Cabinet Regulation No. 294 of 2016 on Procedures for Calculating Savings of Primary Energy Produced by Cogeneration Plants

1. The Regulation prescribes the procedures by which savings of primary energy produced by cogeneration plants shall be calculated.

2. The values which are used for the calculation of electricity produced in cogeneration, shall be determined on the basis of the expected or actual operation of the installation under normal conditions of use. In relation to micro-cogeneration installations such calculations may be based on approved values.

3. The amount of electricity produced in cogeneration during the time period for the settlement of accounts which is left after utilisation of electricity for the needs of the cogeneration plant, shall be determined as follows: 3.1. the total actual efficiency coefficient of energy production for the cogeneration plant shall be calculated ( ), using the following formula: , where – is the amount of electricity produced in cogeneration installations installed in a cogeneration plant during the period of time for the settlement of accounts which is determined according to the readings of the meters at the generator output (MWh); – is the amount of the useful thermal energy produced in cogeneration installations installed in a cogeneration plant during the period of time for the settlement of accounts (MWh); – is the amount of fuel consumed in cogeneration installations installed in a cogeneration plant during the period of time for the settlement of accounts (MWh); 3.2. it shall be assumed that the amount of electricity produced in cogeneration remaining after utilisation of electricity for the needs of the cogeneration plant is equal to the amount of electricity exported to the electricity grid during the period of time for the settlement of accounts, if one of the following conditions is conformed to: 3.2.1. the total actual efficiency coefficient of energy production for the cogeneration plant in which the technology referred to in Sub-paragraph 4.1 or 4.3 of this Regulation is used, is 80 % or more; Translation © 2017 Valsts valodas centrs (State Language Centre) 3.2.2. the total actual efficiency coefficient of energy production for the cogeneration plant in which any of the technologies referred to in Sub-paragraph 4.2, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10 or 4.11 of this Regulation is used, is 75 % or more; 3.3. if the calculated total actual efficiency coefficient of the cogeneration plant is less than the values referred to in Sub-paragraph 3.2.1 or 3.2.2 of this Regulation, the amount of electricity produced in cogeneration remaining after utilisation for the needs of the cogeneration plant shall be calculated, using the following formula: , where – is the amount of the useful thermal energy produced in cogeneration installations installed in a cogeneration plant during the period of time for the settlement of accounts (MWh); α – is the proportion between the electricity produced in cogeneration and useful thermal energy which, using the data of the technical passport of the relevant installation, is calculated when the installation is fully operating in cogeneration. If such data are not available, the abovementioned value shall be determined depending on the cogeneration technology used (Annex 1).

4. Savings of primary energy in cogeneration plants which consist of the cogeneration installation and one or several boilers for production of thermal energy or only from a cogeneration installation and which concurrently produce electricity and useful thermal energy, shall be calculated for one or several of the following production technologies: 4.1. a combined cycle gas turbine with heat recovery; 4.2. a steam backpressure turbine; 4.3. a steam condensing extraction turbine with a steam discharge pipeline for heat supply; 4.4. a gas turbine with heat recovery; 4.5. an internal combustion engine; 4.6. a micro-turbine; 4.7. Stirling engines; 4.8. fuel cells; 4.9. steam engines; 4.10. organic Rankine cycle; 4.11. other technologies or combinations thereof if by using them it is possible to produce electricity and useful thermal energy concurrently.

5. The values which are used for the calculation of cogeneration efficiency and savings of primary energy, shall be determined on the basis of foreseeable or actual operation of the installation under normal conditions of use. In relation to micro-cogeneration installations the savings of primary energy may be calculated on the basis of approved data.

