COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Latvia Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) (ST 10157/21 INIT; ST 10157/21 ADD 1) of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Latvia
Date: 2023-11-16
Institutions: European Commission, Secretariat-General
Subjects: EU aid, Latvia, digital transformation, economic recovery, economic reform, energy policy, green economy, investment, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.11.2023  SWD(2023) 375 final  COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Latvia Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) (ST 10157/21 INIT; ST 10157/21 ADD 1) of 13 July 2021 on the approval of the assessment of the recovery and resilience plan for Latvia {COM(2023) 729 final}  
 
 
Table of contents 
1.  Executive summary ............................................................................................................ 2 

2.  Objectives of the modification of the plan ......................................................................... 3 

3.  Summary of the assessment of the plan............................................................................ 10 

3.1.  Comprehensive and adequately balanced response to the economic and social 

situation ................................................................................................................. 10 

3.2.  Link with country-specific recommendations and the European Semester .......... 11 

3.3.  Growth potential, job creation, economic, institutional and social resilience, 

European Pillar of Social Rights, mitigating the impact of the crisis, and social 
territorial cohesion and convergence ..................................................................... 13 

3.4.  The principle of ‘do no significant harm’ .............................................................. 13 

3.5.  Green transition ..................................................................................................... 14 

3.6.  Digital Transition ................................................................................................... 15 

3.7.  Lasting impact of the plan ..................................................................................... 16 

3.8.  Milestones, targets, monitoring and implementation ............................................ 17 

3.9.  Costing ................................................................................................................... 18 

3.10.  Controls and audit .................................................................................................. 20 

3.11.  Coherence .............................................................................................................. 20 

3.12.  REPowerEU........................................................................................................... 21 

3.13.  Cross-border or multi-country dimension or effect ............................................... 22 

ANNEX I: Climate tracking and digital tagging  .................................................................... 23 

1 

 
 
 
 
 
 
 
 
 
 
 
1.  EXECUTIVE SUMMARY 

In 2022, Latvia’s economic resilience was tested by supply chain disruptions, a surge in 
energy  prices  and  high  inflation.  In  light  of  the  drastic  changes  in  the  economic  and 
geopolitical situation due to Russia’s unprovoked invasion of Ukraine, Latvia submitted on 26 
September 2023 a modified Recovery and Resilience Plan (RRP), together with a REPowerEU 
chapter. Latvia proposed modifications to its RRP pursuant to two legal bases. In accordance 
with Article 21(1) of Regulation (EU) 2021/241, Latvia considered the RRP to be partially no 
longer  achievable  due  to  objective  circumstances  and  made  a  reasoned  request  to  the 
Commission  to  make  a  proposal  to  amend  the  Council  Implementing  Decision.  Finally,  in 
accordance  with  Article  21c  of  Regulation  (EU)  2021/241,  Latvia  included  a  REPowerEU 
chapter in its RRP. 

The modifications submitted by Latvia under Article 21(1) of Regulation (EU) 2021/241 
affect 35 measures of the initial plan. In addition, errors of a clerical nature that do not reflect 
the content of the initial plan submitted by Latvia have been identified in the text of the Council 
Implementing Decision, and Latvia proposed corrections. 

The REPowerEU chapter contains measures to help address the key energy challenges 
that Latvia is currently facing. The proposed new reform aims at transforming the national 
energy sector by:  (a) promoting  energy communities, (b) promoting renewable  energy  self-
consumption  and  self-generation,  (c)  optimising  the  use  of  existing  distribution  and 
transmission  networks,  and  (d)  improving  the  conditions  for  the  uptake  of  sustainable 
biomethane.  The  reform  contributes  to  addressing  energy  poverty  by  promoting  energy 
communities. The investments proposed in the REPowerEU chapter are aimed at increasing 
the capacity of the electricity grid, accommodating the integration of renewable energy sources 
(RES), and accelerating the synchronisation of the national electricity network with the Union 
electricity grid, in line with the country-specific recommendation on energy (CSR 4 in 2023). 
The  investments  are  also  aimed  at  digitalising,  modernising  and  securing  electricity 
transmission  and  distribution  networks,  as  well  as  at  increasing  the  uptake  of  sustainable 
biomethane. The measures are expected to contribute to the REPowerEU objectives to enable 
diversification  of  supply  in  the  interest  of  the  Union  as  a  whole,  and  to  reduce  the  overall 
dependence  on  fossil  fuels,  by  promoting  the  uptake  of  sustainable  biomethane  and  by 
increasing the share and accelerating the deployment of renewable energy.  Investment 7.2.i. 
in  security and stability  of energy supply, and synchronisation with  the Continental Europe 
network,  and  investment  7.3.i.  in  upgrading,  digitalising  and  securing  the  electricity 
transmission and distribution network have a cross-border dimension. 

