Andrius JanukonisLithuanian District Heating Association

Chairman of the Board

5 October, 2005Emily Melton (Manager Member Services, WEC London Office) visit to Lithuania

Round-table DiscussionAB “Lietuvos energija”, Vilnius

DH Sector in LithuaniaDH Sector in Lithuania

DH market share in Europe

1% 3% 3%6%

8%12%12% 12%

15%18%

29%30%

40%42%45%46%

55%58%

0%

10%

20%

30%

40%

50%

60%U

K

Italy

Sw

itzer

land

Nor

way

Cro

atia

Ger

man

y

Icel

end

Hun

gary

Bul

garia

Aus

tria

Rom

ania

Est

onia

Slo

vaki

a

Cze

ch

Sw

eden

Lith

uani

a

Den

mar

k

Finl

and

Members of LDHA – 28 DH companiesMembers of LDHA – 28 DH companies

LDHA members produce and supply around 99% of the total heat supplied to the DH network in Lithuania

DH Ownership structure, 2004DH Ownership structure, 2004

Private Public

Partnership (PPP)45%

Municipa-lities;55%

The lease of heat utilities to foreign and domestic investors started in 2000

(9.5% with JV)

(ownership 100% in municipality)

CHP electricity delivered CHP electricity delivered to the networkto the network

1215

1380

1671

1718

0

200

400

600

800

1000

1200

1400

1600

1800

GW

h

2001 836 356 18 5 1215

2002 940 414 19 7 1380

2003 1057 315 21 7 271 1671

2004 1084 1 26 8 599 1 1718

Vilniaus energija

Kauno energijaKlaipėdos energija

Panevėžio energija

Kauno TE Litesko VISO

Guidelines of DH DevelopmentGuidelines of DH Development

• The share of CHP electricity would make up not less than 35% in 2020 (currently it makes about 17.2%)

• The share of CHP heat would make up not less than 75% in 2020 (currently it makes about 50%)

• Modernize CHP plants in Vilnius and Kaunas and construct a pilot CHP plant in Panevėžys

• Construct modern CHP plants in Siauliai, Klaipėda, Alytus, Marijampolė and other cities until 2020

Fuels used for DH productionFuels used for DH production

It is foressen that production of heat using local, renewable and It is foressen that production of heat using local, renewable and waste resources would make 17% in general heat balance in 2010, waste resources would make 17% in general heat balance in 2010, and 23% - in 2020.and 23% - in 2020.

83,682,3

75,572,0

80,1

59,1

52,5

68,5

9,7

18,722,7

17,2

38,1

44,1

27,3

5,6

5,04,07,2

10,0

2,02,02,01,2 1,30,6 0,80,81,53,0 0,80,8

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

1997 1998 1999 2000 2001 2002 2003 2004

%

Natural gas Mazute Renewables Other fuels

Fuel input for DH production Fuel input for DH production 20042004 DH companies more and more often go for installation of biofuel fired boilers. The total installed capacity of such boilers has reached more than 220MW.

Biofuel makes 10.0% in the general fuel balance and this share in the regional DH companies exceeded 21%.

Lithuania Sweden

Renewables; 60%

Mazute 10%

Natural gas; 6%

Other fuel; 5%

Heat pumps

14%

Electric boilers;

3%

Coal; 2%

Natural gas

83,7%

Other fuel0,8%

Mazute5,6%

Renewables

10,0%

Key indicators of the DH sectorKey indicators of the DH sector

Unit 2001 2002 2003 2004

Heat delivered to the network

GWh 10824 10623 10440 10300

Heat delivered to consumers

GWh 8166 8244 8309 8140

Technological heat losses % 21.1 18.8 18.1 17,8

Average cost of fuel EUR/toe 135 131 131 126

Turn over for heating mio. EUR 272 278 277 268

Average price EUR/MWh 33.3 33.7 33.3 32.9

Technological DH distribution lossTechnological DH distribution loss

23,021,1

18,8 18,1 17,8

0,0

5,0

10,0

15,0

20,0

25,0

2000 2001 2002 2003 2004

%

Main heat transfer lines in the network were installed 30-40 years Main heat transfer lines in the network were installed 30-40 years ago and their operational resource is coming to the end.ago and their operational resource is coming to the end.

