Latvia’s government should scale back funding for the renewable energy sector, Economy Minister Arvils Aseradens argued last week.
Speaking after the unveiling of his ministry’s plan to phase out the mandatory procurement component (MPC) of electricity bills over a period of three years, Aseradens said that efforts to support green energy producers had become a drag on the Latvian economy.
Data collected by the Economy Ministry show that the net costs of the MPC policy reached 266.3 million euros (US$308.7 million) in 2017, equivalent to 1% of the country’s GDP, he said. Ideally, the state should be devoting much smaller sums to green energy subsidies, he remarked.
“Latvia’s mandatory purchase system is much more expensive than that of neighbouring countries,” he commented. “In Latvia, subsidies to electricity producers make up 1% of GDP, whereas in Estonia these are 0.3% of GDP.”
The minister went on to say that he believed the extra expenditures had hampered Latvia’s ability to stay competitive with its neighbours. To date, he said, the MPC policy has cost Riga more than 2 billion euros (US$2.3 billion). By contrast, other countries have managed to support renewable energy without spending so much, he said.
Latvia’s Economy Ministry has been calling for the abolishment of the MPC for some time, and a special task force established earlier this year to discuss the matter has endorsed this stance. On August 1, the task force concluded that the policy ought to be phased out over a three-year period.
Aseradens noted that the Latvian cabinet was due to review this plan in the near future and said he was willing to press the issue.
“I will not allow making MPC cancellation a political topic with no action behind it,” he declared. “The government intends to view the Economy Ministry’s report on its working group’s proposals for the MPC system’s cancellation next week. I expect strong support from coalition parties in favour of abolishing the MPC.”