Based on the assessment of the submitted modification and the REPowerEU chapter, the 
Latvian modified plan receives an A-rating on all criteria (including the two additional 
criteria  for the REPowerEU chapter), except for costing, where the plan receives a B-
rating (unchanged from the assessment of the initial plan) (see table 1).  

Table 1: Summary of the assessment of the Plan under the RRF criteria  

(1) 
Balanced 
Response 
A 

(2) 
CSRs 

A 

(3) 
Growth, 
jobs… 
A 

(4) 
DNSH 

A 

(5) 
Green 
target 
A 

(6) 
Digital 
target 
A 

(7) 
Lasting 
impact 
A 

(8) 
M & T 

(9) 
Costing 

A 

B 

(10) 
Control 
Systems 
A 

(11) 
Coherence 

(12) 
REPowerEU 

A 

A 

(13) 
Cross-
border  
A 

2 

 
 
 
 
 
2.  OBJECTIVES OF THE MODIFICATION OF THE PLAN 

In  2022,  Latvia  faced  a  considerable  general  price  increase  compared  to  2021,  and  its 
economy  was  hit  harder  than  that  of  most  EU  Member  States  due  to  the  Russia’s 
unprovoked military aggression against Ukraine since 24 February 2022. As highlighted 
in  the  2023  Country  Report1,  in  2022  Latvia’s  energy  price  inflation  reached  48.8%, 
significantly exceeding the 37.0% achieved in the euro area. Furthermore, as energy products 
account for a large share of Latvia’s consumer spending, the impact of energy price hikes on 
consumer price inflation was greater than in other countries. Inflation in the construction sector 
reached  19.7%  in  2022.  Besides  the  energy  price  shock,  the  supply  of  metal  and  timber 
products, as well as fertilisers, which were previously imported from Russia and Belarus, has 
been disrupted, leading to a spike in their prices and affecting in particular the agriculture and 
construction sectors. 

Pursuant to Article 21(1) of the RRP Regulation, Latvia has justified the modification of 
35  measures  due  to  objective  circumstances.  Latvia  requested  the  amendment  of  several 
existing measures of the RRP, considering that they were no longer fully achievable based on 
objective circumstances, such as high inflation experienced in 2022, as well as supply chain 
disruptions.  In  addition,  Latvia  proposes  to  modify  measures  to  reflect  the  existence  of 
manifestly better alternatives to achieve the initial ambition. In addition, several targets have 
been  delayed  due  to  a  lack  of  demand  or  the  need  for  longer  procurement  procedures  than 
initially foreseen. 

Latvia’s modified RRP adds the REPowerEU chapter to the original plan, pursuant to 
Article 21c of the RRF Regulation and is a strong response to the geopolitical and energy 
challenges that the European Union has faced since the beginning of 2022. Latvia has one 
of the highest shares of renewable energy in the EU, although this share stagnated  between 
2020 and 2021. Latvia would benefit from accelerating its efforts in the uptake of wind and 
solar  power,  which  is  the  most  viable  and  long-term  solution  to  increase  the  share  of 
renewables.  Latvia’s  RRP  already  includes  measures  to  remove  regulatory  barriers  to  the 
deployment of onshore wind energy and, with the addition of the REPowerEU chapter, Latvia 
will invest in the electricity transmission and distribution networks so to accommodate a higher 
share of variable renewable energy in the near future. The REPowerEU chapter also includes 
measures  aimed  at  improving  the  flexibility  of  the  power  system  (demand  response  and 
storage) and introducing new frameworks for energy communities and self-consumers. It also 
aims  at  accelerating  Latvia’s  synchronisation  with  the  EU  electricity  grid,  a  necessary 
development in the aftermath of Russia’s unprovoked aggression against Ukraine. Moreover, 
the REPowerEU chapter includes an investment in a sustainable biomethane injection point, a 
first necessary step to increase the uptake of this resource at national level. Thus, the measures 
proposed  in  the  REPowerEU  chapter  will  contribute  to  Latvia’s  green  transition  and  help 
address  the  current  energy-related  challenges  as  identified  by  the  country-specific 
recommendations for Latvia in the context of European Semester 2023 cycle. 

