Based on the information from the LITGRID report, it seems that Lithuania has a well-established renewable energy industry. In 2023, it was a historic year for green energy in the country, with renewable energy sources contributing more than two-thirds of the total electricity generated. This marks a significant increase compared to previous years, with renewable energy accounting for 48% in 2021 and 60% in 2022.

The main types of renewable energy sources contributing to this increase include wind, solar, and hydroelectric power. Wind power generation increased from 1.513 TWh to 2.524 TWh annually, solar power from 0.273 TWh to 0.633 TWh, and hydroelectric power from 0.457 TWh to 0.589 TWh.

Overall, renewable energy sources accounted for 3.972 TWh of electricity production annually in Lithuania. This demonstrates a substantial commitment to transitioning towards a greener and more sustainable energy mix.

Lithuania has established ambitious targets for reducing greenhouse gas emissions and transitioning towards a more sustainable and low-carbon economy. These targets are outlined in the National Climate Change Mitigation Goals:

By the year 2030:

• Reduce greenhouse gas emissions by at least 30% compared to 2005 levels.
• Specifically, in sectors participating in the EU Emissions Trading System (EU ETS) such as energy production and supply, and industrial processes, emissions should be reduced by at least 50% compared to 2005 levels.
• In sectors not participating in the EU ETS like transport, industry, agriculture, waste, and small-scale energy, emissions should be reduced by at least 25% compared to 2005 levels, while ensuring compliance with annual emission quotas.

By the year 2040:

• Reduce greenhouse gas emissions by 85% compared to 1990 levels.
• This reduction should include covering 15% of emissions with absorption in the land use, land-use change, and forestry sector.

By the year 2050:

• Achieve net zero greenhouse gas emissions, i.e., a 100% reduction compared to 1990 levels.

This goal involves transitioning all economic sectors to innovative, low-emission, and environmentally friendly technologies and practices.

Additionally, 20% of emissions should be offset by natural absorbers in the agricultural and forestry, and safe carbon capture and utilization (CCU) technologies should be applied where technological limitations prevent complete emission elimination.

These goals are a set of rules that Lithuania promises to follow to help fight climate change and reach a point where we’re not adding more carbon dioxide to the atmosphere.

In Lithuania, the legal definition of renewable energy is outlined in the Law on Renewable Energy Sources (in Lithuanian: Atsinaujinančių energijos šaltinių įstatymas). According to this law, renewable energy covers various sources and technologies, such as: Wind energy

Solar energy, Aerothermal energy, Geothermal energy, Hydrothermal energy, Hydropower energy, Biomass, Landfill gas, Sewage treatment plant gas, Biogas, Renewable liquid and gaseous fuels, Hydrogen produced from renewable energy sources.

This definition includes a wide spectrum of energy sources and technologies known for their sustainable qualities or low environmental impact.

As a member of the European Union, Lithuania adheres to relevant EU directives and regulations concerning renewable energy. Key directives include:

• The Renewable Energy Directive (2009/28/EC), which sets binding targets for renewable energy use among EU member states and establishes a framework for its promotion.
• The Renewable Energy Directive II (EU) 2018/2001, which updates and extends previous directives, introducing new targets for renewable energy in the EU for 2030 and beyond, along with provisions for ensuring bioenergy sustainability.
• The Directive on the Promotion of the Use of Energy from Renewable Sources in Lithuania (2012/27/EU), which mandates the adoption of national renewable energy action plans and measures to encourage renewable energy integration in heating, cooling, and transportation sectors.

It’s noteworthy that EU regulations directly apply in Lithuania, bypassing the need for national transposition. Therefore, any EU regulations regarding renewable energy automatically become part of Lithuanian law.

In Lithuania, the Ministry of Energy holds significant influence over energy policy, while the independent National Energy Regulatory Council acts as the market regulator. Complementing governmental institutions, several influential business associations play crucial roles in shaping renewable energy strategies. These include the Confederation of Renewable Energy Sources of Lithuania (in Lithuanian: Lietuvos atsinaujinančių išteklių energetikos konferencija), Lithuanian Biomass Energy Association (in Lithuanian: LITBIOMA), Lithuanian Wind Power Association (LVEA), Association of Renewable Energy Producers (AEGA), and Lithuanian Solar Energy Association (LSEA). Additionally, non-energy-specific bodies such as the Lithuanian Confederation of Industrialists (in Lithuanian: Lietuvos pramonininkų konfederacija) and the Lithuanian Business Confederation (in Lithuanian: Lietuvos verslo konfederacija) contribute to policymaking processes, ensuring broader business interests are considered.

