1. Andrius Janukonis Lithuanian District Heating Association Chairman of the Board 5 October, 2005 Emily Melton (Manager Member Services, WEC London Office) visit to Lithuania Round-table Discussion AB “Lietuvos energija”, Vilnius DH Sector in Lithuania

2. DH market share in Europe

3. Members of LDHA – 28 DH companies LDHA members produce and supply around 99% of the total heat supplied to the DH network in Lithuania

4. DH Ownership structure, 2004 The lease of heat utilities to foreign and domestic investors started in 2000 (9.5% with JV) (ownership 100% in municipality)

5. CHP electricity delivered to the network

6. Guidelines of DH Development The share of CHP electricity would make up not less than 35% in 2020 (currently it makes about 17.2%) The share of CHP heat would make up not less than 75% in 2020 (currently it makes about 50%) Modernize CHP plants in Vilnius and Kaunas and construct a pilot CHP plant in Panevėžys Construct modern CHP plants in Siauliai, Klaipėda, Alytus, Marijampolė and other cities until 2020

7. Fuels used for DH production It is foressen that production of heat using local, renewable and waste resources would make 17% in general heat balance in 2010, and 23% - in 2020.

8. Fuel input for DH production 2004  DH companies more and more often go for installation of biofuel fired boilers. The total installed capacity of such boilers has reached more than 220MW.  Biofuel makes 10.0% in the general fuel balance and this share in the regional DH companies exceeded 21%. LithuaniaSweden

9. Key indicators of the DH sector Unit2001200220032004 Heat delivered to the network GWh 10824106231044010300 Heat delivered to consumers GWh 8166824483098140 Technological heat losses % 21.118.818.117,8 Average cost of fuel EUR/toe 135131 126 Turn over for heating mio. EUR 272278277268 Average price EUR/MWh 33.333.733.332.9

10. Technological DH distribution loss  Main heat transfer lines in the network were installed 30-40 years ago and their operational resource is coming to the end.  In 2004 approx. 72 mio. LTL (about 21% of the total investment amount) invested in this field

11. Average DH tariff in Lithuania, 2004 The average price of heat is decreasing: it was 115.1 LTL/MWh in 2003, while in 2004 – 113.5 LTL/MWh

12. Heat energy consumption, 2004

13. Heat consumption in old and new erected houses Build in Consumed heat amount, kWhPrice 1 m 2 LTL (excluding VAT) Period TotalFor heating For hot water preparation Space heating of 1m 2 (kWh/m 2 ) 40 flats multy- family apartment house (heating area 1756 m 2 )1962 2300018054494610,281,0410/2003 3800033891410919,301,9511/2003 4100036704429620,912,1212/2003 6200058011398933,043,351/2004 6523061307392334,923,522/2004 4330039567373322,542,283/2004 2800023649435113,471,364/2004 154,462,23 102 flats multy- family apartment house (heating area 6923 m 2 2001 3700011967136081,730,1810/2003 7500046508170676,720,6911/2003 5800032998135784,770,4912/2003 106000751811939510,861,121/2004 106000777161686011,221,162/2004 8200051926186507,500,773/2004 5800032777137994,730,494/2004 47,530,70

15. National Energy Strategy - Heat Sector Strategy for the Heat Supply Development Heat supply development plans for municipalities CHP in DH systems (after the closure of Ignalina NPP) Encourage use of local and renewable energy sources Improve energy efficiency Competition among heat producers Procedure for independent heat producers Modernise heat supply systems Procedure for the purchase of CHP electricity Adopted by Seimas: 10/10-2002

16. Energy Law Adopted by Seimas: 16/5-2002 Energy savings Energy efficient use of primary energy sources Reducing energy intensity Diversification (fuel imports, indigenous fuels) Promotion of indigenous fuels Reliable and cost-effective production Reducing effects on the environment Forming legal and economic conditions for investments Increase economic efficiency: competition, private invest.

