This year, the implementation of the Kaigu Bog energy complex will begin – a wind station plus solar panels with an annual capacity of 300,000 MWh – in parallel with which a green industrial park is planned, where the produced electricity will be consumed by growing seedlings.

This is stated in an interview with Dienas Bizness by Uldis Ameriks, Chairman of the Board of SIA Laflora, explaining that the ambitious project, worth several hundred million euros, will be a materialisation of the European Green Deal concept, which will allow Laflora to achieve climate neutrality by 2030, not only by fully compensating for the GHG emissions generated in peat extraction and processing but also by creating a platform for the further sustainable development of the entire Zemgale region.

How did a peat extraction and agricultural peat substrate producer arrive at a wind farm?

In a way, it is elementary. Specifically, in 2015, challenges appeared in peat extraction in Latvia, and furthermore, in the foreseeable future, peat extraction in the Kaigu Bog owned by SIA Laflora will be completed, so a future development strategy for the company was developed. Its goal was to set the company's future operational directions while simultaneously seeking solutions for what to do in the worked-out Kaigu Bog. This company strategy (which in today's sense can be considered a sustainability plan) included both external challenges – the trends already coming from EU structures at that time – as well as Latvia's internal complications – political, economic, demographic. As a result, a bog management concept emerged, which included solutions for what to do in the Kaigu Bog after peat extraction is finished there. Land has been, is, and will be a valuable asset; it must be used effectively, especially when the area of Kaigu Bog is 764 ha. It is a large area to which it was necessary to find opportunities to give a second life. Over several years, Laflora created an ambitious programme for the recultivation or further use of worked-out peat fields, which are essentially CO₂ sequestration activities to compensate for the emissions generated during peat extraction.

In cooperation with Latvian scientists and various organisations, innovative, scientifically-based methods for the recultivation of worked-out peat extraction fields were sought in the Kaigu Bog owned by Laflora. Research-based afforestation has been carried out in the bog, berry plantations (cranberries, highbush blueberries, cowberries) have been set up, and various bog plants are being grown for biomass production and territory renaturalisation, for example, peat-forming sphagnum mosses, sweet flag, blue flag iris, as well as heather, Labrador tea, and rhododendron plantations with the goal of establishing commercial seedling nurseries. And, since peat extraction in this bog was occasionally interrupted only because the wind was too strong, the idea of wind measurements arose, which also confirmed that one of the solutions for the future use of the Kaigu Bog could indeed be the creation of a wind farm. Of course, in Latvia 7-8 years ago, there was by no means broad public support for converting wind energy into electricity, because at that time it was not really imaginable without some subsidies (support). However, over the last year – after Russia's invasion of Ukraine – a lot has changed, including awareness of energy security and energy independence, and electricity prices have also risen significantly, so state support for wind farms is no longer necessary. The conviction that the company's future development strategy outlined at the time is correct was given by the announcement of the EU Green Deal and the goal of achieving climate neutrality (as much as is polluted, so much is sequestered). A wind farm in the worked-out peat fields would be green energy for self-consumption at Laflora's peat product factory, as well as offered on the market in the future. It is intended to use green energy in greenhouse complexes, where vegetables and tree seedlings can be grown. In fact, Laflora's sustainability development plan aligns with EU and Latvian requirements in the context of climate neutrality.

What stage is the wind farm project at?

After several years of research, all necessary findings and permits have been obtained so that the actual construction of the wind farm could begin as early as the beginning of the summer of this year. It can be said that with the building permit issued by the Jelgava Municipality building authority at the end of last year for the construction of Laflora's 90 MW wind farm, the project's planning phase has concluded and its implementation is beginning. An agreement has been concluded with AS Augstsprieguma tīkls for the construction of a 90 MW power connection to the transmission network, for which a construction project was developed and approved in 2022. The construction of the connection is planned to start at the same time as the wind farm construction works. Laflora is developing the wind farm project through the subsidiary Laflora Energy of the peat extraction and processing company Laflora, in cooperation with the wind farm developer SIA Windy. The intended number of wind turbines is currently 16, but in the future, the amount could be increased to 22, because we plan to participate in a long-term land lease auction alongside the Kaigu Bog lands owned by Laflora, which are managed by the state forest manager AS Latvijas valsts meži. For now, there is no corresponding regulation at the state level, but there are promises that one will be created, and not just Latvenergo, but any other company that wins the rights in the relevant tender will be able to install wind farms on state forest land. Even though it was initially estimated that 1 MW would cost one million euros, inflation has done its work, and it is currently estimated that investments for the implementation of the wind farm in the Kaigu Bog will exceed 120 million euros. Final negotiations are currently underway with potential strategic partners from both Latvia and abroad on attracting investment for the project. It is planned that the Kaigu Bog wind farm will start operating in 2025. At the same time, the wind farm project has been expanded with a second phase, in which it is planned to create a solar panel park, so 110 MW of capacity has been reserved. This means that the total renewable energy capacity in the Kaigu Bog will reach 200 MW in the future. In total, we would be able to produce an amount of electricity (300,000 MWh) per year that is equivalent to about 5% of Latvia's total electricity consumption. The development of the second phase will start after the first phase is completed, so it is currently too early to guess the costs of creating the solar park, but it will cost many tens of millions of euros in any case. At the same time, the implementation of both phases of this project will allow Laflora to achieve climate neutrality by 2030, fully compensating for the GHG emissions created in peat extraction and processing.