InIn 2004 approx. 72 mio. LTL (about 21% of the total investment 2004 approx. 72 mio. LTL (about 21% of the total investment amount)amount) invested in this field invested in this field

Average DH tariff in Lithuania, 200Average DH tariff in Lithuania, 20044

113,5

100,00

110,00

120,00

130,00

140,00

150,00

160,00

170,00

180,00

Sku

od

o š

ilu

ma

Vil

nia

us r

aj.

ŠT

Pakru

ojo

šil

um

a

An

ykščių

šil

um

a

Rasein

ių Š

T

Lazd

ijų

ŠT

Šakių

ŠT

Bir

što

no

šil

um

a

Šven

čio

nių

en

erg

ija

Een

erg

ija

Šil

utė

s Š

T

Šir

vin

tų š

ilu

ma

Tau

rag

ės Š

T

Kaiš

iad

ori

ų š

ilu

ma

Lit

esko

Šil

alė

s Š

T

Rad

vil

iškio

šil

um

a

Plu

ng

ės Š

T

Mo

lėtų

šil

um

a

Mažeik

ių Š

T

Šia

uli

ų e

nerg

ija

Kau

no

en

erg

ija

Jo

navo

s Š

T

Pan

evėžio

en

erg

ija

Ign

ali

no

s Š

T

Ute

no

s Š

T

Kla

ipėd

os e

nerg

ija

Vil

nia

us e

nerg

ija

Lt/

MW

h

• The average price of heat is decreasing:

it was 115.1 LTL/MWh in 2003,

while in 2004 – 113.5 LTL/MWh

Heat energy consumptionHeat energy consumption,, 200 20044

Industry/business

companies8,5%

Budgetary organisatio

ns13,2%

Inhabitants70,5%

Other consumers

7,8%

Heat consumption in old and new erected houses

Build in

Consumed heat amount, kWh Price 1 m2 LTL (excluding

VAT)

PeriodTotal For

heatingFor hot water

preparation

Space heating of 1m2 (kWh/m2)

40 flats multy-family

apartment house

(heating area

1756 m2)

19621962

23000 18054 4946 10,28 1,04 10/2003

38000 33891 4109 19,30 1,95 11/2003

41000 36704 4296 20,91 2,12 12/200362000 58011 3989 33,04 3,35 1/200465230 61307 3923 34,92 3,52 2/2004

43300 39567 3733 22,54 2,28 3/2004

28000 23649 4351 13,47 1,36 4/2004

154,46154,46 2,232,23

102 flats multy-family

apartment house

(heating area

6923 m2

20012001

37000 11967 13608 1,73 0,18 10/2003

75000 46508 17067 6,72 0,69 11/2003

58000 32998 13578 4,77 0,49 12/2003

106000 75181 19395 10,86 1,12 1/2004

106000 77716 16860 11,22 1,16 2/2004

82000 51926 18650 7,50 0,77 3/2004

58000 32777 13799 4,73 0,49 4/2004

47,5347,53 0,700,70

National Energy Strategy - Heat Sector

Strategy for the Heat Supply Development

• Heat supply development plans for municipalities• CHP in DH systems (after the closure of Ignalina NPP)• Encourage use of local and renewable energy sources• Improve energy efficiency• Competition among heat producers• Procedure for independent heat producers• Modernise heat supply systems• Procedure for the purchase of CHP electricity

Adopted by Seimas: 10/10-2002

Energy Law

Adopted by Seimas: 16/5-2002

• Energy savings• Energy efficient use of primary energy sources• Reducing energy intensity• Diversification (fuel imports, indigenous fuels)• Promotion of indigenous fuels• Reliable and cost-effective production• Reducing effects on the environment• Forming legal and economic conditions for investments • Increase economic efficiency: competition, private invest.

Heat Law

Adopted by Seimas: 20/5-2003

• Heat operator tasks (supply heat, maintain system)• Heat planning and zoning etc.• Relation with heat consumers (responsibilities)• New customer contract principles• Regulation of consumers’ disconnection options• Transparency for consumers• Access for external parties to supply heat • Separation from municipal economic activities

Competition in DH sector

• The competition between the suppliers of alternative types of fuels.

• The heat production shall be based on the competition between the heat producers.

• The hot water preparation and supply shall be based on competition.

