Last summer's EU-only restriction on the development of industrial solar parks in Lithuania has left not only dozens of qualifying investors in limbo, but also regional residents, farmers and landowners. Without answers, high expectations for investment in the regions could turn into great disappointment.

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A year ago, Lithuania was one of the hottest solar hotspots on the continent. Dozens of solar park developers had met the various requirements and planned billions of euros of investment in industrial solar parks with a total capacity of almost 4 gigawatts (GW) across the country. But last summer, the Parliament unexpectedly introduced a limit of 2 GW of installed capacity, even though there are currently just over 500 MW of installed solar power plants in Lithuania. 

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This decision has put all solar park projects on hold, even those that had applied before the cap and had signed contracts with landowners to lease thousands of hectares of land. In addition, the developers had paid millions of euros in deposits to the grid operator and had invested equally large sums in various preparatory design, administrative and other work.

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Although this pause appears to the naked eye to be a problem for solar park developers alone, its implications are much wider. Even without taking into account the crisis in electricity prices or the need for local and clean generation, solar energy has already raised high expectations among regional communities, which, if the situation remains unchanged, could become a corresponding disappointment.

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Farmers are satisfied, but questions are already arising

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Regional landowners, many of them farmers, were among the first to benefit from solar parks. Owners of plots of land close to the high-voltage grid have been entering into long-term land lease agreements with developers for several years. For almost all landlords, the partnership with solar developers has meant additional income since the early days, even before construction, including from previously unused plots. They can also continue to operate on the leased plots before construction starts, and for some of them some activities will be possible after the infrastructure is built.

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Mindaugas Ralys, who farms in Aukštaitija region and has a long-term contract with a solar developer, says that above all, this partnership means stability. The sheep farmer is already earning an income under the contract, which will increase once the actual construction of the solar park begins. On the other hand, he has agreed with the developer that he will be able to graze his sheep on the land under the solar panels, so that the area earmarked for the solar park will remain partly in farm use.

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"This additional source of funds allows us to survive in times of falling sales prices, rising energy prices or other setbacks. Stability is the first priority for many farmers. I support solar energy myself, and even before I met the developer, I was interested in setting up my own power plant, but never got around to it," says Ralys.

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However, he says he is monitoring the public information on the solar pause, which is already starting to worry him.

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"I have a simple expectation: if I have leased the land, I want the project to happen. I hope that solar development will not stop. Any promises, incentives and expectations that are followed by ambiguity have disappointed before and may disappoint again. I hope that expertise and foresight will prevail in the end," comments the farmer.

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For his part, Vigas Purvinys, a farmer who also leases land for a solar park, feels that in addition to the financial benefits, there is also a moral satisfaction.

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"I am just happy that I can at least contribute to the development of solar energy in Lithuania in this way. It is progress, and it is the cleanest energy we can produce ourselves. I think it is the one that people support the most," says the farmer.

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Reputational risk

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The pause in the development of solar parks, which has been going on for more than half a year, is starting to worry regional residents, and municipal administrations are also feeling the pinch.

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According to Justas Rasikas, Mayor of Ignalina, in addition to millions of investments or jobs, solar development can bring significant reputational benefits to the region. However, the current situation threatens to undo the work of the last couple of years.

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"Last year, when a solar park of several hundred megawatts from a foreign investor was announced in our region, we were even welcomed by the leaders of other Lithuanian municipalities. This sends a strong message to other investors from all walks of life that we are reliable partners and that huge strategic projects are possible here. However, recent events may undermine all that. Uncertainty is discouraging, and the current silence can be detrimental to the attractiveness of both the region and Lithuania as a whole," says Mr Rasikas.

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He said that the development of solar parks is not only of interest to developers, but also to hundreds of farmers or landowners, to the region's residents who receive a variety of direct and indirect benefits, and to businesses and investors in other fields who are analysing the region's energy or administrative environment.

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"Whereas a few years ago, businesses and especially the general public had little knowledge of solar energy, now we have a great deal of support and expectation: for the electricity price crisis, for local clean production, for energy independence, for investment, for jobs, for leases, for the expertise it brings and for many other benefits. Such projects are very valuable for regional progress and there should be no silence and pause like now", says the Mayor of Ignalina.

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One of the largest solar parks in Lithuania and Europe is planned in the Dūkšto municipality of Ignalina district. Antanas Šakalys, the elder of the district, says that it has taken a lot of time and energy to win the support of the population for such projects, but now it is important not to disappoint them.

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"A few years ago, local people had little understanding of solar energy and, like any innovation, were a bit wary of the planned parks. Everyone had to do a lot of work communicating, telling, explaining, until we got to where we are now: people are eagerly awaiting investment, solar parks, construction, jobs, and various initiatives for communities. A developer with plans in our area is already creating value: not only actively communicating, but also sponsoring events and contributing to the improvement of infrastructure that is important to the residents. However, the information about the current pause is slowly reaching people, and questions are starting to arise", says Šakalys.

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He therefore hopes that the current pause is only temporary. According to the Elder, the Dūkštas region, like many other regions of the country, is facing challenges of employment, youth "leakage", lack of investment and other challenges, and the prospect of hundreds of millions of euro of investment in the region has already become a beacon of hope that it would be a shame to extinguish.

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Commitments will be kept

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One of the developers whose projects are unable to move forward because of the situation is the British-owned Aura Power Developments. One of its projects, a 375 MW, €300 million, 1000 ha solar park in Dūkštas municipality, has secured a grid operator's permit with a deposit of €5.6 million, but, like all 25 other projects, is now waiting for the situation to be resolved so that it can proceed. 

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According to the company's development manager Aistis Radavičius, Aura Power has concluded long-term lease agreements for almost 1000 ha of land for the project, and has lease agreements with about 1600 ha of land owners in Lithuania. The company has invested significant sums in preparatory works, received municipal approval, and has started designing the project, so the 2 GW constraint that suddenly emerged in the summer was a complete surprise and is seen as a major damage to the company's interests.

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"The 2 GW limitation was adopted without any discussion with the market, without any economic or technological assessment, and we are still hopeful that it will be changed. Even the Constitutional Court is already starting to look into the legality of this limitation. I would like to stress that this situation is not due to our actions, but to the actions of the central government, and the consequences will affect entire regions of Lithuania and their communities, not to mention the cheaper electricity that solar energy could provide in a few years' time," says Radavičius.

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He says that the company will stick to the commitments it has made in its contracts with all its partners, including its support for local communities, but points out that the central government's continued stubbornness to stop the development of solar energy in Lithuania could change this position. 

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"I am genuinely surprised: 25 large projects are eligible, but the government wants to approve only 6. Without exception, all the developers are committed to implementing the projects without any subsidies, Lithuania has a strong grid, interconnections with neighbouring countries, the Kruonis pumped storage plant for balancing, and all the technological possibilities to have a lot of renewable generation. There is also huge public support and high electricity prices, which solar energy can reduce, but the government still says “no”. The benefits for farmers are also clear: the cost of renting a hectare can be as high as €1,000 a year. More than 4000 MW of projects are planned in Lithuania, which requires at least 4000 ha of land. So the loss of lease alone could be as much as €4 million a year. And what about support for communities, taxes for municipalities? I very much hope that the situation will change soon, because such delays are becoming hard to understand," says Radavičius.

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