1. THE FUTURE OF SOLAR ENERGY IN LITHUANIA OPTIONS AND OPPORTUNITIES FOR DEVELOPMENT Vitas Mačiulis Lithuanian Solar Energy Association 19 September, 2013

2. STATE-OF-PLAY IN THE SOLAR ENERGY SECTOR BEFORE JANUARY 2013 WHAT ACTUALLY HAPPENED IN FEBRUARY 2013? HOW COULD AND SHOULD SOLAR ENERGY DEVELOP IN 2013–2018? 2

3. 1006 kWh/m 2 1089 kWh/m 2 950 kWh/m 2 1175 kWh/m 2 3 1002 kWh/m 2

4. 4

5. FIRST STEPS OF SOLAR ENERGY IN LITHUANIA TARIFF: 1.63 1.44 1.25 1.25/0.69/0.56 LTL/kWh 5

6. THE BOOM IN SOLAR ENERGY IN 2012 6

7. 7 WHY DID IT HAPPEN IN 2012? Module prices, EU/W Number of applications to the Ministry of Energy Module prices Number of applications January February March April May June July August September October November December

8. SOLAR ENERGY: LITHUANIA vs OTHER COUNTRIES 8 Countries Installed capacity per capita (in 2011) Germany Czech Republic Belgium Slovakia Austria UK Lithuania - 2020 Strategy Lithuania actual figures in 2013 EU (average of 27 countries)

9. WHAT TO DO? FEED-IN-TARIFF: INCENTIVIZING TARIFF – NOT TO BE APPLIED TO NEW SOLAR POWER PLANTS INTRODUCTION OF NET METERING: TWO-WAY ACCOUNTING SYSTEM 9

10. UNDERSTANDING NET METERING ELECTRICITY PRODUCED ONLY FOR OWN NEEDS; PRODUCTION SURPLUS IS FED BACK INTO THE GRID: –DAYTIME SURPLUS IS CONSUMED IN THE EVENING; –SUMMER SUPRLUS IS CONSUMED IN WINTER; –GRID OPERATOR BECOMES A VIRTUAL BATTERY; AT THE END OF A YEAR A BALANCE IS CALCULATED AND THE DIFFERENCE IS PAID OUT, USUALLY BY PRODUCER TO OPERATOR. 10

11. PROPOSED RESTRICTIONS OF NET METERING INSTALLED SOLAR CAPACITY SHOULD NOT EXCEED MAXIMUM PERMISSIBLE CONSUMPTION CAPACITY (THAT OF POWER SUPPLY CONNECTION); GENERATED SOLAR ENERGY DOES NOT EXCEED PREDICTED CONSUMPTION OF ENERGY; SOLAR POWER IS PRODUCED ONLY IN THE PLACE OF CONSUMPTION: i. e. on the building or in the land plot. 11

12. COMMENTS INSTALLED CAPACITY DOES NOT EXCEED CONSUMPTION CAPACITY: –INSTALLED CAPACITY TO COMPANIES EQUALS TO THEIR CONSUMPTION CAPACITY; –INSTALLED CAPACITY TO HOUSEHOLDS EQUALS TO CAPACITY RECEIVED FROM THE GRID; –PRODUCTION CAPACITY OF A SOLAR POWER PLANT EQUALS TO A TOTAL POWER OF POWER CONVERTERS (BUT NOT A TOTAL OF MODULE POWER); –THRESHOLD CAPACITY OF FUSES ENSURES THAT THE ABOVE RESTRICTIONS ARE OBSERVED. 12

13. GENERATED POWER DOES NOT EXCEED CONSUMED POWER: –ENERGY METERING – A TWO-WAY METERING DEVICE; –PAYMENT– AT THE END OF A CALENDAR YEAR; –SURPLUS SUPPLIED BY THE PRODUCER – FOR A MARKET PRICE. 13

14. SOLAR POWER PRODUCTION IN THE PLACE OF CONSUMPTION: –ROOFS OR WALLS OF THE BUILDINGS THAT HAVE SUPPLY CONNECTION; –ONLY AREAS WHERE POWER CONSUMERS HAVE BEEN INSTALLED AND THAT ARE LAWFULLY USED BY THE PRODUCER. 14

15. ADVANTAGES OF NET METERING THE MONEY OF OTHER POWER CONSUMERS WILL NOT BE USED (THE MONEY WILL NOT BE REDISTRIBUTED VIA PUBLIC SERVICE OBLIGATIONS (POS); NO INVESTMENTS BY THE OPERATOR WILL BE NECESSARY TO CONNECT A SOLAR PLANT TO A GRID; UNRESOLVED: BALANCING COSTS (FOR UNITS OF UP TO 10 kW CAPACITY – THERE SHOULD BE NONE). 15

16. ECONOMIC INDICATORS OF SOLAR POWER PLANTS (EXAMPLE FOR 10 Kw) INVESTMENTS – LTL50,000; SOURCE OF INVESTMENTS – OWN FUNDS; ELECTRICITY PRODUCTION – 950 kWh/kW; DEGRADATION OF PHOTOVOLTAIC MODULES: –IN 10 YEARS – 90 % OF CAPACITY; –IN 20 YEARS – 80 % OF CAPACITY. RETAIL ELECTRICITY PRICE – 52 ct/kWh; PREDICTED GROWTH OF ELECTRICITY PRICE – 3 % A YEAR. 16

17. CASH FLOWS OF A 10 kW SOLAR POWER PLANT 17

18. RENTABILITY OPTIONS FOR SOLAR POWER PLANTS 18 Investments, LTL/kWSupport, LTLYear

19. PREDICTIONS FOR SOLAR POWER PLANT CONSTRUCTION IN 2014-2018 19

20. EXPECTED RESULTS OF SOLAR POWER PLANT DEVELOPMENT IN 2018 INDICATOR PESSIMISTIC SCENARIO OPTIMISTIC SCENARIO Per capita, W Share of solar electricity in the total consumption of electricity, % Annual production of solar electricity, GWh Installed capacity, MW

21. PROPOSALS FOR INTRODUCTION OF NET METERING AMENDMENT OF THE LAW ON NUCLEAR POWER STATION IN THE AUTUMN SESSION OF THE PARLIAMENT IN 2013 – BY 15 NOVEMBER MINISTRY OF ENERGY AND LESTO PREPARE BYLAWS – BY 15 DECEMBER 2013 MINISTRY OF ENERGY EARMARKS FUNDING FROM 2014-2016 PROGRAMMING PERIOD – BY 31 DECEMBER 2014 AMOUNT OF SUPPORT – 2,000 LTL/kW; LAUNCH OF NET METERING – 01/01/2014 21

22. THE RESULT: SOLAR ENERGY IN LITHUANIA BACK IN 2014!

23. THANK YOU FOR YOUR ATTENTION! ANY QUESTIONS? 23 For more information: Vitas Mačiulis, 8 698 48934 vitas.maciulis@gmail.com