The main elements of the  modified RRP and REPowerEU chapter are listed below by 
component: 

1   SWD (2023) 614 final 

3 

 
 
 
 
 
 
Component 1: Climate change and environmental sustainability:  

1.1.1.1.i.  Competitive  rail  passenger  transport  within  the  common  public  transport 
system of the city of Riga: On the basis of Article 21(1) of Regulation 2021/241, Latvia has 
proposed to amend the target with sequential number 3, increasing the length of the electrified 
rail network to 100 km and, at the same time, removing the reconstruction of a station from the 
list of investments. It has also proposed to amend the target with sequential number 4, replacing 
seven electric trains with a battery electric train charging infrastructure including electrification 
of  rail  lines  and  construction  of  a  power  substation  due  to  construction  costs  and  delays  in 
production supply, and the new certification procedure of electric battery trains. 

1.1.1.2.i. Environmentally friendly improvements to the public transport system of the 
city of Riga: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to 
amend the target with sequential number 5, reducing the number of purchased electric transport 
units from 21 to 17 due to due to increased costs resulting from high inflation. At the same 
time,  Latvia  has  proposed  to  make  it  explicit  that  the  construction  of  seven  bus  charging 
stations is part of the investment. 

1.1.1.3.i. Complete bike riding infrastructure: On the basis of Article 21(1) of Regulation 
2021/241,  Latvia  has  proposed  to  amend  the  target  with  sequential  number  6,  reducing  the 
length of built or renovated cycle infrastructure in the cities of Riga and Pieriga from 60 km to 
52 km, as the construction costs have significantly increased, and high inflation for material 
construction caused a negative impact. 

1.2.1.2.i.  Increasing  energy  efficiency  in  business,  in  the  form  of  a  combined  financial 
instrument:  On  the  basis  of  Article  21(1)  of  Regulation  2021/241,  Latvia  has  proposed  to 
amend the target with sequential number 12, increasing the total amount of approved projects 
from EUR 72 million to EUR 108 million taking into account the full cost of the investment.    

1.2.1.4.i. Improving the energy efficiency of public sector buildings, including historical 
buildings: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to amend 
the  target  with  sequential  number  18,  downscaling  the  reduction  of  primary  energy 
consumption in  public buildings with improved energy efficiency  from 4 456 MWh/year to 
3 875 MWh/year due to increased construction costs. 

1.3.1.2.i. Investments in flood risk reduction infrastructure: On the basis of Article 21(1) 
of Regulation 2021/241, Latvia proposed to amend the target with sequential number 26 due 
to  increased  construction  costs.  The  amendment  is  two-fold.  On  the  one  hand,  the  original 
formulation of the target in terms of hectares of protected areas is shifted to a formulation in 
terms of completion of flood risk protection projects. One the other hand, the original ambition 
of the target is downscaled and now covers the completion of 21 projects, including pumping 
stations, protective dikes and one canal (the original target covered 59 000 hectares).  

Component 2: Digital transformation: 

2.1.1.1.i. Modernisation of governance and digital transformation of services, including 
the business environment; 2.1.2.1.i. Centralised Platforms and Systems for Governance; 
2.1.3.1.i. Access to data, sharing and analytics: On the basis of Article 21(1) of Regulation 
2021/241, Latvia has proposed to redistribute funding across these measures resulting in the 
amendment of the targets with sequential numbers 29, 30, 32, 33, 34 and 39 due to unforeseen 
changes in the supply of digital services.   

4 

 
 
 
 
 
2.1.2.2.i.  Latvian  national  federated  cloud:  On  the  basis  of  Article  21(1)  of  Regulation 
2021/241,  Latvia  has  proposed  to  amend  the  targets  with  sequential  numbers  35  and  36, 
modifying  the  technological  solution  for  the  implementation  of  modern  IT  architecture  and 
cloud  solutions  in  the  public  administration,  thus  leading  to  a  better  alternative  for 
implementing the measure. 

