SEC Tools Pilot Communities


The Town of Kelme is an administrative centre of the Municipality of Kelme, of which the area is 1,705 km2 and the number of inhabitants 40,600. Farming land makes up 58% and forests cover 26% of the territory.

Kelme has 11,000 inhabitants whereas Tytuvenai being 18 km. from Kelme counts 3,000 inhabitants.

Kelme is located 235 km from Vilnius and 24 km from the A 1 highway Kaunas-Klaipeda.

The area is outside the natural gas supply.

No major industries are located in the Municipality. A number of minor wood manufacturing industries are operating; i.e. producing wood carpets. One major pig farm (SAREMEX) producing 12,000 pigs per year operates near Tytuvenai. This farm is expected to increase the production up to 35,000 pigs per year in the coming years.

The labour force counts approx. 20,000 people of which 7% is unemployed. Around two-third of the labour force works in agriculture; whereas one-third works in the public sector and in minor businesses.

Kelme coat of arms.

The energy system in Kelme

District Heating covers 1.600 flats in Kelme and 200 flats in Tytuvenai.

The private operator UAB Litesko operates the DH supply in Kelme on a lease agreement with Kelme Municipality. Litesko has now renovated 80% of the DH system and is considered to operate well. The main fuels are wood chips and oil-shale oil from Estonia. Shortage in wood fuel is encountered, probably due to growing exports. The potential for producing wood chips is considered high.

In Tytuvenai the district heating system for approx. 200 flats (27 multifamily houses having 2-3 stories) is operated by the Kelme municipality and the system – established in 1965 - is now outdated. The system was taken over by the municipality in 2001-2002 following major troubles for the former private heat supplier. The boilers were renovated in 2002. The system has 1,6 km of DH pipeline, which is worn out.

Natural gas is unavailable in the area.

A study has been made on biogas options at the SAREMEX pig farm. Hence, the biogas option inducing investments of 3,000,000 Lt was not assessed favourable to the company.

The Lithuanian energy sector

Heat Sector

75% of the floor area in Lithuania is heated by district heating. In the biggest cities, combined electricity-heat production is used. Modern CHP plants operate in Vilnius (384 MWe) and Kaunas (178 MWe).

Since 1997, municipalities haveK owned and in most cases operated district heating systems, which are widespread throughout Lithuania and provide space heating for about 1.4 million consumers. One third of district heating companies have been leased out to private operators.

From 2003 heat sector has been regulated by the Heat law, which introduced heat supply planning, encouraged competition among energy/fuel suppliers and service providers, set principal organisation of management, supervision and maintenance of consumer heating installations, established detailed provisions for heat pricing, etc. The Heat law was followed up by a great number of secondary acts which provided more detail and precision in defining particular aspects of regulation.

Natural gas sector

Natural gas is supplied by Russian company “Gazprom”. It is the sole natural gas supplier for all Lithuanian consumers. In Lithuania, a company AB “Lietuvos dujos” owns and operates about 8 thousand km of natural gas networks and makes main sales of natural gas to consumers. There is one more natural gas supply company UAB “Dujotekana”, however, it does not own any distribution network. “Dujotekana” buys gas from the same Gazprom and resells it to Lithuanian consumers, therefore it does not contribute to real competition among natural gas suppliers.

Natural gas sales are growing. To improve reliability of natural gas supply, construction of an undergroud natural gas storage is discussed. The main government concern is about natural gas prices, which are solely at Gazprom disposal and may be a matter of political issues.

Electricity sector

Currently, the Lithuanian electricity system fully meets the national electricity demands: the electricity consumption is 10.8 TWh. The maximum load is 1,952 MW. The Ignalina Nuclear Power Plant generated 78.2%, thermal power plants generated 17.1%, hydro power plants and the pumped storage power plant generated 4.7%. Considerable amount of electricity is exported. In 2007, 7.3 TWh of electricity was exported to Byelorussia and Russia.

A planned closure of Ignalina nuclear power plant (INPP) in 2009 will provide the main impact on overall performance of the energy sector.

Renewable fuels

Currently, local and renewable fuels of all kind – peat, wood, wood waste, straw, hydro, wind and geothermal energy, - make up about 9% in the overall primary energy balance. It is intended to raise this share up to 12% in 2010.

Legal framework

The energy sector is governed by Energy Law, which serves as an umbrella law to sectoral laws. There are separate sectoral laws imposing regulations on each sector: electricity, heat and natural gas. Each law is followed up by a number of secondary acts, the largest number of these being in the heat sector.

Municipal energy planning in Kelme

A municipal mandatory heat plan was prepared in 2004. No specific development options were given from the plan. In Kelme 2 district heating zones were defined and in Tytuvenai one was defined. The plan mainly focuses on ways to cope with emission limits.

The Heat Plan is to be revised each 5 year.

SEC Tools Pilot Actions in Lithuania

Sustainable Energy Action Plan

From 2003 the Lithuanian heat sector has been regulated by a Heat law, which a.o. introduced municipal heat planning. Following this Law local energy plans were developed in the three communities during 2004 and which has been a starting point for the SEC Tools activities.

In relation to the existing planning process the SEC Tools pilot actions have focused on:

  • Extending the current heat plan in Trakai with heat planning for 3 small towns
  • Development of a new local planning guideline
  • Identifying priorities for the future planning process

Some shortcomings were identified and adjusted in the current planning process, e.g. there was a need to provide a more realistic analysis of the demand side and a need for analysing more fuel supply options.