6. In order to determine the efficiency of a cogeneration plant, the primary energy savings (PES) which are obtained when the cogeneration plant produces energy in cogeneration, shall be calculated. The following formula shall be used for the calculations: , where Translation © 2017 Valsts valodas centrs (State Language Centre) 2 – is the electric efficiency coefficient of cogeneration installations installed in a cogeneration plant within a certain period of time which is calculated using the formula referred to in Paragraph 7 of this Regulation; – is the heat efficiency coefficient of cogeneration installations installed in a cogeneration plant within a certain period of time which is calculated using the formula referred to in Paragraph 8 of this Regulation; – is the efficiency coefficient for an individual production of thermal energy depending on the type of fuel used (Annex 2); – is the efficiency coefficient for an individual production of thermal energy depending on the type of fuel used (if firewood or biogas is used in a cogeneration plant, shall be assumed), which is calculated using the following formula: , where – is the harmonised efficiency coefficient with a climate correction for an individual production of electricity depending on the fuel used and the year in which the cogeneration plant was put into service (Annex 2); – is the own consumption coefficient of a cogeneration plant which is calculated by dividing the annual amount of electricity consumed by a cogeneration plant with the annual amount of electricity produced in a cogeneration plant; – is the correction coefficient for avoided grid losses in relation to electricity that is consumed in a cogeneration plant (Annex 3); – is the correction coefficient for avoided grid losses in relation to electricity that is transferred into the grid (Annex 3).

7. The electrical efficiency coefficient of cogeneration installations installed in a cogeneration plant within a certain period of time which is not less than four months, shall be calculated, using the following formula: , where – is the amount of electricity produced in cogeneration installations installed in a cogeneration plant within the relevant period of time which is not less than four months (MWh); B – is the total amount of fuel consumed for the production of electricity and useful thermal energy in the cogeneration installations installed in a cogeneration plant within the relevant period of time which is not less than four months (MWh).

8. The heat efficiency coefficient of cogeneration installations installed in a cogeneration plant within a certain period of time which is not less than four months, shall be calculated, using the following formula: , where – is the amount of the useful thermal energy produced in cogeneration installations installed in a cogeneration plant within the relevant period of time which is not less than four months (MWh); Translation © 2017 Valsts valodas centrs (State Language Centre) 3 B – is the total amount of fuel consumed for the production of electricity and useful thermal energy in the cogeneration installations installed in a cogeneration plant within the relevant period of time which is not less than four months (MWh). Informative Reference to the European Union Directive This Regulation contains legal norms arising from Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. Prime Minister Māris Kučinskis Deputy Prime Minister, Minister for Economics Arvils Ašeradens Translation © 2017 Valsts valodas centrs (State Language Centre) 4

Annex 1 Cabinet Regulation No. 294 17 May 2016 Proportion between Electricity Produced in Cogeneration and Useful Thermal Energy for Different Cogeneration Technologies No. Cogeneration technology Energy and heat proportion α 1. Combined cycle gas turbine with heat recovery 0.95 2. Steam condensing extraction turbine with a steam 0.45 discharge pipeline for heat supply 3. Steam backpressure turbine 0.45 4. Gas turbine with heat recovery 0.55 5. Internal combustion engine 0.75 Deputy Prime Minister, Minister for Economics Arvils Ašeradens Translation © 2017 Valsts valodas centrs (State Language Centre) 5

