District heating and market economy in Latvia

From the Soviet time Latvia inherited a number of district-heating systems fuelled with Russian natural gas or imported heavy fuel oil. From a fuel ef ficiency point of view there is no reason to preserve the district heating systems unless the boilers are replaced by CHP. However, 50% of the electri city consumption is imported, and the import prices are low because the pro duction prices in neither Estonia nor Lithuania fully include the long-term capacity costs. Thus, Latvia has two major long-term strategic choices to make: (1) should the country try to reduce the energy demand, and (2) shoul d the country try to replace the import of electricity by domestic producti on. In implementing the latter solution Latvia could benefit from cogenerat ion, if the local district heating systems are preserved. This article seek s to form a strategy to develop the use of Latvian wood resources in local cogeneration. Even though cogeneration from a business economic point of vi ew is not feasible with today's import prices, the Latvian balance of payme nts would benefit immediately from the implementation of such technologies, (C) 1999 Elsevier Science Ltd. All rights reserved.