• The state (municipalities) shall promote competition in the field of maintenance of heating and hot water systems inside the multy-family apartment houses.

Municipal Heat Plans

• The municipalities shall manage the heat sector in conformity with the special Municipal Heat Plans.

• The main objective of the Municipal Heat Plans shall be to satisfy the consumers heat demand on least costs.

• The Municipal Heat Plans shall be in conformity with the state strategy, national objectives in the energy industry.

• The government may provide assistance and support in implementing the Municipal Heat Plans.

M unicipal heat plans are

confirmed; 39; (65%)

No municipal Heat plans 13 ;

(22%)

M unicipal heat plans are

under preparation; 8;

(13%)

There are 60 municipalities in Lithuania

Heat Supply License

• The heat suppliers shall obtain the heat supply license.

• The heat supply license to the heat supplier supplying not less than 5 GWh of heat/year is issued by the National Control Commission for Prices and Energy.

• The heat supply license to the heat supplier supplying less than 5 GWh of heat/year is issued by Municipalities

Heat pricing

• The heat and hot water prices shall be the single - component or the double - component.

• The heat and hot water prices might be differential depending on the heat supply system, consumer groups, volume of heat consumption, season of consumption.

Long-term renovation program “Let’s renovate dwelling- renovate City”

• On June 2004 Vilnius City Municipality started the implementation of long – term renovation program “Let’s renovate dwelling - renovate City”.

• World fund for Environmental Protection gave a loan of 6,5 million USD (3 million USD is intended for building renovation).

• Pilot project – overall renovation of 3 multi-family apartment buildings - is implemented within this project framework.

Members of LDHA – DH companiesMembers of LDHA – DH companies

1. UAB “Vilniaus energija”2. AB “Kauno energija” 3. UAB “Litesko”:

• “Alytaus energija” • “Kelmės šiluma”• “Marijampolės šiluma”• “Palangos šiluma”• “Telšių šiluma”• “Vilkaviškio šiluma”• “Druskininkų šiluma”• “Biržų šiluma”

4. AB “Panevėžio energija”5. AB “Klaipėdos energija”6. AB “Šiaulių energija”7. UAB “E energija”:

• UAB “Prienų energija”• UAB “Ukmergės energija”• UAB “Akmenės energija”

8. AB “Jonavos šilumos tinklai”9. UAB “Mažeikių šilumos tinklai”10. UAB “Utenos šilumos tinklai”

11. UAB “Tauragės šilumos tinklai”

12. UAB “Šilutės šilumos tinklai”13. UAB “Radviliškio šiluma”14. UAB “Anykščių šiluma”15. UAB “Raseinių šilumos tinklai”16. UAB “Kaišiadorių šiluma”17. UAB “Švenčionių energija”18. UAB “Ignalinos šilumos

tinklai”19. UAB “Plungės šilumos tinklai”20. UAB “Pakruojo šiluma”21. UAB “Šakių šilumos tinklai”22. UAB “Lazdijų šilumos tinklai”23. UAB “Širvintų šiluma”24. UAB “Molėtų šiluma”25. UAB “Šilalės šilumos tinklai”26. UAB “Vilniaus rajono šilumos

tinklai”27. UAB “Fortum Heat Lietuva”28. UAB “Birštono šiluma”

Heat balance, 2004 Heat balance, 2004

10197,6

2103,2

8095,4

0

2000

4000

6000

8000

10000

12000

Heat delivered to thenetwork

Heat loss Heat delivered toconsumers

GW

h

Heat usersHeat users

477462523723 544630 572867

114913(24,06%)

142297(27,17%)

123628( 22,70%)

119518 (20,86%)

0

100000

200000

300000

400000

500000

600000

700000

2001 2002 2003 2004

Total number of users Number of indebted users

Legal Acts on Renovation of Legal Acts on Renovation of Multy-family Apartment Houses

• Lithuanian Housing Strategy (Adopted on 21-01-2004);

• Support Programme on Renovation of Multy-family Apartment Houses (Adopted on 23-09-2004, modified on 21-06-2005)

• Measures and terms of implementation of Directive 2002/91/EC of the European Parliament and of the Council on the energy performance of buildings (Adopted on 27-12-2004)

• Law on State Support for Housing’s Procure or Rent and Modernization of Multy-family Apartment Houses (Adopted with modifications on 24-03-2005)