2.2.1.r. Creating the full cycle of business digital transformation support with regional 
coverage: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to amend 
the milestone with sequential number 42, broadening the target group of the reform in order to 
reach wider digital transformation of the economy, thus leading to a better alternative for the 
implementation of the measure. 

2.2.1.1.i. Support for the establishment of Digital Innovation Hubs and Regional Focal 
Points: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to amend 
the targets with sequential numbers 43 and 44, and to introduce a new milestone with sequential 
number 44a. The proposal foresees broadening the target group of the reform in order to reach 
wider digital transformation of the economy. In addition, Latvia has proposed to reduce the 
numerical value of the targets and amend their description to provide a more appropriate type 
of measurement reflecting the main aim of the measure. Overall, the change would lead to a 
better alternative for the implementation of the measure.     

2.2.1.2.i. Support for the digitisation of processes in commercial activities: On the basis of 
Article 21(1) of Regulation 2021/241, Latvia has proposed to amend the targets with sequential 
numbers 45 and 46, broadening the target group of the investment in order to reach wider digital 
transformation of the economy, as well as specifying the parties of the grant agreement for both 
targets. Overall, the change would lead to a better alternative for the implementation of the 
measure.  

2.3.1.r.  Development  of  a  sustainable  and  socially  responsible  support  framework  for 
adult learning: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to 
adjust the description of the milestones with sequential numbers 55, 57 and 58 as more effective 
solution – drafting a single regulatory framework - has been identified and a better solution to 
co-implement existing and planned training schemes ensured. These changes would lead to a 
better alternative for the implementation of the measure.   

2.3.1.2.i.  Development  of  digital  skills  of  enterprises:  On  the  basis  of  Article  21(1)  of 
Regulation 2021/241, Latvia has proposed to lower targets with sequential numbers 63 and 64 
concerning digital skills of enterprises due to increased costs of trainings. 

2.3.1.4.i. Development of the approach to individual  learning accounts; On the basis of 
Article 21(1) of Regulation 2021/241, Latvia proposed to lower the intermediate target with 
sequential number 66 due to unexpected delays in the procurement process. 

2.3.2.1.i. Digital skills for citizens, including young people: On the basis of Article 21(1) of 
Regulation 2021/241, Latvia has proposed to  amend the intermediary target with sequential 
number 71, as it is no longer achievable due to unforeseen regulatory bottlenecks. 

2.3.2.3.i.  Closing  the  digital  divide  for  socially  vulnerable  pupils  and  educational 
institutions:  On  the  basis  of  Article  21(1)  of  Regulation  2021/241,  Latvia  has  proposed  to 

5 

 
 
 
 
 
 
delete  the  intermediary  target  with  sequential  number  78  due  to  unexpected  delays  in  the 
procurement process, which have led to delays in the implementation of the measure. 

2.4.1.1.i. Investment construction of passive infrastructure along the Via Baltica corridor 
for  5G  coverage;  2.4.1.2.i.  Broadband  or  very  high  capacity  network  “last  mile” 
infrastructure development: On the basis of Article 21(1) of Regulation 2021/241,  Latvia 
has proposed to delete the target with sequential number 82, related to the Via Baltica corridor 
project, due to compatibility issues with State aid rules that could not have been fully foreseen 
in the planning phase. In light of this, Latvia has proposed to redistribute the underlying budget 
to the measure related to the development of broadband or very high-capacity network “last 
mile” infrastructure, resulting in a more ambitious target with sequential number 83. 

Component 3: Reduction of inequality: 

3.1.1.4.i. Establishment of a Funding Fund for the construction of low-rented dwellings: 
On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to amend the target 
with  sequential  number  102,  by  decreasing  the  number  of  apartments  related  to  approved 
projects by one third due to construction costs, which have increased by 50% due to supply 
chain disruptions and high inflation for construction materials. 

3.1.1.5.i. Development of infrastructure and equipment of educational institutions: On the 
basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to increase the final target 
with sequential number 106 from 20 to 21 schools, by using the financial resources released 
by lowering the target with sequential number 108 of measure 3.1.1.6.i.  

3.1.1.6.i. Purchase of zero-emission vehicles for the performance of municipal functions 
and  related  services:  On  the  basis  of  Article  21(1)  of  Regulation  2021/241,  Latvia  has 
proposed to reduce the target with sequential number 108, as the final target to purchase 15 
school  buses  could  be reached  with  a  lower amount  of RRF funding than initially planned. 
Latvia has proposed to reallocate the released amount to measure 3.1.1.5.i.  

