Strategic vision of Latvenergo: to double generation by 2030 with renewable sources as a priority
Riga, 2021-10-05 16:29 CEST --
At the end of September, Latvenergo Group held an online seminar with its stakeholders to discuss the strategic development directions of the Group during this time of changes. The discussion was an important part of the development of the new strategy of Latvenergo Group, the guiding principle of which is ambitious growth and action in achieving the objectives of climate-neutral operations. For example, in 2030, 75% of the energy generated by Latvenergo Group will be from renewable sources (RES) giving priority to the development of wind energy.
The development of the Operational Strategy of the Group for 2022–2027 is approaching its end, and in this process, the opinion of the stakeholders on the strategic directions of the development of the Group is identified and assessed. Therefore, an online seminar ‘Industrial Development Trends in the Context of the Green Deal and Strategic Vision of Latvenergo Group’ was held on 30 September, where representatives of Latvenergo discussed with stakeholders the ambitious growth strategy in synergy with climate neutrality goals.
When opening the discussion, Edmunds Valantis, State Secretary of the Ministry of Economics of the Republic of Latvia, said: "We can see how radically the conditions in the external economic and domestic environment have changed in a very short time. The new reality for all of us is the Green Deal and sustainability as the guiding principle for development. These circumstances are considered by Latvenergo, which as an important company for Latvia, is developing the new operational strategy. Being a challenger is a challenge in itself, and Latvenergo accepts it by being ready for rapid growth. Although the strategy is for a five-year period, the development vision of Latvenergo extends 20–50 years forward, and the decision on growth investments should be carefully considered already today.”
Guntars Baļčūns, Chairman of the Management Board of Latvenergo AS, said: “Today’s discussion confirmed that we are not neutral towards climate neutrality, and it is natural that Latvenergo, as a genetically green company, sees its development, as well as the development of the society and the country closely related to sustainability. We are ready to develop various models of cooperation with society, creating a common understanding of the importance of energy as the leading force for change. Therefore, the challenges of our strategy are – the rapid growth of electricity generation, doubling capacity and moving from an importer to an exporter. The most promising is the powerful development of wind energy, as well as electrification as the basis for economic growth, as Latvia has very high potential for the implementation of Green Deal initiatives, and we are ready to help others as well. Another challenge is an interoperable network ready for change in energy consumption and generation.”
Ivars Golsts, Chairman of the Supervisory Board of Latvenergo AS: “With this strategy, we look further – to 2030 and 2050. Our goal is to generate all the energy necessary for consumption, thus, strengthening the Latvian economy; therefore, it is necessary to find unity with public opinion on energy development. This is a growth strategy to double generation capacity and generate 1/3 more than we consume; this is an interoperable network strategy operating in a distributed generation environment; this is a mobility strategy, in line with the national goals on climate neutrality, as well as a business opportunity for the Group and a necessity for the country and society.”
The opinion on sustainability as the priority in the activities of capital companies was also acknowledged by the survey of seminar participants, where 97% of the participants recognised sustainability as the priority. 57% of the participants named economic sustainability followed by environmental sustainability as the priority areas for Latvenergo Group to focus on; 57% of the participants named wind energy as the main prospect for the development of Latvenergo AS generation assets until 2030; 67% of the participants supported the opportunity for individuals to purchase shares of Latvenergo Group if listed on the stock exchange.
At the seminar, the management of the Group presented the strategic goals set in the strategy of the Group for 2022–2027: electrification, development of power plants, and further growth of Latvenergo, as well as their justification:
Electrification – the best answer to the challenges of climate neutrality. With high ambitions, electrification will be the basis of our economic growth, as electrified processes can be automated, controlled remotely, quickly adapted to the market situation and public demand. Latvia has very high potential to implement the Green Deal initiatives. Therefore, electrification is a solution to promote the prosperity of Latvia.
Development of power plants – a vital need to minimise high electricity prices, which is also an opportunity to reduce the import of (or dependence on) foreign energy sources. Latvia is among the leading users of RES (renewable energy sources) in the European Union, and the establishment of new RES has great potential for the strengthening of positions. New high-capacity renewable energy projects such as WPPs or solar parks will help to strengthen the competitiveness of the state-owned company, as well as ensure the reduction of the electricity capacity deficit in the region through environmentally friendly technologies. In 2030, 75% of the energy generated by Latvenergo Group will be obtained using renewable sources, which will facilitate Latvia's progress towards the status of a climate-neutral country.
Growth of Latvenergo – consolidation in the Baltics and acquisition of new markets. Energy generation sources are expected to be both at home (Baltics) and further markets, where operations are rational from the point of view of market organisation and business model, and from the perspective of geographical and resource availability aspects. Latvenergo becomes a net producer – without reducing sales, but significantly increasing the amount of energy it generates.
Latvenergo AS has been holding stakeholder seminars on a regular basis for more than 10 years and considers this form of communication and exchange of ideas to be a fruitful and important driver of the development of the Group. The previous stakeholders' seminar provided several recommendations for the Group's operations that have already been implemented or are being implemented, e.g., the development of electric mobility (currently 18 Elektrum charging stations with 67 charging points have been established in 9 Latvian cities). Other recommendations: energy generation should be established from renewable sources outside the territory of Latvia (solar parks in Lithuania and Estonia); activities in the development and implementation of innovations (Innovation Forum for Excellent Latvian Enterprises, participation in the FutureHub and the internal employee innovation programme, as well as the largest heat accumulation tank in the Baltics at the CHPP-2 of Latvenergo AS).
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Latvenergo Group is one of the leading energy suppliers in the Baltics operating in electricity and thermal energy generation and trade, natural gas trade and electricity distribution services. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several times. International credit rating agency Moody's has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.
Latvenergo Group is comprised of the parent company Latvenergo AS (generation and trade of electricity and thermal energy, trade of natural gas) and subsidiaries - Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (trade of electricity and natural gas in Estonia), Elektrum Lietuva UAB (trade of electricity and natural gas in Lithuania), Enerģijas publiskais tirgotājs AS (administration of mandatory electricity procurement process) and Liepājas enerģija SIA (generation and trade of thermal energy in Liepaja, electricity generation). All shares of Latvenergo AS are owned by the state and held by the Ministry of Economics of the Republic of Latvia.