Passions around solar panels – how not to get burned?

Everyone still remembers the OIK affair. We still continue to pay it. But it seems that someone wanted to repeat something like that again. And why not – if there are sheep, there will always be shearers.

This time there may even be two types of sheep – those who will buy solar panels and those who won’t!

How not to fall into the herd of sheep to be sheared? As strange as it may sound, the most criticized measures (restrictions) are aimed precisely at making this herd of shearing sheep as small as possible, so that more wool remains for the shearing sheep. This, of course, does not satisfy the shearers – that is why a lot of fabrications and half-truths are circulated in the public space.

The most important thing is that your choice does not disappoint.

It is very important that the support system for solar panels is clear, fair and sustainable – so that people who rely on this support system do not get cheated: either because they did not understand this support system correctly, or they miscalculated – relying on it , which is later changed.

How do you create a support system that is fair and that everyone can count on?

First of all, it must be understood that this system affects us all – not just those who want to use it. Similar to how the law of conservation of energy works, it is also the case with giving support – if something is given to someone, it must be taken from someone else.

The support can be of various kinds – compensating the costs of purchasing and installing solar panels, compensating the costs of using the system (a more favorable tariff), creating a more convenient mode of use and providing additional services (NET system), etc.

There are not too many opportunities to support from one’s pocket to make the use of solar panels more profitable – either from the state (Latvian taxpayers’ wallet – as it is now with OIK), or by granting European funding (which is already available), or it is paid for other users of the system (as was the case with OIK earlier).

Therefore, it is important to create a properly balanced support system that will be able to be maintained in the long term, when the number of solar panel users and the amount of electricity they produce will increase significantly. It will be different like with OIK…

And here is also an answer for the dissatisfied and those who do not understand it – why is support for solar panels not provided after “full throttle”? Trying to misrepresent it as Latvia’s reluctance to take care of its energy independence and deny the Latvian consumer the opportunity to provide himself with electricity.

One can already understand the desire of solar panel users to install and use solar panels without any power limitations and to be able to transfer the generated and unused energy into the system in any amount and then use it whenever you want and wherever you want. Technically, all this is feasible.

But who will pay for it? It would be fair that those who want to use such conveniences should pay. Therefore, it would be fair that those who will have to pay for it – know what they have to count on, so that they can calculate the expected benefit and make their choice responsibly. Currently it is not!

Distribution network tariff.

The distribution network covers the costs of its system with revenues from the tariff, which consists of two parts – “fixed” (depending on the connection capacity) and “variable” (depending on consumption). The variable tariff part provides the largest revenue share (about 2/3 of all revenue). It is inconsistent with the real situation (real cost formation mechanism), because the infrastructure necessary for electricity transmission must be maintained, regardless of how much energy is transmitted through it, and it is these “fixed costs” that make up the most significant part of costs (not “variable” costs).

With the existing tariff structure (a large share of the “variable” part), if the connection is loaded inefficiently (small amount of transmitted electricity compared to the connection capacity), then the tariff paid by the user of this connection does not cover the maintenance costs of this connection.

Taking into account the specifics of solar generation (the number of sunny hours per year), the connection created for the solar panels will be loaded inefficiently. Also using microgeneration within the existing household connection – this will reduce the amount of electricity transferred into the system, which is used in calculating the payment of the “variable” tariff section. This means that with the existing tariff structure, the costs of such microgeneration connections will not be covered by the tariff paid by the user, and they will have to be covered by other users of the distribution system. As long as there are not many such connections, the Distribution Network can cover these costs from its profits without changing the tariff. However, the “boom” of solar panels has already started in Latvia, which means that the distribution network will have to change the proportions of the fixed and variable parts in order to ensure a reasonably sustainable tariff structure.

NET system

Since solar panels produce electricity depending on the sunshine, and not according to the will of their owners, the generation and consumption profiles will not coincide, and situations may arise when the owner of the solar panels will not need the electricity produced – therefore, in order to make the use of solar panels more profitable, NETO was created a system that allows you to transfer unused electricity to the common system and then receive it back.