3.1.2.1.i. Access to Public Services and Employment for Persons with Disabilities: On the 
basis  of  Article  21(1)  of  Regulation  2021/241,  Latvia  has  proposed  to  postpone    three 
milestones with sequential numbers 113, 115 and 116, and two targets with sequential numbers 
114 and 117 on retrofitting to improve accessibility of public buildings and housing of persons 
with  disabilities,  due  to  of  achieving  supply  chain  disruptions  that  have  caused  delays  and 
raised costs in the construction sector. To maintain the ambition of the final target, Latvia has 
proposed to mitigate the increase in costs by using the available financial allocation.  

3.1.2.2.i.  Development  of  a  forecasting  tool:  On  the  basis  of  Article  21(1)  of  Regulation 
2021/241, Latvia has proposed to amend the milestones with sequential numbers 119 and 120 
on the development of forecasting tool by postponing them, due to the difficulties encountered 
during the procurement process.  

3.1.2.3.i.  Resilience  and  continuity  of  the  long-term  social  care  service:  On  the  basis  of 
Article 21(1) of Regulation 2021/241, Latvia has proposed to amend the target with sequential 
number  122  and  123  on  the  provision  of  new  long-term  care  services  due  to  supply  chain 
disruptions that have caused delays and raised costs in the construction sector. Latvia has also 
proposed to extend the implementation timeline, reaching the final target of the measure two 
and a half years later. In order to keep the initial target of providing 852 new places close to 

6 

 
 
 
 
 
family, Latvia has proposed to build less buildings with more capacities. In addition, Latvia 
has proposed to reduce the number of agreements with municipalities from 18 to 17, to allow 
the possibility of constructing more buildings in Riga. Finally, to compensate for the increased 
construction costs and maintain the ambition of the measure, Latvia has proposed to use the 
available financial allocation to increase the total budget of the project.  

3.1.2.4.i. Synergistic development of social  and occupational rehabilitation services for 
the promotion of the resilience of people with functional disabilities: On the basis of Article 
21(1) of Regulation 2021/241, Latvia has proposed to amend the milestones with sequential 
numbers 125 and 126 because they are no longer achievable within the timeline estimated in 
the original RRP due to unforeseen issues encountered with the execution of the procurement.  
In addition, Latvia has proposed to amend the milestones with sequential numbers 125 and 126 
due to high inflation. Latvia has proposed to use EUR 0.5 million of the available financial 
allocation to increase the total budget of the project. 

3.1.2.5.i. Labour market participation of unemployed, jobseekers and people at risk of 
unemployment: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to 
amend the milestone with sequential number 128, as the measure’s objective can be achieved 
with  a  better  alternative.  Latvia  has  claimed  that  a  single  digital  tool  for  skills  assessment, 
where  two  skills  tests  would  be  available,  would  be  better  for  user  convenience,  instead  of 
several platforms. 

Component 5: Economic transformation and productivity reform 

Investment 5.1.1.1.i. Development and continuous operation of a fully-fledged innovation 
system governance model: On the basis of Article 21(1) of Regulation 2021/241, Latvia has 
proposed to amend the target with sequential number 155 and the milestone with sequential 
number 156. A better alternative has been identified to revise the innovation system governance 
model  by  putting  Strategic  Steering  groups  as  the  key  coordinating  bodies  for  each  area  of 
research and innovation strategies for smart specialization (RIS3 area), instead of officials from 
the Ministry of Economy and Latvian development agency. 

Investment  5.1.1.2.i.  Support  instrument  for  research  and  internationalization:  On  the 
basis of Article 21(1) of Regulation 2021/241,  Latvia has proposed to amend the milestone 
with  sequential  number  157  and  the  target  with  sequential  number  158.  The  purpose  is  to 
implement  better  alternatives  in  order  to  ensure  effective  support  in  developing  innovation 
clusters. The original plan was to create one competency centre per 'RIS3 smart specialization 
area' (of which there are five); however, after a consultation with stakeholders, it became clear 
that some of the 'natural clusters' did not match well with the categories of specialization areas. 
Thus, Latvia opted for a model where the number of clusters would not be fixed, but they would 
rather  be  selected  in  an open  call  based  on  the merit  of  the  proposals. This  would  give the 
system more flexibility and a way to accommodate the clusters closer to how the businesses 
have  'naturally'  clustered.  While  the  measure  improves  the  coordination  among  the 
stakeholders, the challenges stemming from system fragmentation remain pertinent. Moreover, 
unlike originally intended, separate calls would be organised for i) R&D support, ii) networking 
support, and iii) IPCEI participation. 