When will the seedling cultivation project in the Kaigu Bog green industrial zone start?

In the industrial zone, by promoting local peat consumption, it is planned to develop the largest and most modern seedling nursery in the Baltics, which will include greenhouse complexes for growing vegetables and forest seedlings. It is planned to create production facilities that will test innovative and carbon-sequestering products, for which research has already begun in cooperation with scientists. Currently, negotiations are taking place with potential investors – those who would like to work in this planned green industrial zone. The idea is very simple – to grow seedlings in Latvian peat substrate and supply them to Europe. Currently, peat is extracted in Latvia, processed into peat substrates, and exported to more than 100 countries worldwide, including the Netherlands, which is a major grower of flower and vegetable seedlings, as well as vegetables, but a portion of what is grown in that country returns to Latvia.

With energy resource prices rising significantly, in the winter of 2022/2023, more than one plant nursery in Western Europe is “on pause”. Since the EU Green Deal requires a reduction in greenhouse gas emissions, especially CO₂, it would be logical to reduce the CO₂ footprint in transport – substrates from Latvia to the Netherlands and plants (flowers) from the Netherlands to Latvia and other countries; this can be done by growing plants etc. in Latvia. Even more so, if the Kaigu Bog energy block allows the necessary electricity to be purchased at very competitive prices. It is intended to attract circular economy companies and production facilities with high energy consumption in their production processes, allowing them to produce in a climate-neutral way. This will allow both existing 290 jobs to be saved and approximately 120 new ones to be created.

After the implementation of these ambitious investment projects and the EU's negative stance towards peat, will Laflora remain in the peat extraction and substrate production segment?

Laflora was, is, and will be a peat extraction and agricultural substrate production company; we produce peat substrates used by professional horticulture. People cannot survive without eating (food), even more so if the real implementation of the EU Green Deal is not possible without peat and its substrates. Namely, in one m³ of peat, 6,000 tree seedlings can be grown, with which to plant 3 ha of forest, where one hectare of forest will sequester 370 t of CO₂ in 50 years. In one m³ of peat, 7,000 vegetable seedlings can be grown; if they are cucumbers, then 16 t of these vegetables can be obtained, if tomatoes – then 32 tonnes of tomatoes. And one can also calculate how high the GHG emissions are to obtain 1 m³ of peat and how much CO₂ the trees and vegetables grown in it will sequester. Mathematics proves that the amount of CO₂ emissions created as a result of peat extraction is many times exceeded by the sequestered CO₂ in the plants grown in peat substrates. That is exactly why it is surprising that at the European Union level, a group of people has been able to tell the unbelievable – that peat is comparable to fossil (oil, natural gas) resources and that this industry simply must be liquidated. In the case of peat, the situation is completely absurd – emissions are accounted for in Latvia, but the CO₂ sequestration created by the green plants (vegetables and trees) grown in peat is not accounted for at all – neither in Western Europe nor here, as would be logical. If the emissions of the horticultural peat industry are accounted for (which, however, are not comparable to the volumes of energy peat emissions), then it must be taken into account that they are, firstly, compensated by the green plants grown in peat, and, secondly, as in any emission-generating industry, they can be compensated by activities promoting CO₂ sequestration, i.e., compensatory measures. These are valuable emissions for the Latvian economy – added value is created from local resources in a sustainable way (only 4% of Latvia's bogs have peat extracted), a world-demanded exportable product worth 280 million euros per year is ensured, a significant number of people are employed in regions where there are the greatest problems with jobs, and millions are also paid in taxes, especially since Latvia is in second place after Canada in the export of peat products (substrates).

