Latvia

REC/CEC definitions

Overall assesment

The transposition process in Latvia is in progress. The definitions of energy communities are included in the national legislation with amendments to the Law on Energy and the Electricity Market Law.

Following a consultation period, the Amendments to the Law on Energy and the Amendments to the Electricity Market Law were announced at the State Secretary Meeting. The Latvian Parliament adopted on 14th July 2022 the general legislative framework for energy communities, which will come into force on the 1st of January 2023. However, governmental regulations are expected from the Cabinet of Ministers to further elaborate certain aspects of the legislative framework for energy communities, such as specifying the registration requirements that there will be needed for a REC to be included in the Energy Communities Register and the provisions for electricity sharing. The deadline for the issuance of such governmental regulations is the 28th of February 2023.

The Latvian approach is to state, at first, the general definition of energy communities and then provide specific references to RECs and electricity communities (Note: in the Latvian context CECs will be named “electricity communities” (elektroenerģijas kopiena)). The proximity criterion and the enabling framework for energy communities is planned to be elaborated later, in the governmental legislation issued pursuant to the Law on Energy.

The general definition for energy communities that is included in the Amendment to the Law on Energy is the following (article 17):

(1) the energy community is a legal entity that is engaged in the production, trade, sharing, consumption and storage of energy - mainly electricity obtained from renewable energy resources and other types of renewable energy, provision of demand response services, electric vehicle charging service, energy efficiency services or other provision of energy services.

The Law also specifies that a REC operates in the renewable energy sector, and it owns, develops or manages territorially related renewable energy production facilities, while the electricity energy community (CEC) operates in the electricity sector. Still, several elements of the definitions need to be further elaborated on what they mean at the national level.

Detailed assesment

Criteria of EU definition reflected in national definition

  • (Effective) control
  • Eligibility: members in an energy community can be natural persons, municipalities, and small or medium-sized enterprises. Other public persons may also be members or shareholders of the electricity energy community (CEC)
  • Autonomy is missing
  • Open and voluntary participation is not clearly mentioned
  • Proximity is mentioned, but not specified

Level of detail in the elaboration of principles contained in EU criteria

  • There is no elaboration of what each term means. It is expected that the Cabinet of Ministers will provide clarity on what the requirement of proximity means and will specify the mandatory requirements in the energy community's statutes, as well as the rules on the relations between the energy community's members and shareholders, its representative and other energy users, and energy suppliers, including the system operator and heat supply system operator.
  • Open and voluntary participation is not specifically mentioned in the Amendment on the Law on Energy, but it may be found in the rules governing the relevant legal form to be chosen by the energy community.
  • Specifically for control it is mentioned that members of the energy community or shareholders participate in the adoption of decisions that provide decisive influence or actual control in the energy community, in particular in the adoption of decisions that refer to:
    1- ownership rights or the right to use all assets of the energy community or their determining part
    2- rights or legal transactions that give decisive influence in relation to the composition, votes or decisions of the governing bodies of the energy community.

Clearly defined purpose

The purpose of the activity of the energy community is the production of energy for its members or shareholders, providing economic, social and environmental quality improvement benefits to its members, shareholders or the territories in which it operates. The primary purpose of the energy community is not to make a profit.

ICA cooperative governance principles reflected

The provisions for energy communities include some ICA principles, through reference to the principles included in the EU definitions.

Legal entities allowed

An energy community can be an association, foundation, cooperative society, partnership, capital company or other civil law society. If the energy community is a capital company:

  1. the goals defined in its statutes should correspond to the goals of the energy community mentioned in the law and it should carry out the economic activity mentioned in the law;
  2. its articles of association should state that it does not distribute or pay out the profit obtained in dividends, but invests to achieve the goals set out in the articles of association.

Citizen participation is ensured

No.

Designated authority to oversee

The Amendment to the Law on Energy states that the State Construction Control Bureau is responsible for creating, maintaining, administering and managing the register of energy communities, as well as making, updating and making new records publicly available. The status of an energy community is only acquired after registration to this registry. The Cabinet of Ministers will determine the information to be included in the register of energy communities, registration requirements and procedures, the information to be included in the application for registration or termination of operation, the information to be provided in the annual reports of the energy community, as well as the procedure by which the energy community is excluded from the register of energy communities or can be re-registered.

Number of definitions

2 (RECs and electricity communities/CECs).

Coherency between both definitions

Both Amendments to the Law on Energy and to the Electricity Market Law were elaborated in a coordinated manner and a general definition for energy communities was provided to highlight the main characteristics of the concept. The Law on Energy also mentions that the energy community meets the conditions of the REC or the electricity energy community (CEC), or both of these energy communities at the same time, thus highlighting that the 2 definitions might on some occasions overlap. This shows that some thought has been put into aligning the 2 definitions and the concept of energy communities, which makes sense in terms of promoting a single organizational concept.