First of all, it must be understood that in reality there is no accumulation of energy transferred to the system the system simply does not have such an option. Another consumer is found for this energy. But when the user of the solar panels wants to receive back “his transferred” energy, it is bought from another electricity producer at that moment. (This service is provided free of charge to solar panel owners.)

The electricity market price is variable. This means that the price of energy transferred to the system may differ from the price of energy “received back”. There is an obvious trend in the electricity market – when generation from renewable energy sources increases, the market price of electricity falls. With the amount of solar generation expected in the near future (which is increasing rapidly), it is expected that on sunny days (when there is a surplus of energy that will be transferred to the system), the price of electricity will be significantly lower than when the owners of the solar panels want to “receive” this energy. . Someone will have to cover this price difference.

Similar to the connection costs, as long as these volumes are small – the system operator can cover them from their profits, but when they increase, the tariff for all users will have to be raised. Or a fairer mechanism of the NET system should be ensured – transition from the energy accounting system to the energy settlement system (when the amount of energy received/transferred is counted not in kilowatt hours, but in euros).

About generation and self-consumption.

Another important aspect. From the point of view of system costs, there is a fundamental difference – whether the energy produced by the solar panels is used “on site” (optimally – for self-consumption), or whether this energy must be moved somewhere further in the system.

It will be easier to understand by looking at the specifics of the electricity supply system by analogy with the water supply system.

To ensure water supply, pressure is created in the system – this is achieved by erecting water towers of different heights. (Similar to how a power system provides different voltage levels). In order to spend (and pay) less water from the system, the user can build his own well (microgeneration) and get water from there. If the extracted water is too much, then the system has to find where this water can be used. It is good if there are neighbors nearby who need this water, then it can be used there. It is convenient and beneficial for everyone – both the system and the well owner. However, if no one needs this water locally (and if there are already many wells around), then the system has to pump this water up to the water tower, from where it can be diverted somewhere else where it is needed. It is not difficult to understand that it will cost the system much more than in the first case. It is similar with electricity to move it through the system – at different voltage levels.

Therefore, it is understandable and justified that different regulations are created for such different cases. Capacity limits are set to ensure that most of the energy produced is used ‘on site’. This makes it possible to include many more microgeneration users in the system. Fast and relatively low cost.

What to expect in the future?

From the above explanation, it is understandable why various restrictions are currently implemented in the system. Some of them are purely objectively justified, some – as an attempt to balance, reduce the existing systemic disadvantages (for example – the structure of distribution tariffs).

It is obvious that if we want to create a support system for microgeneration in Latvia that can be relied on in the long term, then such a system must be fair and properly balanced – one that does not create deforming pressure on other users when microgeneration volumes increase significantly.

Such a system cannot be implemented without changes in the structure of the distribution tariff – with the proportion of the “fixed” tariff component increasing significantly, so that it reflects the real costs of maintaining the connections (thus reducing the benefits currently obtained from the use of solar panels).

It is clear that the NETO accounting system will have to be replaced with a NETO billing system – when the energy transferred and received to the system is considered not by volume (kilowatt hours), but by its value (euros) – thus preventing someone else from having to pay for it.

It is logical and reasonable to create different regulations depending on how balanced the generation of the installed solar panels is with self-consumption – giving preference to those who want to implement microgeneration according to their self-consumption profile (for example, using 80% of what is produced, and only transferring 20% ​​to the NETO system)

Creating an adequate regulation for the real situation will not require such strict power limits regarding microgeneration (the much discussed and hated 11kW).

It’s all work to be done. And it will have to be implemented in the near future. (As it was predicted when the “solar boom” was just beginning – see here )


Although these changes will reduce the profitability of using solar panels, they are also in the interests of solar panel users – because they will provide them with conditions they can rely on in the long term, giving them the opportunity to more safely calculate the most beneficial solution for themselves and make the right decisions.

This, of course, may not please those implementing the solar business, who hoped to earn as much as possible in the short term at the expense of the existing situation, luring customers with unreasonably favorable promises.

Therefore, answering the question – Why doesn’t Latvia allow itself to do what is being done right next door in Lithuania regarding solar panels? The short answer – because Lithuania has not yet had its “OIK affair”, it is currently in the making…

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.