Global energy optimization trends and policies in Latvia

Overview

In 2022 final energy consumption (FEC) in Latvia was 3.8 Mtoe, which represents an increase of 16% compared to 2000. In 2022, the largest consuming sector is residential, 29% of total FEC. Unlike other sectors, residential energy consumption decreased by 19% over this period, and its share has decreased by 12.6 percentage points. The share of transport has significantly increased from 22% to 27% in 2022, while industry increased its share from 17.5% to 23.9%.. Due to change in the geopolitical situation in 2022 and the associated rapid increase in energy prices, significant decline in energy consumption was observed in several sectors and in total in 2022 (- 3.4% compared to 2021).

Figure 1: Final energy consumption by sector (with climatic corrections)

Energy efficiency for final consumers, as measured by ODEX, improved by 31%, or 1.7% per year from 2000 to 2022.The rate of improvement slightly decreased (1.3% per year since 2010, compared to 2.1% per year over 2000–2010). In industry, despite the economic recession (2008-2011), there has been steady progress and larger gains than in the other sectors, 45% (2.7%/year). Financial support programmes and legislation targeted at reducing heat losses from buildings had contributed to energy efficiency improvement in residential sector by about 36% (average 2.0%/year). For transport and service sectors, gains are lower (respectively 1.3% and 0.5% per year since 2000).

Figure 2: Technical Energy Efficiency Index

Estimated total energy savings from 2000 to 2022 are around 1.4 Mtoe. Household sector played major role, contributing nearly half (44%) of them. The second largest contribution is provided by industry (31%), followed by transport sector (20%). If in households and industry these savings had been generated due to implemented energy efficiency support programmes and market-based technology development trends, the savings in transport sector had mainly been generated by technological development and, to a lesser extent, by support programmes. Rapid increase in energy prices in 2022 significantly affected consumer behaviour. Energy savings in household and services in 2022 increased by respectively 10.3% and 16.7% compared to 2021.

Figure 3: Energy savings by sector

Between 2000 and 2022 primary energy consumption of Latvia increased by 0.4 Mtoe (almost 10%), from 3.84 to 4.23 Mtoe). The increase in final demand (0.59 Mtoe) was partly offset by a lower consumption in the power sector (mainly due to introduction of the efficient CHP technologies and lesser extent switching to renewable energy sources), which accounted for a decrease of 0.15 Mtoe. Compared to these effects, the contributions from energy use in other transformational changes and non-energy use were relatively small.

Figure 4: Main drivers of the total energy supply variation

During the period 2000-2022, total final energy consumption in Latvia increased by almost 0.6 Mtoe (from 3.23 to 3.83 Mtoe). The economic activity and structural changes, as well as the weather fluctuations contributed to a total increase of final energy consumption by around 2.24 Mtoe, with the activity effect being the main driver with a share of 82% (+1.83 Mtoe). These were, however, compensated by the energy savings achieved through a considerable improvement in energy efficiency (1.39 Mtoe) as measured by the ODEX and, to a lesser extent, other effects mostly behaviours) that also caused decreasing energy consumption over the period 2000-2022.

Figure 5: Main drivers of the final energy consumption variation

Energy efficiency improvement is one of the top priorities of national energy sector development which allows for the cost-effective reduction of risks associated with security of energy supply, provides sustainability, competitiveness and growth of national economy, in line with GHG emissions mitigation. Mix of instruments are used for energy efficiency policy implementation. The co-financing of energy efficiency investments (see sectorial Tables) and obligation to implement energy management systems (EMS) should be particularly underlined. Table below presents EMS implementation by large enterprises and large electricity consumers, for EMS in public bodies see the Buildings section. Latvia’s Updated NECP2030 put special importance to imposement of obligation on public bodies to monitor and reduce energy consumption and to ensure their exemplary role. In line with Article 5 of the new EED 2023/1791/EU, the mandatory target will be set for public sector (including state and municipal capital companies) – 1.9% energy consumption reduction annually. Latvia’s cumulative energy saving target in 2030, according to Article 8 of EED, is 29.5 TWh (2.5 Mtoe). To meet the cumulative energy saving target for 2020, both Energy Efficiency Obligation Scheme (included electricity retail sellers) and alternative measures were implemented. For 2021+ period the EEOS is not continued.

Buildings

Total energy consumption in buildings in 2022 was 10% lower than in 2000. Consumption in residential buildings had decreased by 19% during this period. In contrast, consumption in service sector buildings had increased by 16%. Rapid increase in energy prices in 2022 affected energy consumption, which decreased by 5.8% in residential buildings and by 4.6% in service sector buildings, compared 2021.

Figure 6: Final energy consumption in buildings (with climatic corrections)

In 2022, space heating accounted for 65% of household consumption, water heating for 19%, cooking for 7% and electrical appliances and lighting for 9%. In 2000-2022, space heating and water heating consumption decreased, respectively by 29% and 13%. Due to buildings energy efficiency improvement space heating consumption decreased fastest, its share decreased by 7.6%. Consumption for appliances and lighting increased by 39% mainly due to increase of large appliances number.

Figure 7: Energy consumption by end-use of households (with climatic corrections)

Household consumption per m² for space heating decreased by 44% (average 2.6%/year) since 2000, from 21.7 koe/m² to 12.1 koe/m² in 2022, thanks in particular to buildings renovation support programmes. Important, unit consumption average value is influenced by several factors partly compensating each other: fuel substitution, higher energy efficiencies due to thermal regulations, changes in heating system (trend to central heating), changes in the share of single and multi-family dwellings and last but not least behavioural factors (e. g. trend to higher or lower indoor temperature). Behavioural factors played a significant role in energy consumption changes in 2016-2018 and 2021-2022.

Figure 8: Energy consumption of household space heating per m2 (with climatic corrections)

Total energy consumption per dwelling (excluding space heating) in 2022 was by 7% higher than in 2000. The indicator reached maximum value in 2010 when unit consumption was 28% higher than in 2000. Over time, by 2022, this unit consumption decreased by 16% compared to 2010. Over the entire period consumption for water heating decreased by 8%, in contrast, consumption for electric appliances increased by 48%, mainly due to increase of appliances number. Average value of unit consumption is influenced by several factors partly compensating each other, e.g., dwelling average size, number of people per dwelling, fuel substitution and other.

Figure 9: Energy consumption per dwelling by end-use (except space heating)

Total electricity consumption per dwelling in 2022 was 47% higher than in 2000. Growth is roughly the same for both end-uses. Consumption, related to electric appliances, increased significantly until 2010 due to rapid growth in their number, after 2010 it decreased due to progressively use of more efficient appliances and wider use of LED bulbs for lighting.

Figure 10: Electricity consumption per dwelling by end-use (with climatic corrections)

In 2022 final energy consumption of households was 0.2 Mtoe lower than in 2000. On the one hand, three main drivers contributed to increase energy consumption – lifestyle/comfort (larger homes by 0.48 Mtoe), more appliances per dwelling (0.26 Mtoe) and climate effects (by 0.06 Mtoe). On the other hand, energy savings (0.61 Mtoe) partly compensated the effect of the above-mentioned energy consumption drivers, while the decline in the number of dwellings had a slight downward impact of 0.08 Mtoe.

Figure 11: Main drivers of the energy consumption variation in households

Over the period 2000-2022, space hating consumption in the residential sector decreased by around 0.22 Mtoe (from 0.94 to 0.72 Mtoe), mainly due to the energy efficiency improvement (0.54 Mtoe) that exceeded the consumption rise linked to the lifestyle/comfort (larger homes) and penetration of central heating. Climate effects and population change (less dwellings) played less role.