Overview of activities

Efficient Street Lighting

Starting point for ELI Latvia

Street lighting in general is in poor condition in Latvia. The technology is very energy inefficient. There are several reasons for this including very old existing equipment (some of the cables being used had been installed before 1940) and limited or no maintenance performed over the years.

Due to limited financial resources, residential areas street lighting is provided for only a limited period of time during the night (no lighting from 1am to 6 am) and by limited number of lamps (only every third lamp is used on many streets).

No market research on Latvian street lighting had ever been carried out so it is impossible to ascertain the composition of the installed base.

A municipality pays the utility company Latvenergo for street lighting on the basis of kWh consumption. Latvenergo had also begun charging a maintenance fee. The Energy Supply Regulation Board had at one point been analyzing street lighting costs. Latvenergo includes the ESRB in electricity tariffs up to today. This is an historical point of contention.

Frequently, street lamps in towns and rural areas in the early years were attached to electricity transmission poles. Because those poles belong to Latvenergo, the company has performed the maintenance of both the poles and the lamps. The ownership of street lighting fixtures has been a major point of contention. One of the suggested solutions was to pass the asset ownership (that is, ownership of the electric poles) over to the municipalities.

In early 2000, several individual municipalities tried to change the street lighting situation. Some examples of the existing situation are listed below:

1. The Riga street lighting company, “Rigas Gaisma”, which is the municipal entity responsible for street lighting within the city of Riga, has prepared a concept plan for the re-development of the city infrastructure. Street lighting is a major component of this plan. Riga City Council adopted the concept plan in May 2000. City Council is still discussing Rigas Gaisma’s annual funding. Its funds are distributed once per year, usually in the Spring. They are always less than Rigas Gaisma was asking for. Rigas Gaisma usually uses whatever money it gets to pay for electricity and a bit of reconstruction work.
   
2. The municipality of Ventspils has implemented a step-by-step strategy to reconstruct the street lighting during the reconstruction of the infrastructure on various streets. City financing of the utility Latvenergo ownership is reduced by year.
   
3. Some municipalities have tried to allocate funds for the modernisation and reconstruction of their street lighting. In some cases, efficient lighting technologies have been used. But this is being done very gradually. The town of Broceni, on the other hand, has been financing replacement of street lighting fixtures over two years in cooperation with Philips.
   
4. Seven municipalities have prepared feasibility studies for the redevelopment of their street lighting. These studies have some features of a business plan. They have been made available for municipalities and others searching for co-financing and loan possibilities from governmental institutions.

Barriers to implementing street lighting upgrades in municipalities include the following:

• Ownership questions were not solved - only three municipalities own their own street lighting. Latvenergo owns it in the other 523 municipalities.
• Lack of finance – municipalities have limited opportunities to get loans, there is a low priority for street lighting, etc
• Long project payback times – this is mainly because street lighting is not used either full time or fully (see above)
• Lack of positive cash flow from a project – operating revenues did not cover full operating and maintenance costs
• Lack of street lighting standards – European Union standards were neither translated nor used.

Pilot project in Tukums

The ELI program in Latvia investigated the opportunities for overcoming the obstacles to efficient street lighting noted above. ELI Latvia started by trying to raise municipal awareness through the use of training workshops for potential municipalities and competitions between municipalities to see which one would participate in the ELI pilot stage project. The workshops were useful for determining which municipalities appeared to be the most stable, which owned its own street lighting, which was open to participate in an ESCO, etc.

The pilot project in Tukums started in December 2001, when Ekodoma in close cooperation with specialists from the municipality carried out an energy audit of Tukums’ street lighting system. The street lighting energy audits were directed by our Danish consultants.

The first milestone was achieved in April 2002, when a detailed business plan was presented to the Tukums City Council. The plan included technical solutions, project profitability, specifications, O&M, financial and economical analyses and a market investigation of potential Latvian ESCOs. Following this, in June 2002 a tender addressed to ESCOs to develop an efficient street lighting system in Tukums was announced. At the end of September the Service Company selected and Tukums Council signed a contractual agreement of 10 years duration. During this period, the ESCO will develop the project and then both operate and manage it.

This pilot project in Tukums has been an important test of “performance contracting” in Latvia and the preparation of a contractual agreement is an important added value for future implementation of energy efficiency projects in Latvia.

The project was realized using ESCO services

1. investment of $450,000 US
• ESCO - Wesseman, Ltd
  • Latvian Environmental Investment fund $130 000 US
  • Latvian Mortgage Bank $120 000 US
  • Wesseman, Ltd budget $90 000 US
• Tukums municipality
  • Nordic Investment Bank $110,000 US
2. technical solutions used
   • Reconstruction of new street lighting equipment 2,2 km of streets
   • Replacement of luminaries and bulbs 950 light points
     

This project has been implemented thanks to the good working relationship that had been established and the on-going cooperation between and among the partners, Tukums Council, the experts who participated and the financial institutions involved.

Follow up activities from the pilot project include the dissemination of information about energy efficiency projects through seminars and training courses for municipalities; and as well, the training of companies in structuring third party financing following the creation of an ESCO system.

The pilot project also demonstrated numerous opportunities for financial institutions. Equally importantly, it identified for commercial banks and Funds in Latvia the ideal conditions for borrowers. Particular thanks for this project should go to:

• The Nordic Investment Bank for municipality;
• The Latvian Environmental Investment Fund
• the Latvian Hipoteku Bank for ESCO.

The Tukums City Council was very actively involved and determined to carry out the project using third party financing. This poses a good example for other municipalities and should motivate them to try it themselves.

The first problem the team encountered pertained the selection of the right alternative during the feasibility study. The selection involved a trade off between the technical requirements of the project and the financial capabilities of the municipality. To help overcome this problem, an energy auditing of the existing street lighting system was undertaken in order to determine possible energy savings.

The second potential problem concerned the financial institution. It was imperative to show them the environmental benefits, in particular, of the project in order to comply with their requirements.

Finally, the lack of experience and existing legislation for third party financing was a major problem as well. The compilation and structuring of the concession agreement between the Tukums Council and the ESCO required a great deal of investigation and help from outside sources.

More detailed information is available at http://www.apgaismojums.lv/streetli.htm