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WP2 DH report

31 5.4.3. Framework Conditions for CHP in Latvia Current Aspects CHPs smaller than 4 MWEL are incentivised to operate as baseload, and do so, due to mandatory procurement of electricity from those, along with FiT for this production. Those plants are usually biogas-based plants. Larger CHPs receive a capacity-based payment in form of a guaranteed fee corresponding to the electric capacity installed. Contrary to the capacity payment seen in Denmark, the Latvian capacity payment does not facilitate flexible operation, since the large CHPs operate as baseload. This happens due to operational practice, and to replace the baseload historically received from the Ignalina nuclear power plant in Lithuania and shale-oil-based electricity from Estonia. Future Aspects The current financing of subsidies for CHP and renewable energy in general is valid until 2017. What happens thereafter remains uncertain. Since the European Commission has ruled that the Danish PSO-based subsidy, similar to the one applied in Latvia, must be changed before 2018, it is likely that the current approach to financing will have to change at some point. 5.4.4. Framework Conditions for P2H Current Aspects A PSO-like obligatory purchase component tariff is levied on end-users of electricity, to finance the support for CHP and RE-based production. Thereby, P2H-technologies pay the same for electricity as other types of electricity consumption. Subsidies are provided for heat pump installation in households, public buildings and commercial buildings (national level support scheme), as well as European Economic Area-grants for green innovations and Cohesion Fund programmes. Despite this, the deployment is limited. In the survey, it is pointed out that electricity prices on the market are too high to provide an incentive for investment in electric boilers, which also does not receive any subsidies or special regulation. Future Aspects As described in 5.4.3, the potential consequence of European Commission ruling can mean that levies will change on electricity use. This can in turn make P2H-technologies more profitable, by lowering their marginal production costs. 5.4.5. Framework Conditions for General Resources Operational practice in DH-systems is primarily to match demand with supply through production units, and not through storage. Heat storages are present, but uncommon. Seasonal storages are not deployed. There are no direct subsidies for heat storages, apart from cases where they are part of new renewable energy installations. HO boilers, based on biomass, are not subsidised other than by special EU grants, but are widely deployed. Heat tariffs are flat and settled in each individual DH


WP2 DH report
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