Another nuance – in Latvia (and not only) peat has been extracted for more than 200 years; the idea that the stocks of this mineral have been exhausted is not true, and furthermore, data obtained by scientists show that the annual volume of peat growth in Latvia significantly exceeds the volumes of its extraction. In Latvia, bogs occupy at least 645,100 ha (about 10% of the territory), 70% of this area are natural bogs, but peat extraction takes place in 4% of the total bog area. They contain a total of about 1.5-1.7 billion tonnes of peat. In Latvia's natural bogs, about 1.6 million t of peat accumulates annually (assuming the average accumulation rate is 2 mm per year). Research conducted in recent years by scientists from the Faculty of Geography and Earth Sciences of the University of Latvia shows that the increase in the peat layer per year is greater, reaching even 3-4 mm, with an average of 2 mm. Peat resources have not been precisely determined, they could be 11.3 billion m³ or 1.7 billion tonnes (according to data from the Latvian Environment, Geology and Meteorology Centre). This means that total peat stocks in Latvia are increasing, and peat is a slowly renewable, not a fossil, resource. These data further confirm that everything is fine with nature and peat in Latvia. I hope that these arguments will be heard both in the EU and in the cabinets of Latvia's leading institutions, and especially their heads.

We have also planned new product manufacturing from peat, for example, peat paint, fillers, etc., which require additional research. Laflora is based on three cornerstones – sustainability, flexibility, and non-standard solutions. In my opinion, the Latvian state should also be based on the same ones; it can justify its position and approach regarding the resources it has compared to other EU member states, which simply do not have such resources as peat or forest, or have fully utilised them many decades ago. A non-standard approach is an opportunity and a winning formula for Latvia's growth, for the creation of new jobs, rather than closing something down.

How was 2022 for Laflora?

Turbulent, but overall productive. The volume of peat extraction reached 112 thousand tonnes, which is 9% more than in the previous season. In 2022, the increase in annual extraction volume was also driven by demand for energy peat – the company provided 17k t of fuel peat to heating companies, with which 52,000 MWh of energy can be produced. Yes, under normal circumstances, the extraction of burnable peat and its use as an energy resource would not be acceptable, but in an emergency situation – the war in Ukraine, conditions of cosmic increases in energy resource prices – it is an opportunity to obtain heat at a reasonable price. For example, last year, to hedge against potential fuel shortages, as well as to minimise the possibilities of fuel price increases, Finland extracted additional volumes of burnable peat. Last year Laflora produced and sold more than one million m³ of peat products worldwide. It should be taken into account that last year foreign buyers were very diligently building warehouse stocks, which only further increased the demand for peat substrates; true, several plant nurseries in Europe have stopped their operations during the winter season due to high energy resource prices. In 2022, the company's net turnover according to unaudited data reached 31.6 million euros, which is 35% more than was achieved in 2021. This is the company's historically highest net turnover. Of course, inflation played a role in its increase, which raised not only the company's production costs but also the selling prices of the produced peat substrates, which were dictated by ever-increasing demand for this product from Asian countries, to where export volumes have also grown.

Already in 2022, there was an idea about creating a peat substrate factory in Nīcgale. What stage is this project at?

The idea exists, there is no implementation yet. Currently, peat extracted in Nīcgale is transported to a peat substrate factory near Jelgava, but a project for a substrate factory has already been developed, and by implementing it, peat would no longer be “toured” from Latgale to Zemgale, but would be turned into a finished, high value-added product already at the factory in Nīcgale. The location of the factory has already been chosen – next to the peat extraction site. In the new factory, there will be work for 25 people. According to rough estimates, the creation of a peat substrate factory in Nīcgale would cost about 5 million euros, which would be one of the company's largest capital investments. Total investments in the Nīcgale peat deposit would reach about 7.5 million euros; the payback period for such investments is estimated at at least 10 years, even though there are currently relatively many unknowns – what will the state's tax policy be, what will the state's policy towards peat extraction be, will the EU have set any restrictions and bans for this industry (for example, issuing loans). Basically, guarantees from the peat bog owner – the state – are needed for not changing the existing conditions until the end of the peat extraction licence term in 2062. After all, there is the EU Green Deal, and by building a factory in Nīcgale, Laflora will reduce the volume of CO₂ emissions on account of the peat haulers (from Nīcgale to Jelgava about 200 km). This is a real CO₂ emission reduction measure.

Laflora wind farm

• Number of wind turbines: 22

• Turbine height: 251 m

• Wind farm capacity in the first phase of the project: 90 MW

• Average energy produced per year: 300,000 MWh or approximately 5% of Latvia's total annual electricity consumption

• Carbon savings until 2050: 2.8 million t of CO₂ eq.

• Investments in creating the wind farm: more than 120 million euros

• Wind farm opening: in 2025