In Lithuania, businesses and private energy consumers have embraced various strategies to access renewable energy, with a standout model being the prosumer concept. This approach gained traction for its flexibility and benefits, aligning with the state’s goals of boosting renewable energy production and decentralizing energy systems. State support, particularly directed towards household consumers and small businesses, further driven such initiatives.

A significant advancement has been the establishment of remote power plants, enabling consumers or groups to generate energy in one location for consumption elsewhere. Until recently, all consumers operated under a net metering system, allowing them to effectively “virtually store” produced energy.

This innovative approach has significantly advanced renewable energy capacities, especially in solar power. By decentralizing energy production and consumption, it has streamlined access to renewable sources, aligning with national renewable energy objectives.

However, there are challenges. Balancing costs, which became unpredictable, pose difficulties for independent energy suppliers obligated to provide physical energy and balance portfolios. Consequently, starting this year, prosumer projects for businesses operate under a new net billing scheme. This scheme eliminates virtual storage, settling energy produced against consumed energy based on hourly market prices at NordPool, precisely at the time of consumption or production.

In the past year, there has been a noticeable shift in the business approach towards engagement with renewable energy. One of the primary drivers behind this change is the increasing unpredictability of energy prices. Businesses are finding that relying solely on traditional energy suppliers exposes them to volatile and potentially costly fluctuations in energy costs. As a result, they are seeking alternative solutions, such as investing in renewable energy sources, to gain more stability and control over their energy expenses.

Additionally, businesses are increasingly implementing sustainability policies for political reasons and in response to pressure from stakeholders, consumers, and partners. There is a growing awareness of the environmental impact of business operations, and companies are recognizing the importance of reducing their carbon footprint and adopting more sustainable practices. This pressure from various stakeholders is prompting businesses to prioritize renewable energy investments as part of their broader sustainability strategies.

Overall, the combination of price unpredictability, stakeholder pressure, and alignment with global sustainability goals is driving businesses to increasingly engage with renewable energy solutions as a more reliable, cost-effective, and environmentally responsible energy source.

Discussions within the business community regarding reducing carbon emissions vary in visibility and maturity. While there is growing awareness of the importance of sustainability and carbon reduction, there is still significant room for improvement. Some businesses remain inertial, only becoming active in seeking alternative solutions, such as installing their own solar power plants or signing long-term fixed fee Power Purchase Agreements (PPAs), when faced with rising electricity prices.

Similarly, at the within society, there exists somewhat of a paradox. While there is widespread positivity towards renewable energy, with many supporting the transition to cleaner sources, opposition can arise when specific renewable energy projects, such as wind power plants, are proposed. This dichotomy suggests a disconnect between broader support for renewable energy in principle and local opposition to specific projects.

From a political and regulatory perspective, support for carbon emissions reduction and energy efficiency initiatives varies. While there are regulations and policies in place aimed at promoting renewable energy and reducing carbon emissions, the level of support may not always be sufficient to drive widespread adoption. Additionally, there may be challenges in navigating regulatory frameworks and obtaining necessary approvals for renewable energy projects, which can hinder progress in this area.

Overall, while there is growing momentum towards reducing carbon emissions and embracing renewable energy, there are still barriers and challenges to overcome, both within the business community and from a political and regulatory standpoint. Continued efforts to increase awareness, streamline regulatory processes, and address opposition to renewable energy projects will be essential to drive meaningful progress towards carbon reduction goals.

In Lithuania, the primary focus for renewable energy projects currently lies in wind and solar energy, with biogas also playing a role, though to a smaller degree. The process for setting up wind and solar projects typically involves obtaining permits and approvals from relevant authorities, such as local governments, environmental agencies, and the National Energy Regulatory Council. This may include environmental impact assessments, land use permits, grid connection agreements, and other necessary permissions. However, some developers find the permitting process slow and overregulated, though the overall situation in Lithuania is considered favourable within a broader perspective.