Annex 2 Cabinet Regulation No. 294 17 May 2016 Efficiency Coefficients I. Harmonised efficiency reference values with climate correction for individual production of electricity Table 1 The year of the putting into service of a cogeneration plant Fuel Category Type of fuel 2012 2012- 2016 and and 2015 later earlier Hard coal, including anthracite, bituminous coal, sub-bituminous S1 0.442 0.442 0.442 coal, coke, semicoke, petroleum coke S2 Lignite, lignite briquettes, shale oil 0.418 0.418 0.418 S3 Peat, peat briquettes 0.390 0.390 0.390 Dry biomass, including wood pellets and briquettes, dried woodchips, S4 0.330 0.330 0.370 Solid fuel clean wood residues, nutshells and olive and other stones Other solid biomass, including solid biomass of all types which is not S5 0.250 0.250 0.300 listed in Category S4, as well as black and brown liquor Municipal and industrial waste (non-renewable) and S6 0.250 0.250 0.250 renewable/biologically degradable waste Heavy fuel oil, gas oil, diesel oil, L7 0.442 0.442 0.442 other oil products Biofuels, including biomethanol, L8 bioethanol, biobutanol, biodiesel 0.442 0.442 0.442 and other biofuels Liquid fuel Liquid waste, including biologically degradable waste and non- L9 renewable waste (including 0.250 0.250 0.290 pyrolysis oil, melted fat, fat, and spent grain) Translation © 2017 Valsts valodas centrs (State Language Centre) 6 Natural gas, LPG, LNG and G10 0.533 0.533 0.538 biomethane Refinery gas, hydrogen and G11 0.450 0.450 0.450 synthesis gas Gaseous Biogas which has been obtained fuel G12 from anaerobic digestion, waste 0.428 0.428 0.428 landfill and sewage treatment Coke gas, blast furnace gas, mining G13 gas and other recoverable gases 0.358 0.358 0.358 (except refinery gas) Waste heat (including exhaust gases of high temperature processes, O14 – – 0.300 products of exothermic chemical reaction) O15 Nuclear energy – – 0.300 Other O16 Solar energy – – 0.300 O17 Geothermal energy – – 0.300 Other fuel which is not referred to in O18 – – 0.300 this Table II. Efficiency Coefficients for Separate Production of Thermal Energy Table 2 Type of use of thermal energy Fuel Category Type of fuel Hot Direct use of Vapour* water waste gases** Hard coal, including anthracite, bituminous coal, sub-bituminous S1 0.88 0.83 0.80 coal, coke, semicoke, petroleum coke Lignite, lignite briquettes, shale S2 0.86 0.81 0.78 oil S3 Peat, peat briquettes 0.86 0.81 0.78 Dry biomass, including wood Solid fuel pellets and briquettes, dried S4 woodchips, clean wood residues, 0.86 0.81 0.78 nutshells and olive and other stones Other solid biomass, including solid biomass of all types which S5 0.80 0.75 0.72 is not listed in Category S4, as well as black and brown liquor Municipal and industrial waste S6 0.80 0.75 0.72 (non-renewable) and Translation © 2017 Valsts valodas centrs (State Language Centre) 7 renewable/biologically degradable waste Heavy fuel oil, gas oil, diesel oil, L7 0.85 0.80 0.77 other oil products Biofuels, including biomethanol, L8 bioethanol, biobutanol, biodiesel 0.85 0.80 0.77 and other biofuels Liquid fuel Liquid waste, including biologically degradable waste L9 and non-renewable waste 0.75 0.70 0.67 (including pyrolysis oil, melted fat, fat, and spent grain) Natural gas, LPG, LNG and G10 0.92 0.87 0.84 biomethane Refinery gas, hydrogen and G11 0.90 0.85 0.82 synthesis gas Gaseous Biogas which has been obtained fuel G12 from anaerobic digestion, waste 0.80 0.75 0.72 landfill and sewage treatment Coke gas, blast furnace gas, G13 mining gas and other recoverable 0.80 0.75 0.72 gases (except refinery gas) Waste heat (including exhaust gases of high temperature O14 0.92 0.87 – processes, products of exothermic chemical reaction) O15 Nuclear energy 0.92 0.87 – Other O16 Solar energy 0.92 0.87 – O17 Geothermal energy 0.92 0.87 – Other fuel which is not referred O18 0.92 0.87 – to in this Table Notes. 1. * These values must be used by units which operate with vapour and have been put into operation after 31 December 2015. If such units, upon calculating the efficiency coefficient for individual production of thermal energy, do not take into account recovery of condensate, then the values indicated in the Table in case of vapour must be increased by 5 per cent by volume. 2. ** Such values must be used, if the temperature of waste gases is 250°C or higher. Deputy Prime Minister, Minister for Economics Arvils Ašeradens

Annex 3 Translation © 2017 Valsts valodas centrs (State Language Centre) 8 Cabinet Regulation No. 294 17 May 2016 Correction Factors z for Avoided Grid Losses that are Applicable to the Calculation of Efficiency Coefficient for Separate Production of Electricity Voltage in the grid to which For electricity exported to the For electricity consumed in a a cogeneration plant is grid cogeneration plant connected 345 kV or higher 1 0.976 From 200 up to 345 kV (not 0.972 0.963 included) From 100 up to 200 kV (not 0.963 0.951 included) From 50 up to 100 kV (not 0.952 0.936 included) From 12 up to 50 kV (not 0.935 0.914 included) From 0.45 up to 12 kV (not 0.918 0.891 included) Less than 0.45 kV 0.888 0.851 Deputy Prime Minister, Minister for Economics Arvils Ašeradens Translation © 2017 Valsts valodas centrs (State Language Centre) 9