Component 6: Rule of law 

7 

 
 
 
 
 
Investment  6.1.2.1.i.  Linking  railway  X-ray  equipment  to  BAXE  and  use  of  artificial 
intelligence  for  the  analysis  of  rail  freight  scanning:  On  the  basis  of  Article  21(1)  of 
Regulation 2021/241, Latvia has proposed to amend the milestones with sequential numbers 
176  and  177,  because  supply  chain  disruptions  have  caused  delays  in  connecting  the  old 
customs cargo database (BAXE) to the new customs database, and that subsequently affected 
the introduction of the new cargo image analysis. On this basis, Latvia has proposed to extend 
the implementation timeline. 

Investment 6.1.2.3.i. Improvement of customs control of received postal items at airport 
customs  control  point:  On  the  basis  of  Article  21(1)  of  Regulation  2021/241,  Latvia  has 
proposed  to  amend  the  milestone  with  sequential  number  180  because  of  delays  in 
procurement. On this basis, Latvia has proposed to extend the implementation timeline of the 
milestone.  

Investment 6.1.2.4.i. Creation of infrastructure for the performance of control services in 
Kundziņsala: On the basis of Article 21(1) of Regulation 2021/241, Latvia has proposed to 
amend the milestones with sequential numbers 181, 182, 183, 184 and 185 because of delays 
in procurement, high inflation in the construction sector and supply chain disruptions. On this 
basis, Latvia has proposed to extend the implementation timeline of the milestones, as well as 
amend  the  description  of  the  milestones  with  sequential  numbers  183  and  185,  as  a  final 
product of the measure is no longer deliverable. 

Investment  6.3.1.1.i.  Modernisation  of  public  administration  and  Investment;  6.3.1.2i. 
Professionalisation of public administration and administrative and capacity building: 
On  the  basis  of  Article  21(1)  of  Regulation  2021/241,  Latvia  has  proposed  to  amend  the 
milestones  with  sequential  numbers  200  and  202.  A  better  alternative  is  identified  for  the 
approval of the competence framework for the public administration. On this basis, Latvia has 
proposed to amend the qualitative indicators of the original RRP.  

Component 7: REPowerEU chapter (new) 

Reform 7.1.r. Transforming the national energy sector: The objective of this measure is to 
reduce the overall reliance on fossil fuels and to develop the potential to become a green energy 
exporting country. The reform is expected to (i) introduce a regulatory framework laying down 
the conditions and procedures for the registration and operation of energy communities, and 
supporting  vulnerable  groups  of  society  (ii)  introduce  a  regulatory  framework  for  self-
consumers  and  owners  of  micro-generator  facilities,  (iii)  lay  down  conditions  for  a  more 
optimised use of existing transmission and distribution networks, and (iv) lay down conditions 
for increasing the uptake of sustainable biomethane to be injected into the existing natural gas 
supply network. 

Investment 7.2.i. Security and stability of energy supply, and synchronisation with the 
Union grid: The objective of the investment is to increase the security and stability of energy 
supply, and to support the synchronisation of the national electricity grid with the Continental 
Europe electricity networks.  Under this investment  measure,  a new 60 MW Battery Energy 
Storage System (BESS) will be installed. Moreover, the investment also encompasses ancillary 
activities aimed at enhancing the cybersecurity of critical infrastructures and ensuring stable 
operation of the transmission network after the synchronisation, in view of a greater integration 
of renewable energy sources (RES) in the national grid. 

8 

 
 
 
 
 
Investment  7.3.i.  Upgrading,  digitalising  and  securing  the  electricity  transmission  and 
distribution networks: This investment consists of sub-investments:  

- 

- 

- 

- 

the  first  is  aimed  at  increasing  the  capacity  of  the  national  electricity  grid  to 
accommodate greater integration of variable renewable energy.  
the second is aimed at modernising energy transmission lines to increase the security 
and stability of supply. The sub-measure will result in the replacement of at least 150 
km of existing medium-voltage overhead power lines with cable lines.   
the third is aimed at digitalising the energy distribution network for a more efficient and 
flexible management of energy flows. The sub-measure will implement an advanced 
smart distribution management solution (ADMS) and provide for the acquisition and 
installation  of  remotely  controlled  medium  voltage  switches  on  cable  lines  in 
transformer substations and on lines at different switching points. 
the fourth is aimed at completing two studies that are expected to contribute to Latvia’s 
development towards becoming a green energy exporting country, and at carrying out 
an  Environmental  Impact  Assessment  for  an  electricity  transmission  line  project 
between Ventspils, Brocēni and Telšiai. 

