Latvia – the best location to invest in smart renewable energy

Whichever way you look at it, Latvia is the land of smart renewable energy opportunity. 

Latvia is Europe's 3rd largest manufacturer of renewable energy (Eurostat, 2020), thanks to harnessing its strong rivers in the form of clean, hydroelectric power. It's the 2nd-greenest country in the EU based on CO2 emissions, and has over 2000 specialist employees working in the field. On top of that, it's been calculated that the Baltic Sea on Latvia's coast has the potential to generate up to 1100 megawatts in renewable wind energy, which is currently unused. 41% of Latvia's energy consumption comes from renewable energy, thanks to strong hydroelectric power, which is Europe's 2nd highest rate.

With about 50% of the country's border being the coast of the Baltic sea, and over half of the land covered with forest, the country's natural resources lend themselves well to develop clean energy solutions. Solar power currently accounts for 0.2% of contributions to the energy grid, though the potential can be measured in gigawatts.

Renewable energy is a topic that has been prioritized at a both European and national level. Latvia has pledged to reach 50% renewable energy of its final energy consumption by 2030, and the Investment and Development Agency of Latvia has named it a priority sector, which benefits from eased policies, bureaucracy, fast tracked paperwork, and more. 

Considering the statistics, and some of the major infrastructure projects being built, we're seeing the beginning of investment in the area. This is the time to take advantage of the beneficial landscape and spirit of innovation.

The Latvian-Estonian offshore wind project to create 3 TWh of renewable energy

Acknowledging the potential of the Baltic Sea, and in an effort to combine resources for a cost-effective project, Estonia and Latvia have begun work to develop the first European cross-border infrastructure project – a shared offshore wind farm. 

The wind farm, to be located in the Gulf of Riga, is expected to harvest 1 GigaWatt-worth of clean wind energy for Baltic use, which would translate to 3 TWh (Terawatt-hours) of renewable energy. The project is in its first stage of development, with a feasibility study underway to ascertain the best location and overall costs of the project. The location is expected to be within the Gulf of Riga, no closer than 15km to shore, ensuring that the area's biodiversity is not affected.

This project draws attention to the massive opportunity when it comes to taking advantage of the natural resources available. This potential has not gone unnoticed, with US agencies highlighting the investment opportunity: 

“The most promising sectors for renewable energy equipment in Latvia are energy efficiency solutions, biomass power, wind energy, and energy produced in combined heat and power plants. Many stretches of the Baltic coast have wind conditions suitable for wind parks, especially offshore. Over half of Latvia is covered by forest, so wood biomass presents excellent potential for further development.” - The International Trade Administration in the U.S. Department of Commerce, Latvia – Country Commercial Guide

Latvia already has the necessary energy infrastructure in place in order to successfully harness smart renewable energy on the coasts and in the forests of Kurzeme, as well as collaborate with its Nordic neighbours in electrical trade. This is thanks to the recent completion of the Kurzemes Loks portion of the NordBalt submarine power cable project, which links the Nordic and Baltic electrical markets, thus ensuring higher rates of energy security.

Clean offshore wind power goes hand in hand with the “Sea 2030” mission – an initiative to increase the availability of clean water and to reduce pollution in the Baltic Sea. By placing a focus on renewable energy, it draws attention to opportunities to make changes in manufacturing. It has even been found that the presence of offshore wind turbines has stimulated the development of sea-cleaning coral, acting as artificial reefs.

While the implementation of offshore wind farms in Latvia is at its infancy (with plenty of room for growth), it is already the location for the Baltic Offshore Training Centre (BOTC), which is the leading GWO (Global Wind Organization) training center in the Baltic and Nordic region. Established in 2013, the centre specializes in practical safety training and is internationally certified in accordance with the GWO.

98 million EUR in fast-tracked investment with the “Green Channel”

The Smart Renewable Energy sector has been named a priority industry to support in Latvia, both due to its correlation with various green initiative promises, as well as due to the expected economic contributions the sector would bring to GDP. For those reasons, several systems and infrastructure have been put in place to ease the way for the entrance of renewable energy investments into the country.

The “Green Channel” initiative has already facilitated 98 million EUR-worth of investment, which is part of the 500 million EUR of investment that Latvia has seen in just the first 9 months of 2021 – since the “Green Channel initiative was launched.

“This year, even faced with difficulties, Latvian entrepreneurs have shown excellent results in exports. Also last year, when the FDI in Europe fell, we did better than we had in the last seven years. This year looks even more promising, and the results are achieved partly because of the policy implemented by the government – by introducing the fast track ‘Green Channel’ for priority investment projects. The investments attracted in the first nine months of this year are double of what we had last year and reach 500 million EUR,” says Jānis Vitenbergs, Minister of Economics of the Republic of Latvia.

The “Green Channel” is a governmental initiative to fast track the bureaucratic aspects of green investment and business dealings. Investors are able to jump to the front of the line for over 40 specific state services in a variety of categories, including:

• Construction
• Territorial planning
• Immigration
• And other administrative processes

You can find a full list of supported and fast tracked services here.

To qualify for Green Channel fast tracking, the business has to meet three of the four following criteria:

• The investment amount in 3 years should be at least 5 million euros (in Riga – at least 10 million euros).
• The investment project should create 75 new workplaces (in Riga–100) or 50 new workplaces (in Riga-75) with Latvia’s monthly average salary of the previous calendar year (published on the website of the Central Statistical Bureau of Latvia) multiplied with a coefficient of 1.5 (in Riga - the coefficient is 2).
• The planned product and service export amount in three years after the launch of the investment project should be larger than 3 million euros (in Riga – the amount is 5 million euros).
• The planned investment in R&D and employee competence development should be over 250 thousand euros.

Learn more about the requirements and application process for the “green channel” here. 

Innovations supporting the renewables industry in Latvia

With public support in place, we turn to the private sector. 

The smart renewable energy sector has consolidated into the Green Tech Cluster - an association made up of 66 members spanning 187M EUR in turnover and over 1800 employees. There are also other organizations in related sectors, such as the Wind Energy Association with lobbying and networking functions. Some of their members are major players in the wind energy sector, such as Latvenergo and Enefit Green, two Baltic state-owned energy organizations.

At the same time, the tech industry is actively developing innovations to drive the adoption of renewable energy solutions. Here are a few that have been showing major traction:

• Aerones – roboticized wind turbine cleaning and repairs for more cost-effective maintenance. Winners of several startup pitch competitions.
• Jauda – one of the largest producers of electrical materials and equipment in the Baltic countries with more than 50 years of experience. The company produces products for energetics and electrification, including compact substations, low and medium voltage equipment, metal constructions, and metalware.
• Etgas – biomass generation plant engineering, construction, and operations.
• Hygen – decentralized refueling solutions for gaseous fuel powered vehicles (bio-CNG).
• LightHouse – lighting-as-a-service that introduces LED lighting to reduce costs and environmental impact.
• Digas – dual-fuel system to replace diesel-fuel in locomotives with a more cost effective and environmentally friendly alternative without compromising performance.

Latvia is on the precipice of becoming a green energy powerhouse

With political will being bent to ease the way for renewable energy investments, and while it correlates with social and politically-backed movements to integrate smart energy into our society, the best time to invest in the industry is now. 

The science shows it all – Latvia has the raw materials and connectivity to become a European-level player in the renewable energy market. Those who unlock that potential will reap the benefits.

To learn more about investing in Latvian smart renewable energy, contact Kristaps Supe, Senior Project Manager at the Latvian Investment and Development Agency.

You can get to know more about the investment environment in Latvia by contacting us here!