory of Lithuania, research will be conducted regarding specific marine areas. 99 00  According to the draft National Waste Management Plan, waste processing will contribute to the reduction of fuel (waste) accumulation in landfills. 3. Biogas (landfills) Estimates for 2020  69  500  n.a. 99 99  12  Biogas production potential in agriculture was indicated. 4. Biogas (anaerobic degradation)  Wind energy (on-shore)  52 0202  The construction of new installations and conversion of existing gas-based cogeneration installations into biogas installations was taken into account. 1. Biofuel   128 11  The potential in the Nėris segment of Kaunas-Jonava was included, but could only be exploited following amendments to the Law on Water. 2. Hydroenergy  Solar energy Proposed capacity, to be achieved with EU funding 1 00 00 00 00   00 Potential  n.a. 00  75  350  30

6 B1 | Second target: to increase the total final RES consumption in the thermal energy production sector from 35 per cent in 2020 to at least 45 per cent in Households. It is estimated that without additional measures the share of RES in households will amount to 68 per cent in 2020 RES consumption in households with individual heating in 2020, in thousands of t oe Sources: Statistics Lithuania 68% 6% Estimated RES consumption  Biofuel will remain the main fuel for individually heated households  On the basis of trends, it is estimated that without additional measures there will be no change in RES share in total consumption before 2020 RES consumption in % Proposed measures Estimated RES consumption Proposal  To actively promote the conversion of installations using fossil fuel into installations using biofuel, to support the installation of geothermal heating and the development of solar panels that would not produce surplus heat in the summer season.  Estimated demand for support – LTL million.  It is predicted that the increase in gas and biofuel prices will improve heating efficiency  Greater efficiency will mean that actual RES consumption will change very little in absolute figures as compared to 2012 RES consumption in 2020 Shortfall in RES (to achieve the target would cost LTL million) RES share

7 32%24% RES share in district heating Current RES consumption A total of 244 thousand t oe : :  241 thousand t oe of solid biomass  1 thousand t oe of biogas  2 thousand t oe of geothermal energy 19% A total of 196 thousand t oe : :  195 thousand t oe of solid biomass  1 thousand t oe of biogas Increase in consumption RES consumption in % B2| District heating. If the measures proposed were implemented, only a quarter of the fuel consumed for district heating would come from sources other than RES RES consumption by district heating producers in 2020, in thousands of t oe Proposal  In accordance with the National Programme for the Development of the Heat Sector it is proposed to allocate additional support to new biofuel installations.  Estimated demand for support – up to LTL420 million. Sources: Statistics Lithuania 1 – National programme for the development of the heat sector Increase in consumption Proposed measures Current RES consumption

8 11%2% RES share in the sector of other heat Current RES consumption A total of 133 thousand t oe :  130 thousand t oe of solid biomass  3 thousand t oe of biogas  2 thousand t oe of straw 13% A total of 27 thousand t oe :  23 thousand t oe of wood biofuel  4 thousand t oe of biogas Increase in consumption RES consumption in 2020 Increase in consumption Current RES consumption 160 B3| Other heat. The main heat consumer – industry RES consumption for individual heating by non-household consumers in 2020, in thousands of t oe  There are no measures provided for in the programme to increase the RES share in the individually heated non- household consumer group.

9 Shortfall in RES (to achieve the target would cost LTL billion) C | Third target: to increase the use of RES in the transport sector. It is proposed to reduce the shortfall in RES to 65 thousand t oe RES consumption in transport sector in 2020, in thousands of t oe Sources: National Commission for Energy Control and Prices, Litgrid. 0.1%4.3%1.1%5.5% Dabartinis vartojimas A total of 62 thousand t oe :  Blending of biofuels into fuel: 5% into petrol, 7% into diesel fuel  E85 vehicles  Public transport (trolleybuses and electric trains)  Electric vehicles (there were up to 4 such vehicles in Lithuania in 2012) A total of 16 thousand t oe, main preconditions:  Increase of biofuel blending into petrol to 10%  Growth in the volume of blended biofuel proportionate to the increase in total fuel consumption  Increased consumption of RES-based electricity in the transport sector 1 RES consumption in – The formula for RES-based electricity share in the transport sector is: the amount of electricity consumed by transport x 2.5 x RES-based electricity share in the EU; 2 – a fuel mix containing 85% of bioethanol and 15% of petrol; 3 – compressed natural gas. Consumption in 2012 Growth of consumption RES share Proposal  To encourage the buying of E85 2 vehicles by setting a target that 1% of new cars should be powered by E85; to promote the use of biogases in public transport by setting the target of ensuring that biogases make up 3% of the fuel used in CNG 3 -powered buses.  Estimated need for support: LTL27 million.

10 Thank you for your attention!