The next heating season will be more expensive: it is offered to pay for the heating throughout the year.

However, the president of the Lithuanian Association of Heat Suppliers, Valdas Lukoševičius, doubted that politicians would dare to introduce a new order.

“It is normal practice in western countries to report. There is a constant component for farm maintenance and a variable for energy consumption. There have been many attempts to introduce such an order in Lithuania, but it has failed. I doubt that is introduced in the future. They are purely political issues. People are opposed to how to pay for heating here in the summer when we don’t need it. Because it is a legal provision, politicians are often afraid of it, they postpone the issue for the future, and it remains ” he said to Delfi.

Trends presented

During the meeting held in the Government on August 5, the VERT member Matas Taparauskas presented the price trends for the 2021/2022 heating season.

First, he recalled that an important part of the price of heating consists of variable costs: fuel and heating purchased at heating auctions. This participation is 61 percent. prices. Another 9 percent. – depreciation, 4 percent. – repairs, 16 percent. – salary, 8 percent. – return on investment, 2 percent. – other costs.

“Heating prices are reviewed every month, taking into account changes in fuel prices and the purchase of heating. The actual fuel price with a delay of 2 months is used to calculate the heating price for the following month (for example, the actual fuel prices in June are used to calculate the heating price in August). At that time, other parts of the price are reviewed once a year, ”said M. Taparauskas.

A member of VERT presented that currently there have been contracts on the exchange of energy resources, with which heating companies have secured about 10 percent. the amount of biofuel needed for the next heating season.

The price of the contracts already concluded shows that the price of biofuels in the country may increase by around 40% compared to January 2021. According to the contracts for the purchase of biofuels concluded, the situation is reminiscent of 2018, ”he said, and He added that the price of raw wood has increased by about 50% during the year.

As for natural gas, its price, according to M. Taparauskas, has increased due to the rise in the price of raw materials, which has reached 7.5 times a year since June 2020.

“Currently, contracts are being signed in the market for an even higher price of 35-40 euros / MWh.

At that time, the price of natural gas paid by heating companies (including infrastructure taxes) increased 1.8 times a year (up to 26.03 euros / MWh). According to the prices of the purchase of raw materials concluded today on the stock market, the price of natural gas used by heating companies will continue to rise, “he said.

The price of heat is expected to be a quarter higher due to the sharp increase in fuel prices in the upcoming heating season. However, it is highlighted that it will continue to be lower than during the 2018/2019 season.

Differences in cities

According to VERT, in 2021/2022, a kilowatt-hour should cost around 5.24 cents. For comparison, in 2020/2021 the price was 4.13 cents, in 2019/2020 – 4.61 cents, in 2018/2019 – 5.37 euros.

During the last decade, the price of heating was the highest in 2012/2013, reaching 8 cents / kWh.

Among large cities, the price of heating is expected to grow the most in Vilnius, by almost 49%, to 5.48 euros per kWh.

In Šiauliai, prices should increase by 29 percent, to 5.07 euros per kWh, in Klaipėda – 15 percent, to 5.4 euros / kWh, in Panevėžys – 14 percent, to 4.87 euros / kWh , in Kaunas – 3 percent, up to 3.43 euros / kWh.

“There will be no high prices, they will be much lower than in 2007, when we burned more gasoline and there was a jump in gasoline prices. We are returning to the level of 2018, where the conditions and prices of the biofuel supply were good”, said V. Lukoševičius to Delfi.

Belarusian effect

As Vaidotas Jonutis, head of Baltpool, pointed out at the government meeting, biofuel transactions have recently formed a price of about 17 euros per megawatt hour. T. and. about 60 percent. more expensive than last year.

He noted that biofuels compete with the furniture industry for imports. “Imports account for about 30 percent. Total consumption. In Vilnius, more than half,” said V. Jonutis.

The speaker identified several reasons for the price increase. It is about the recovery of the DIY sector during the COVID-19 pandemic, which has encouraged the furniture industry to operate at full capacity. “At that time, biofuel producers cannot compete with the furniture industry on imports,” said V. Jonutis.

Another reason is the domestic consumption of Belarus. “I directed the production from the state forests to the pulp, furniture board and pellet mills. Small amounts are traded on the exchange. Lithuanian biofuel suppliers cannot form warehouses, ”said the Baltpool director.

It is observed that with the decrease in the felling of damaged stands in the region, a shortage of raw materials is possible in the Lithuanian market.

“Biofuel producers do not want to make long-term commitments because they do not know if they will be able to buy raw materials for profitable activities,” summarized V. Jonutis.

However, according to him, the situation may change. “If the economic bubble bursts, the furniture industry slows down, Belarus will start exporting as before,” he explained.

Another option is favorable weather conditions for the biofuel market. T. and. a dry autumn would allow the delivery of biofuels from forest warehouses, and a warm winter would reduce peak demand and ease supply conditions.

For his part, V. Lukoševičius pointed out that it was clear to all specialists that cheap biofuels in Belarus were temporary.

“The low cost of fuel there, as in other countries, was determined by the greater scale of deforestation. This was related to pests that damaged the trees. It was mandatory to cut down many damaged trees.

In Belarus, the forest cover is high, so they did not use all the raw materials and all the biofuel residues. Then he exported a lot, he tried to win. It’s over. Now, normally, biofuels are starting to get more expensive, also in Belarus. We probably won’t get cheap biofuels temporarily, “he said.

Consider a proposal

According to the Government Chancellery, in a dialogue with state institutions, the association of municipalities, heat producers and suppliers at the beginning of August, the evolution of the prices of fuels purchased for heat production and the measures to be taken in the heat sector.

“One of the proposals named at the meeting is to allow residents to pay for heating throughout the year. Both this proposal and others are currently being evaluated by the Ministry of Energy, which should provide conclusions, an assessment of how it would work in practice the new regulation, if any. Only after receiving the conclusions of the institutions, it is possible to evaluate the advantages and disadvantages of the new regime, “Delfi said in the comment.

At that time, V. Lukoševičius noted that the payment would not reduce heating prices throughout the year, but would improve the settlements.

“Now we are incurring very high costs for several winter months, which are difficult for some people to pay. The leveling of payments could help some people, then the solvency, the debt percentage would improve. However, it is necessary to approve the relevant law, “he said.

One of the potential problems with the proposal is how would the settlements in rental housing be paid or would the summer tenants pay for the heat of the winter tenants?

“Yes, that would be a problem, they would have to pay, like all consumers. There should be no exceptions for anyone. If there is no tenant, something changes, then it is the responsibility of the property owner to pay the maintenance costs of the house, ”said V. Lukoševičius.