“Breakthrough Package could become a barrier to wind farms
The “Breakthrough Package” prepared by the Ministry of Energy to stimulate the development of wind energy in Lithuania is so far viewed critically by the participants of this sector. A few months after the public presentation, the Ministry still has not heard the comments made by the wind energy business, and the minimal changes made do not meet the needs of the market.
On 16 June this year. The Seimas of the Republic of Lithuania adopted amendments to the Law on Renewable Resources, presented as the “Breakthrough Package”, which are expected to enter into force on 8 July. According to the authors of the changes, it should help to address the problems that have been holding back wind farm construction projects for a long time. “The idea of a ‘breakthrough package’ has been welcomed by the associations of renewable energy developers, but they are forced to say that it has gone in the opposite direction, creating new restrictions without removing old ones.
“We are now in a period of sustainable energy transition, where renewable energy is needed not only for a cleaner and safer environment, but also as a source of reducing dependence on imported fossil fuels. Moreover, the world economy is currently unsustainable and we are about to enter a period of recession, the effects of which could be mitigated by making renewable energy Europe’s economic engine. For this reason, Lithuania urgently needs to increase the scale and pace of renewable energy”, comments Edgaras Maladauskas, Acting Director of the Lithuanian Wind Energy Association (LVEA).
He said that wind energy developers in the country need more grid capacity and upgrades, as well as faster speed and compliance with deadlines by public authorities.
“Watching the Ministry of Energy pushing the “Breakthrough Package”, we miss more communication and listening to the specifics and problems of wind industry development. The Ministry’s package lumps solar and wind together, although the processes, timelines and challenges are radically different. If we do not take into account the needs of the wind industry, instead of the desired breakthrough, we will have a negative impact on the whole country’s energy sector and industry, and it will take more time to correct the mistakes made by officials in the future,” stresses Mr Maladauskas.
Increasing the sanitary zone will make it more difficult to collect permits
According to Martynas Nagevičius, President of the Lithuanian Renewable Energy Confederation (LAIEK), the current “Breakthrough Package” makes wind energy development in Lithuania more difficult than easier. This opinion is shared by the majority of LVEA members and market players who develop and build wind farms.
“Some of the changes are welcome, such as a clearer definition of what constitutes visual pollution and how it should be assessed, rather than continuing the endless debate about what is beautiful and what is not. The naming of a production tax in the law also clearly defines the relationship between wind farm developers and the adjacent community, which is likely to remove uncertainties where compensation negotiations often turn into a racket for developers. However, not all of the proposed changes are good,” says Mr Nagevičius.
The main criticism from wind energy developers has been the extension of sanitary zones around wind farms by a factor of 2-3. Instead of the current requirement to obtain the approval of landowners of land within the sanitary zone, developers of new wind farms will have to obtain the approval of owners of land further away. This will increase the area where consents will have to be obtained by a factor of about 10, which will not only complicate the process, but also significantly increase the time needed for project development.
Wind energy supporters are also concerned that as soon as the draft amendment to the Renewable Resources Act was discussed, a massive reservation of transmission lines began, leaving no spare capacity for wind farms that had been under development for years. There is a risk that some wind farm developers will not be able to complete their projects in time.
“Wind farm developers are also not satisfied with LITGRID’s current performance and failure to meet deadlines. Currently, there is no clear regulation on the timeframe for responding to the issuance of connection conditions, nor is there a set timeframe for the coordination of the technical projects prepared. The processes are unreasonably long, sometimes taking as long as half a year, which is only one part of the wind farm development,” said Mr Maladauskas.
According to him, the associations are also concerned about the passivity of the State Energy Regulatory Office (SERT) in failing to address the cancellation of fictitious applications for development permits – the impression is that the delay in decision-making is aimed at creating an opportunity to legalise the illegal line reservations made.
Rejected proposals and increased taxes
Wind energy developers also point to the importance of simplifying the permitting process for wind farms that have already been launched, as part of the REPowerEU initiative announced by the European Commission (EC). The EC aims to issue permits to wind farm developers within a year, but currently the environmental impact assessment procedure in Lithuania alone takes several years.
“The recommendation is for Member States to simplify the permitting process for wind farms, for example by setting out priority areas for wind farm development in strategic documents, where only a Strategic Environmental Assessment (SEA) could be carried out for the whole area, without having to carry out an EIA for each individual park. Unfortunately, this proposal, supported by wind energy developers, has been rejected by the Ministry of Energy, and municipal special plans for wind energy development are proposed for abolition”, said M. Nagevičius, President of LAIEK.
Proposals requiring public authorities to provide opinions more quickly in the preparation of planning works or to refuse to re-publicise a project after minor changes have been made, especially when the changes are related to reducing the number of wind farms rather than increasing the number of wind farms, have also been rejected, he said. Proposals limiting the rights of municipalities to raise property and infrastructure taxes for wind farms to a maximum level were also rejected.
The “breakthrough package” introduces new taxes on wind developers. While it was promised that a ‘tax on communities’ would replace the current property tax, both taxes have been retained, and a number of municipalities are preparing to further increase the property tax,” says Mr Maladauskas.
There are also concerns that wind farm developers have been given stricter deadlines to prepare and agree projects with the grid operator, as well as higher collateral levels, forcing developers to “freeze” excess equity and debt funds into the development of a project during the planning and construction phase.
Misses out on promoting wind energy
Wind sector players are convinced that the Ministry of Energy is approaching the wind energy market from a short-term perspective – as a way to quickly replenish the state budget by burdening wind energy developers with additional taxes and requirements, and at the same time reducing competition between market players.
“By creating truly attractive conditions for a wind energy breakthrough, Lithuania could not only meet its domestic electricity needs but also become an electricity exporting country. The demand for electricity is growing every year and will continue to do so, and if there is a shortage, the crisis will be even deeper and longer, so we need to set even higher goals and ambitions when considering the further development of wind energy, to encourage it as much as possible, not restrict it,” said LVEA Director E. Maladauskas.
According to Mr Nagevičius, officials underestimate the fact that with each increasing percentage of electricity generated from renewable sources in total electricity consumption, each successive percentage will be harder to achieve.
“The more wind farms that are built in the region, the lower the electricity prices will be on the market when the wind is blowing and generating electricity. At the same time, the financial return on investment in wind farms will decrease, and the various regulatory hurdles for developers will become increasingly significant. The regulatory environment for wind energy development needs to be significantly improved if this Government’s plans for 2030 are to be realised,” agrees Mr Nagevičius.