17. Heat Law Adopted by Seimas: 20/5-2003 Heat operator tasks (supply heat, maintain system) Heat planning and zoning etc. Relation with heat consumers (responsibilities) New customer contract principles Regulation of consumers’ disconnection options Transparency for consumers Access for external parties to supply heat Separation from municipal economic activities

18. Competition in DH sector The competition between the suppliers of alternative types of fuels. The heat production shall be based on the competition between the heat producers. The hot water preparation and supply shall be based on competition. The state (municipalities) shall promote competition in the field of maintenance of heating and hot water systems inside the multy-family apartment houses.

19. Municipal Heat Plans The municipalities shall manage the heat sector in conformity with the special Municipal Heat Plans. The main objective of the Municipal Heat Plans shall be to satisfy the consumers heat demand on least costs. The Municipal Heat Plans shall be in conformity with the state strategy, national objectives in the energy industry. The government may provide assistance and support in implementing the Municipal Heat Plans.

20. There are 60 municipalities in Lithuania

21. Heat Supply License The heat suppliers shall obtain the heat supply license. The heat supply license to the heat supplier supplying not less than 5 GWh of heat/year is issued by the National Control Commission for Prices and Energy. The heat supply license to the heat supplier supplying less than 5 GWh of heat/year is issued by Municipalities

22. Heat pricing The heat and hot water prices shall be the single - component or the double - component. The heat and hot water prices might be differential depending on the heat supply system, consumer groups, volume of heat consumption, season of consumption.

24. Long-term renovation program “Let’s renovate dwelling- renovate City” On June 2004 Vilnius City Municipality started the implementation of long – term renovation program “Let’s renovate dwelling - renovate City”. World fund for Environmental Protection gave a loan of 6,5 million USD (3 million USD is intended for building renovation). Pilot project – overall renovation of 3 multi-family apartment buildings - is implemented within this project framework.

25. Members of LDHA – DH companies 1.UAB “Vilniaus energija” 2.AB “Kauno energija” 3.UAB “Litesko”: “Alytaus energija” “Kelmės šiluma” “Marijampolės šiluma” “Palangos šiluma” “Telšių šiluma” “Vilkaviškio šiluma” “Druskininkų šiluma” “Biržų šiluma” 4.AB “Panevėžio energija” 5.AB “Klaipėdos energija” 6.AB “Šiaulių energija” 7.UAB “E energija”: UAB “Prienų energija” UAB “Ukmergės energija” UAB “Akmenės energija” 8.AB “Jonavos šilumos tinklai” 9.UAB “Mažeikių šilumos tinklai” 10.UAB “Utenos šilumos tinklai” 11.UAB “Tauragės šilumos tinklai” 12.UAB “Šilutės šilumos tinklai” 13.UAB “Radviliškio šiluma” 14.UAB “Anykščių šiluma” 15.UAB “Raseinių šilumos tinklai” 16.UAB “Kaišiadorių šiluma” 17.UAB “Švenčionių energija” 18.UAB “Ignalinos šilumos tinklai” 19.UAB “Plungės šilumos tinklai” 20.UAB “Pakruojo šiluma” 21.UAB “Šakių šilumos tinklai” 22.UAB “Lazdijų šilumos tinklai” 23.UAB “Širvintų šiluma” 24.UAB “Molėtų šiluma” 25.UAB “Šilalės šilumos tinklai” 26.UAB “Vilniaus rajono šilumos tinklai” 27.UAB “Fortum Heat Lietuva” 28.UAB “Birštono šiluma”

26. Heat balance, 2004

27. Heat users

28. Legal Acts on Renovation of Legal Acts on Renovation of Multy-family Apartment Houses Lithuanian Housing Strategy (Adopted on 21-01-2004); Support Programme on Renovation of Multy-family Apartment Houses (Adopted on 23-09-2004, modified on 21- 06-2005) Measures and terms of implementation of Directive 2002/91/EC of the European Parliament and of the Council on the energy performance of buildings (Adopted on 27-12-2004) Law on State Support for Housing’s Procure or Rent and Modernization of Multy-family Apartment Houses (Adopted with modifications on 24-03-2005)