Author: Rolands Lūsis
February 29, 2024
The electricity market is one of the most dynamic markets in today’s global economy, and it is rapidly evolving and changing, so it is crucial to pay attention to market trends and changes. After dedicating several hours to researching the latest updates, we at “Sunwise” have compiled the most important information into one article, where we will examine the significant changes in electricity trading and distribution service tariffs.
The breakdown of electricity prices in Latvia consists of 3 parts:
- Electricity price
- AS “Sadales tīkls” services
- Taxes
Let’s take a closer look at the changes in tariffs by AS “Sadales tīkls” and how they synergize with the installation of solar power stations.
“Sadales tīkls” tariffs from January 1, 2024
The price for electricity distribution services consists of 2 components:
- Fixed fee for power maintenance
- Fee for electricity supply (variable depending on the volume of electricity)
Depending on the connection tariff plan (Basic 1-4 or Special 1-4), the monthly fee for distribution services can be calculated, knowing the connection power and the volume of supplied electricity. Detailed costs can be viewed on the Sadales tīkls website linked below:
Distribution network tariffs for electricity producers
When installing a solar power station (larger than 11.1 kW), both individuals and legal entities may be eligible for an additional electricity producer tariff plan – R-1, which is added to the monthly payment for distribution services. However, this tariff is applied only in cases where the existing connection power is less than the export power of the solar power station. Under this condition, the distribution service fee consists of 3 components:
- Tariff fixed price for power maintenance
- Tarrif variable price (depending on the volume of electricity)
- Electricity producers tariff
Example 1:
The warehouse owner wants to install a solar power station with a capacity of 300 kW and an equal export capacity, but the existing connection capacity is 257.45 kW, and the connection tariff is Basic-3. The projected electricity import volume is 100,000 kWh.
Calculation of monthly fees for distribution services:
- Basic-3 fixed component: 257.45 kW * 2.73 EUR/kW = 702.84 EUR
- Basic-3 variable component: 100,000 kWh * 0.00692 EUR/kWh = 692 EUR
- Producer tariff R-1: (300 kW – 257.45 kW) * 0.1445 EUR/kW = 6.15 EUR
Monthly fee: 702.84 + 692 + 6.15 = 1400.99 EUR
If the export capacity of the solar power station is less than the connection capacity, then the electricity producer tariff is not applied:
- Tariff fixed price for power maintenance
- Tarrif variable price (depending on the volume of electricity)
Example 2:
The warehouse owner wants to install a solar power station with a capacity of 300 kW and an equal export capacity, but the existing connection capacity is 321.82 kW, and the connection tariff is Basic-3. The projected electricity import volume is 100,000 kWh.
Calculation of monthly fees for distribution services:
- Basic-3 fixed component: 321.82 kW * 2.73 EUR/kW = 878.57 EUR
- Basic-3 variable component: 100,000 kWh * 0.00692 EUR/kWh = 692 EUR
Monthly fee: 878.57 + 692 = 1570.57 EUR
The load calculation table can be viewed on the ST website: Load table
Electricity trading and net metering system
Starting from May 1, 2024, both companies and individuals who produce electricity can apply for net metering system services. The basic principle of this system is based on expressing the exported energy in monetary terms, namely, the generated electricity that is not used for self-consumption is sold to electricity retailers (Elektrum, Enefit, Ignitis, etc.), and the accumulated monetary balance can be used for both distribution service and electricity bill payments. This service can be used by users whose solar station power does not exceed 999.99 kW. The price at which the generated electricity can be sold will be individual and dependent on the contract with the electricity retailer.
- Electricity production facilities generate 300 kWh.
- An active user immediately consumes 150 kWh for self-consumption.
- The electricity produced but not immediately consumed (150 kWh) is fed into the distribution network of “Sadales tīkls.”
- At times when solar panels are not producing, for example at night, the active user receives 100 kWh from the distribution network.
- “Sadales tīkls” sends the following customer data to the chosen electricity retailer: electricity delivered to and received from the electricity network (kWh).
- The retailer calculates the total value of electricity delivered to and received from the overall electricity network.
- If the value of the electricity generated and delivered to the distribution network is higher than the value of the electricity received from the overall network, the difference can be accumulated for the following months or used for consumption payments within the same customer’s connection, depending on the agreement between the retailer and the customer.
In the case where the user does not opt for the net metering system, an alternative solution is electricity trading. This option is available only to customers registered for economic activities. Similar to the net metering system, the customer enters into an individual contract with an electricity retailer. In this case, the profit from electricity trading is not accumulated for bill payment but rather paid out in monetary terms, agreed upon with the specific electricity retailer. The price at which the company can sell the generated electricity is individual and not publicly available, but it typically derives from:
Option 1: NordPool market price (for the specific hour) – 0.02 EUR/kWh
Option 2: NordPool market price (for the specific hour) – 15%
Example:
In one hour, 100 kWh of electricity is generated, of which 50 kWh is fed into the grid or sold. The tariff for that specific hour at NordPool market is 0.15 EUR/kWh. The sold electricity in monetary terms:
Option 1: 50 kWh * (0.15 EUR/kWh – 0.02 EUR/kWh) = 6.5 EUR
Option 2: 50 kWh * (0.15 EUR/kWh – 15%) = 50 kWh * 0.1275 EUR/kWh = 6.38 EUR
No distribution tariff is payable for the sold electricity!
Contact us to explore the possibilities for installing a solar power station on Your property and to conduct detailed financial calculations: write to info@sunwise.lv or call +371 28803374.
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