Investment 7.4.i. Increasing the uptake of sustainable biomethane: This measure is aimed 
at increasing the uptake of sustainable biomethane, in line with the revised Renewable Energy 
Directive 2018/2001/EU. The investment under this measure will provide for the construction 
of  a  new  regional  sustainable  biomethane  injection  point  (BIP),  and  the  acquisition  and 
installation of an IT solution for the management of the new regional BIP, including effective 
methane and biomethane leak detection and prevention solution.  

In  addition,  errors  of  a  clerical  nature  have  been  identified  in  the  text  of  the  Council 
Implementing Decision and have been corrected. 

Table 2: New and modified components and associated costs. 

Component 
Component 1: Climate change and environmental 
sustainability 
Component 2: Digital transformation 
Component 3: Reduction of inequality 
Component 4: Health 
Component 5: Economic transformation and 
productivity reform 
Component 6: Rule of law 
Component 7: REPowerEU chapter 

Status 
Modified 

Modified 
Modified 
Modified 
Modified 

Modified 
New 

Costs (EUR million) 

676,207 

361,293 
378,501  
181,5 
196 

37 
134,743 

Other elements not covered by assessment criteria  

The description of the consistency with other programmes, consistency with the challenges and 
priorities identified in the most recent euro area recommendation, administrative organisation, 
gender equality and equal opportunities for all, consultation process, Member State’s security 
self-assessment for  digital  investments,  communication strategy as reflected in  the previous 
Staff Working Document (2021) 162 final remains valid. 

9 

 
 
 
 
 
 
Latvia has explained that measures included in the REPowerEU chapter will have a positive 
impact  on equal  opportunities for all.  Namely, the  reform 7.1.r.  “Transforming the national 
energy sector” contributes to addressing energy poverty by introducing provisions for local and 
regional  authorities  to  direct  a  part  of  the  amount  of  electricity  produced  in  the  energy 
community, or the economic benefit obtained from it, to vulnerable groups of society as part 
of the regulatory framework for energy communities. 

State  aid  and  competition  rules  fully  apply  to  the  measures  funded  by  the  Recovery  and 
Resilience Facility. Union funds channeled through the authorities of Member States, like the 
RRF funds, become State resources and can constitute State aid. When this is the case and State 
aid  is  present,  these  measures  must  be  notified  and  approved  by  the  Commission  before 
Member States can grant the aid, unless those measures are covered by an existing aid scheme 
or  comply  with  the  applicable  conditions  of  a  block  exemption  regulation,  in  particular  the 
General Block Exemption Regulation (GBER) declaring certain categories of aid compatible 
with the internal market in application of Articles 107 and 108 TFEU. When State aid is present 
and it requires notification, it is the duty of the Member State to notify State aid measures to 
the Commission before granting them, in compliance with Article 108(3) TFEU. In this respect, 
the State aid analysis carried out by Latvia in the RRP cannot be deemed a State aid notification. 
In as far as Latvia considers that a specific measure contained in the RRP entails de minimis 
aid or aid exempted from the notification requirement, it is the responsibility of Latvia to ensure 
full compliance with the applicable rules. 

3.  SUMMARY OF THE ASSESSMENT OF THE PLAN 

3.1. Comprehensive  and  adequately  balanced  response  to  the  economic  and  social 

situation 

Latvia’s modified RRP, along with the new REPowerEU chapter, includes a balanced set 
of reforms and investments contributing to the Union’s economic, social and territorial 
cohesion,  referring  to  the  six  pillars  of  Article  3  of  the  Regulation  (EU)  2021/241.  The 
modifications  of  the  plan  together  with  the  new  REPowerEU  chapter,  only  impact  the 
assessment of the contribution to pillar 1 on green transition. For the other pillars, the nature 
and  extent  of  the  proposed  modifications  of  the  RRP  do  not  affect  the  outcome  of  the 
Commission’s assessment of the initial plan. The modified RRP covers, in a comprehensive 
manner, the six pillars (see table 3). All pillars are covered by at least one component, while 
some components contribute to several pillars. Allocations to the green and digital transitions 
(of respectively 42% and 23%) comply with the targets of the RRF Regulation (of respectively 
37% and 20%). 

