On 1 January 2018, the new financing model for the mandatory procurement component (MPC) entered into force, and in February energy-efficient companies received their first electricity bills with a substantial cost reduction.
The change of the MPC financing model is one of the solutions developed by the Ministry of Economics within the Industrial Support Programme with a view to increase international competitiveness of the Latvian industry and reduce costs of manufacturing companies. The strategic objective of the Industrial Support Programme is to increase the volume of the industrial sector by 30% in three years, and it includes a number of measures for raising competitiveness of local industrial and manufacturing companies.
The main lines of the Industrial Support Programme are related to increasing of international competitiveness of the sector. These include a range of measures, including for the promotion of energy efficiency and reduction of energy costs, attraction of skilled labour, upgrading and expanding of production facilities, and promotion of exports and entering new markets.
One of the most significant factors hindering the development of the domestic industry are relatively high energy supply costs for domestic industrial enterprises, which are higher than in other countries in the Baltic and Nordic region. Electricity costs of industrial companies in the manufacturing process represent a much more significant share of costs than in other sectors. Consequently, any additional payments imposed on the use of electricity will always have a more severe impact on industrial companies.
This was one of the reasons why the MPC financing model has changed from this year, dividing it into two parts – the fixed or power component that depends on voltage of the electricity connection, and the variable part, which is proportionate to the electricity consumed. Thus, the disproportionately high burden of MPC payments on industrial companies is reduced and companies are generally encouraged to think about the efficiency of electricity use revaluating the capacity they really need and refusing from the unnecessary capacity. We can already say that the effect has been positive and many companies have also applied for individual consultations to AS “Sadales tīkls” to find out what is the most optimal energy supply solution for their company.
The effect of changes in the MPC payment on each company can be checked on the website of AS “Enerģijas publiskais tirgotājs”: http://www.eptirgotajs.lv/oik-kalkulators/#/.
Now, Latvian industrial companies also have access to 32.5 million euros within EU Structural Funds programmes to increase their energy efficiency. The Energy Efficiency Fund was also established, from which the State Development Financial Institution Altum will support introduction of various energy efficiency measures and solutions in Latvian companies in the coming years.
Public Relations Division
Ministry of Economics
Latvia