On 16 June 2022, the Saeima approved on first reading amendments to the Energy Law and the Electricity Market Law, which, among other things, regulate energy communities. Despite the fact that energy communities are well-known elsewhere in Europe, to date, there is no regulation specifically of energy communities in Latvia, and the concept is relatively new.

What are energy communities?

Energy communities are legal entities (e.g., an association or a capital company) whose purpose is to produce energy for their members and create environmental, economic and social benefits for the community and locality in which they operate. There are two types of energy communities: citizen energy communities and renewable energy communities.

A citizen energy community’s members are natural persons, local authorities or small and micro-enterprises. For example, apartment owners of the apartment building can establish a citizen energy community to receive state support, for example, for the installation of alternative means of generating electricity.

A renewable energy community’s members, on the other hand, are located in proximity to the renewable energy projects that are owned and developed by that legal entity. Members can be natural persons, companies or local authorities, including municipalities.

Energy communities are a way for citizens to get involved in the energy sector. They also provide direct potential benefits to citizens, such as increasing energy efficiency, reducing electricity bills and carbon emissions, and supporting the local economy. It is planned that by 2050, half of Europe’s citizens could be producing up to half of the EU’s renewable energy.[1]

Energy communities regulation

In the EU, the concept of energy communities first appeared in the European Commission’s “Clean energy for all Europeans” package. Additionally, the Directive on Common Rules for the Internal Electricity Market[2]  contains rules that regulate consumers’ participation in the energy market, allowing them to generate, trade or share electricity. The directive aims to foster the growth of citizens’ energy communities by creating more favourable regulatory framework. In contrast, the revised Renewable Energy Directive[3] aims to strengthen the self-consumption of renewable energy and the role of renewable energy communities.

In Latvia, the provisions of the directives will mainly be transposed by the already mentioned amendments to the Energy Law and the Electricity Market Law. The status of an energy community could be obtained by registering in the Energy Community Register. The institution responsible for the register will be the State Construction Control Bureau.

Amendments to the Electricity Market Law provide for the introduction of a net settlement system for electricity. Both households and legal entities – self-consumers of electricity produced from renewable energy resources (RES) – will be able to participate in the net settlement system. The net settlement system will not only account for the amount of electricity produced and consumed from RES, but will also determine the value of the electricity. It is also planned that the electricity produced at one user’s facility will be used in other facilities owned by the same user within the net settlement system. Amendments to the Electronic Energy Market Law also stipulate that all users of the net settlement system will be exempted from the costs of the electricity component for the electricity generated by themselves and later received from the system. There is no exemption from the capacity component of the mandatory procurement payment.

Expected benefits from energy communities

Currently, there is no particular regulation of energy communities in Latvia. It is expected that the operation of energy communities will contribute to household energy efficiency and the use of RES. Public participation in energy generation in Latvia is low due to the lack of stimulating instruments, bureaucratic burdens and high first investment costs. Since the planned amendments are intended to eliminate the aforementioned obstacles, the installation of various alternative energy sources for self-consumption could become more common in Latvia.

Active (producing) users will have the option to remotely generate electricity onsite with a separate connection to the grid. The amendments also provide for the option for active users to unite and collectively produce electricity as well as to share the electricity generated by users with other members of the energy community or active users in the same building, terraced house or industrial park, without the involvement of a distribution system operator.

In order for the abovementioned amendments to enter into force, they must be supported by the Saeima at the second (last) reading. The amendments during reading may be subject to changes.


[1] Source: https://energy-communities-repository.ec.europa.eu/energy-communities_en

[2] The official title of the directive is Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on Common Rules for the Internal Market for Electricity and Amending Directive 2012/27/EU. Available here.

[3] The official title of the directive is Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the Promotion of the Use of Energy from Renewable Sources. Available here.