Hydrogen, carbon capture, and other emerging renewable energy technologies are still in the early stages of development in Lithuania. Consequently, the regulatory framework for these technologies may not be as well-established compared to wind and solar. Nonetheless, there is growing interest and investment in these areas, and regulations may evolve accordingly as these technologies mature.

Additionally, the increasing penetration of renewables has led to a heightened interest in energy storage solutions to address grid instability. Like many other countries, Lithuania is exploring various energy storage technologies to mitigate these challenges.

Offshore wind energy represents another significant opportunity for renewable energy development. However, developing offshore wind farms involves additional complexities compared to onshore projects, including maritime regulations, environmental considerations, and grid infrastructure. While Lithuania is just starting to take initial steps towards offshore wind development, it holds considerable promise for the future of renewable energy in the country.

In conclusion, the process of granting rights for renewable energy projects can vary based on the specific energy source and project characteristics. While wind and solar dominate the current renewable energy landscape in Lithuania, emerging technologies like hydrogen and carbon capture, along with offshore wind, are expected to play increasingly important roles in the future.

Yes, the government is directly involved in the renewables industry in Lithuania. The government owns most of the shares in Ignitis, an energy company that serves as a significant market player not only in Lithuania but also throughout the Baltic region. Similarly, other governmental companies such as Latvenergo in Latvia and Eesti Energia in Estonia also hold significant market shares and are considered among the largest players in the Baltic energy sector. These government-owned companies play a crucial role in shaping the renewable energy landscape and driving the transition towards cleaner energy sources in the region.

The government of Lithuania is actively leading the advancement of the renewables industry through strategic planning and legislative initiatives, anchored by key laws such as the Law on Renewables, in conjunction with regulations like the Electricity Law and Energy Law. These legal frameworks form the basis for renewable energy development in the country, providing a robust foundation for growth and innovation.

However, it’s essential to acknowledge the dynamic nature of the energy market, which necessitates frequent revisions and updates to existing laws. Although some people in the market might not like this repeated process, it’s necessary to keep up with the changing energy landscape. As new concepts and technologies continually emerge, regulatory frameworks must adapt to foster progress and ensure alignment with evolving industry standards.

Businesses that adeptly navigate these changes are better positioned to succeed in the renewable energy sector. Presently, the government, in collaboration with the OECD, is working on the initiative in Lithuania titled “Accelerating Permitting for Renewable Energy.” It’s anticipated that upon the completion of this initiative, significant progress will be made in streamlining the permitting process, further facilitating renewable energy projects in the country.

In Lithuania, government incentive schemes promoting renewable energy adoption are robust, reflecting trends seen across Europe. Initially, the development of renewables relied on feed-in tariff models. However, the current landscape includes various direct subsidies and incentives aimed at both private households and businesses.

For private households, substantial direct subsidies are available to encourage the acquisition of solar power plants for personal use, particularly under the prosumer model outlined previously. Additionally, there are subsidies for businesses looking to invest in energy storage facilities, further incentivizing renewable energy integration into commercial operations.

Moreover, the government provides support for the development of private electric vehicle (EV) charging stations, as well as public and semi-public EV charging infrastructure. Customers purchasing new or used EVs may also benefit from subsidies, fostering the uptake of electric vehicles and reducing reliance on fossil fuels in the transportation sector.

A recent government initiative earmarks EUR 250 million in direct subsidies, along with EUR 500 million in loans, to support energy communities. This initiative targets local municipalities, leveraging concepts such as Renewable Energy Communities and Citizen Energy Communities. By empowering local communities to transition towards renewable energy, these initiatives aim to transform the energy sector and promote sustainability at the community level.

While these incentives demonstrate a concerted effort to promote renewable energy adoption, it’s essential to acknowledge the potential existence of disincentives, although they may be less pronounced. Such disincentives could include regulatory barriers, administrative complexities, or limited financial resources for certain renewable energy projects. However, the main emphasis remains on incentivizing and supporting renewable energy development to achieve broader sustainability goals and reduce reliance on fossil fuels.