All recommendations were compiled into a new tool, the above-mentioned local energy planning guideline.

Local Energy Market – Biomass projects

A major concern in the communities and other parts of Lithuania is the rising heat price caused by the increasing prices of imported gas from Russia. These circumstances make more favourable conditions for fuel diversification, including replacement of clean and convenient but very expensive natural gas by cheaper local fuels such as wood chips or straw.

5 MW biomass plant in Kaisiadorys.

Thus, in Kaisiadorys the problems with the rising heat price has been met by the construction of a biomass fired heating plant, which has been built in parallel with the SEC Tools Project (commissioned in 2008).

The 5 MW wood-fired boiler plant use wood waste from local wood processing industries, and is substituting imported gas. In addition to increasing the local employment this plant will level out an expected increase in the heating price caused by the increasing prices for Russian imported gas.

In Trakai, a biomass plant is included in the local energy plan for Lentvaris Town, while in Trakai Town such is prohibited, due to its status as a cultural heritage.

Another option investigated for all of the three communities is construction of a 1 MW straw-fired boiler plant based on an ESCO agreement with local farmers or a local agricultural co-operative to supply the straw and operate straw-fired boilers.

The analyses indicate a relatively short pay-back time for this option.

According to current legislation independent heat producers may sell heat to district heating networks and the district company is obliged to buy heat at the agreed price provided it is lower than comparable heat production cost incurred by the district heating company.

Local Energy Market – ESCO projects

There is a general need to identify financing options for energy projects, and particularly local financing options in relation to ESCO models.

Various options have been investigated with regard to assessing the possibility of implementing ESCO projects in the communities.

The ESCO market in Lithuania is assessed mostly usable in public buildings and in relation to operation of small-scale boilers as mentioned above.

The residential market has been viewed as immature for projects due to current ownership structures, non-paying consumers, lack of trust and difficulty in controlling occupant behaviour.

This may depend on further development of ESCO concepts tailored to the residential market and initiation of demonstration projects in this regard.

ESCO projects can be combined with financing from local Lithuanian banks, and with guarantees for micro credits from the Government institution INVEGA.

Mobilising End-users

Renovated residential house in Kelme.

Multifamily houses in all 3 communities consume for space heating 2-3 times more of heat energy compared to more advanced EU countries. In the context of the sharply rising prices urgent actions are needed to improve energy efficiency in households.

However, numerous attempts of authorities to motivate people to launch renovation failed because peoples’ behaviour had been very passive and sceptical due to a great number of reasons, which deserve a broader discussion.

In relation to this problem part of the SEC Tools pilot actions have focused on tools to motivate residential end-users.

Local Energy Market – Biomass projects

Careful analysis revealed barriers that impede house modernisation. These include – improper house management and lack of accumulated funds that might catalyse modernisation.

The main focus has been put on introduction of heat saving measures to enable consumers to individually regulate heat consumption and reduce their consumption and heat bills.

New heat cost allocation methods that offer consumer motivation to save energy were developed and submitted to the Price Commission for approval. The Commission approved the methods in August 2008 and now they are available to households.

A special brochure for consumers explaining benefits from the new heat cost allocation methods was issued and distributed for a broad audience.

This would be a way to show the whole community a cheap way to improve energy efficiency in households by regulating consumption and adjusting heating to individual needs.

Up to now, not a single multifamily house in all 3 municipalities has been equipped with individual heat regulators and people have no understanding that such technical means may improve their economy.

Mobilising end-users – Energy Management in public buildings

Energy saving measures was implemented in Schools and kinder gardens under a WB programme and further improvements are planned.

Heat planning meeting in Trakai.

To support this process, the Municipality of Trakai is considering introducing energy management procedures in public buildings. An energy management system using energy meters and computers will allow the Municipality to control and monitor energy consumption more efficiently and thereby help to reduce energy costs.

Within the SEC Tools project the Municipality has reviewed experience from other countries and various energy management tools in relation to the specific needs within the Municipality.

Also in Kaisiadorys improvements in public buildings are planned. In 2008 energy audits were made for two kindergartens in Kaisiadorys followed by preparation of a technical project, based on the audit results. After implementation of the technical project the kindergartens will be fully modernised.

Mobilising end-users – Management of multi-family houses

As mentioned above the municipal authorities have encouraged people to embark on renovation of their houses. In the background of fast rising heat prises, reduction of heat consumption seems the only feasible alternative to withstand pressure on household budgets. The government operates a special programme on modernisation of multifamily houses and people are invited to participate in it. Up to 30% of renovation costs can be compensated from the state budget.

To participate in the programme, flat owners must order an energy audit and prepare an investment project based on the audit results. 7 multifamily houses in Trakai responded to municipal initiatives and decided to go on renovation. Municipality assisted them to organise all the preparation works and provided finance. At the end of 2008 7 houses had submitted applications to the programme and it is expected that their proposals will be selected for implementation and state co-funding.

In accordance with the project SEC-Tools, energy audits and investment projects were made for two residential houses in Kelme. As the main measures, outer walls were renovated together with roofs and staircase doors. Replacement of windows was left for individual decisions. One multifamily house was successfully renovated – the first one in the whole Kelme municipality. It is expected that this positive case will serve as a pattern and good experience will be spread out throughout the region.


- Context
- Status & potential
- Planning
- Instruments
- Action Plan
- Monitoring

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