Lithuania has indeed been proactive in addressing the issue of high energy prices, especially in light of EU directives. Following the EU Council’s Regulation on emergency intervention, Lithuania implemented its own Methodology for Determining Market Revenue and Calculating Revenue Surplus. However, with the recent drop in prices, this methodology is not currently relevant.

It’s important to note that our concern is not just about the use of gas and oil but specifically about sourcing from unfriendly totalitarian countries. In response, Lithuania has prioritized the development of its own oil and gas infrastructure. This strategic approach enabled us to swiftly reduce reliance on gas and oil imports from Russia, particularly after the war in Ukraine emerged.

Furthermore, there’s an ongoing initiative to support energy communities, aimed directly at easing energy poverty. Through this initiative, some facilities are being developed to benefit customers facing energy poverty directly. We believe that by addressing energy poverty and simultaneously promoting the development of new energy facilities, we can create a more sustainable and resilient energy landscape.

While it’s challenging to identify just one example given the numerous notable initiatives among our clients, a standout illustration of businesses’ engagement in renewable energy can be seen in the significant rise of prosumers in Lithuania. Recently, Lithuania achieved a milestone with over 100,000 prosumer consumers owning their solar power plants. This figure marks a tenfold increase in just four years, with their combined capacity exceeding 1 GW, constituting more than two-thirds of the country’s total solar park capacity, which stands at 1.4 GW.

The majority of these producing consumers are residents, comprising approximately 86,000 households, while the remainder, approximately 16,000, consist of private companies and organizations. Lithuania has ambitious targets to further expand the number of producing users to 300,000 by 2030.

The introduction of the net billing system is anticipated to impact business users, potentially reducing their numbers. However, this change is expected to stimulate growth in the power purchase agreement (PPA) market, presenting new opportunities for businesses to engage in renewable energy procurement. This shift underscores the evolving landscape of renewable energy engagement, where businesses are increasingly taking proactive steps towards sustainability and energy independence.

The significant barriers that impede both the renewables industry and businesses’ access to renewable energy in Lithuania are multifaceted, but one of the most prominent challenges is the limitation in grid capacities. While there is a substantial number of potential renewable energy projects that could be developed, the existing grid infrastructure often lacks the capacity to accommodate them efficiently. As a result, these projects face delays and uncertainties, hindering their progress and implementation. In addition to grid constraints, other barriers may include bureaucratic permitting processes, which can be time-consuming and complex. Obtaining the necessary permits and approvals for renewable energy projects may involve navigating through various regulatory requirements and administrative procedures, leading to delays and increased costs for developers.

In a new-build renewable energy project, several key contracts are typically expected to be in place to ensure the successful development, construction, and operation of the project.

Firstly, land lease or purchase agreements are essential to secure the necessary land for the renewable energy project. Additionally, agreements with neighbouring property owners may be required to address any objections or concerns related to the development.

Servitude agreements for cables and transformers are crucial for ensuring the necessary infrastructure connections. Project design services agreements are also essential to outline the scope of work and responsibilities for design professionals involved in the project.

Agreements with the grid operator are necessary for the connection and use of the grid, ensuring that the renewable energy generated can be effectively distributed.

For wind or solar projects, agreements for the supply and installation of turbines or solar panels are vital components. These agreements often include provisions for operation and maintenance services, as well as balance of power agreements to manage energy output and grid stability.

In solar projects, an Engineering, Procurement, and Construction (EPC) contractor is typically engaged to oversee the entire construction process. Financing documentation, including loan agreements, mortgages, and pledge agreements, are crucial for securing project funding.

Finally, power purchase agreements (PPAs) and balancing services agreements are key contracts that govern the sale of electricity generated by the project and ensure its integration into the energy market.

Overall, these contracts play a critical role in the development, construction, financing, and operation of renewable energy projects, providing the necessary legal framework to support their successful implementation.

In general, Lithuania does not have legal restrictions on the export of renewable energy, nor are there specific local content obligations or domestic supply obligations imposed within the renewable energy sector. However, there are some considerations to be aware of.

While there are no legal barriers, there are technical limitations due to the lack of interconnection with other EU markets. This limitation inhibits the ability to export electricity effectively. Currently, there is a total ban on purchasing electricity from Russia and Belarus, but beyond this, the lack of interconnection restricts the capacity to export renewable energy to neighbouring countries or beyond.

Interconnection with other EU markets is deemed essential not only for achieving energy independence but also for facilitating the export of electricity. By enhancing interconnection infrastructure, Lithuania can unlock its potential to become not just an energy independent nation but also an electricity-exporting country. Therefore, investing in interconnection infrastructure is crucial for realizing Lithuania’s ambitions in the renewable energy sector and leveraging its renewable energy resources to benefit both domestic and international markets.

Baltic countries, have indeed been impacted by various non-country-specific factors. One significant factor is the increase in financing costs, which has occurred over the past few years. Higher financing costs can pose challenges for renewable energy projects, affecting their feasibility and economic viability.

However, there have also been some mitigating factors. For instance, in the solar energy sector, prices for solar panels have dropped in the last year. This reduction in the cost of solar panels can help offset some of the challenges posed by higher financing costs, making solar projects more affordable and attractive for investment.

Additionally, supply chain disruptions and uncertainties, which have been experienced globally due to the COVID-19 pandemic, may have impacted the deployment of renewables in Lithuania. Delays or interruptions in the supply of renewable energy equipment and components can affect project timelines and costs, further complicating deployment efforts.

Currently, several major renewable energy projects are underway in Lithuania, indicating significant progress in the country’s renewable energy sector. One notable development is the announcement of the first 700 MW offshore wind project tender, which was successfully won by a consortium led by the local energy company Ignitis. However, the second tender of the same size did not yield successful results. There is anticipation regarding potential changes to tender rules and conditions to attract more participants for the second tender.

In terms of renewable energy generation capacity, projects involving ~ 2.6 GW of wind energy and ~3.8 GW of solar energy are currently in various stages of development. It’s likely that not all of these projects will be completed; however, there is a strong possibility that by the year 2027, Lithuania will be able to meet all its energy needs with renewable sources playing a key role. This would mark a significant milestone in the country’s transition towards a sustainable energy future. Furthermore, the Lithuanian government is actively supporting the establishment of energy communities, with ambitious plans to develop an additional up to 1 GW of new energy capacity through this initiative. Such development of renewables will, of course, necessitate balancing solutions. Therefore, it is anticipated that a substantial number of energy storage facilities will be developed alongside these new energy capacities. Currently, there are ~1,4 GWh pending reservations for the energy storage facilities.

The confidence in Lithuania becoming a leader in newer areas like offshore wind or hydrogen largely relies on the outcome of critical factors such as the second offshore wind tender. The lack of success in the second tender is indeed concerning and may dampen immediate prospects. However, it’s essential to consider the broader context, including potential geopolitical tensions, which may have influenced the tender’s outcome.

While this setback is notable, it may not necessarily indicate a permanent barrier to Lithuania’s ambitions in offshore wind or hydrogen. The country possesses significant potential in these areas, supported by its geographical advantages and growing expertise in renewable energy development. Moreover, ongoing efforts to revise tender rules and conditions to attract more participants reflect a commitment to overcoming obstacles and fostering growth in these sectors.

Therefore, while uncertainties remain, there is optimism that Lithuania can leverage its strengths and navigate challenges to emerge as a leader in offshore wind, hydrogen, and other emerging renewable energy technologies. The resilience of the renewable energy sector and the government’s proactive stance suggest that Lithuania remains poised to capitalize on its renewable energy potential and drive innovation in newer areas of the industry.

In Lithuania, renewable energy projects commonly follow a two-phase development process. Initially, early-stage developers undertake the groundwork, including securing necessary land and obtaining initial permits from authorities and grid operators. Once these preliminary steps are completed, the project is typically sold to a second-stage developer, who advances the project further, securing the necessary permits to commence construction. Finally, the project may be sold to the end-user.

During the early stages of development, renewable energy projects are often financed through equity investment or alternative financing mechanisms such as bonds. These sources of funding provide the initial capital required to cover land acquisition, permitting, and other preliminary expenses.

As the project progresses and obtains permits to construct, and especially if it has a strong shareholder base and a reliable power purchase agreement (PPA) with an offtaker, it becomes more attractive to traditional lenders such as banks. These lenders may provide project finance to cover the substantial costs associated with construction and commissioning, leveraging the project’s permitted status and revenue-generating potential as collateral.