Table  3:  Coverage  of  the  six  pillars  of  the  Facility  by  the  new  or  modified  RRP 
components 

Green 
transition 

Digital 
trans-
formation 

Component 1: Climate 
change and environmental 
sustainability 

● 

10 

Smart, 
sustainable 
& inclusive 
growth 

● 

Social and 
territorial 
cohesion 

Health, and 
economic, 
social and 
institutional 
resilience 

Policies 
for the 
next 
generation 

 
 
 
 
 
 
 
 
 
 
Green 
transition 

Digital 
trans-
formation 

Smart, 
sustainable 
& inclusive 
growth 

Social and 
territorial 
cohesion 

Health, and 
economic, 
social and 
institutional 
resilience 

Policies 
for the 
next 
generation 

Component 2: Digital 
transformation 
Component 3: Reduction 
of inequality 
Component 4: Health 
Component 5: Economic 
transformation and 
productivity reform 
Component 6: Rule of law 
Component 7: 
REPowerEU chapter 

● 

● 

○ 

○ 

● 

● 

● 

● 

● 

● 

● 

● 

● 

Key: “●” investments and reforms of the component significantly contribute to the pillar; “○” the component 
partially contributes to the pillar. 

Pillar I: Green transition 

Latvia’s modified RRP, including the new REPowerEU chapter, has a strengthened focus on 
the  green  transition.  The  overall  ambition  of  component  1  of  the  original  RRP  has  been 
preserved and all the measures included in the REPowerEU chapter are expected to contribute 
to  the  mentioned  transition  by  reducing  reliance  on  fossil  fuels  and  by  accelerating  the 
deployment of renewable energy sources. 

*** 

Taking  into  consideration  all  reforms  and  investments  envisaged  by  Latvia,  its  modified 
recovery and resilience plan continues to represent, to a large extent, a comprehensive and 
adequately  balanced  response  to  the  economic  and  social  situation,  thereby  contributing 
appropriately to all six pillars referred to in Article 3 of the RRF Regulation, taking the specific 
challenges and the financial allocation of Latvia into account. This would warrant a rating of 
A under criterion 2.1 in Annex V to the RRF Regulation. 

3.2. Link with country-specific recommendations and the European Semester  

Overall, Latvia’s modified RRP represents a comprehensive and adequate response to 
the economic and social challenges faced by Latvia. Latvia continues to make progress in 
tackling the previously identified challenges, notably through the implementation of measures 
included in the RRP. The modified RRP maintains the six components as the original plan and, 
in addition, includes a new reform and three new investments in the REPowerEU chapter. 

The 2022 and 2023 CSRs invited Latvia to take action in five main policy areas – taxation, 
social protection and healthcare, access to finance and energy. Latvia was recommended 
to broaden taxation, including of property and capital, (2022.1.4., 2023.1.4.), as well as improve 
the adequacy of healthcare (2022.1.5., 2023.1.5) and social protection (2022.1.6., 2023.1.6.). 
Latvia was also recommended to improve the access of small- and medium-sized enterprises 
(SMEs) to finance (2022.3., 2023.3.). Moreover, Latvia was recommended to reduce overall 
reliance  on  fossil  fuels  (2022.4.1.,  2023.4.1.),  accelerate  the  deployment  of  renewables 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2022.4.2.,  2023.4.2.),  ensure  sufficient  interconnection  capacity  (2022.4.2.,  2023.4.4.),  and 
reduce overall energy consumption through energy efficiency measures (2022.4.4, 2023.4.3.). 
Latvia was also invited to step up policy efforts aimed at providing and acquiring skills and 
competences  necessary  for  the  green  transition  (2023.4.5.).  As  the  maximum  financial 
contribution  for  Latvia  has  been  adjusted  downwards,  the  2022  and  2023  structural 
recommendations not related to energy challenges are not considered in the overall assessment.   

The REPowerEU chapter is expected to contribute to addressing energy-related 2022 and 
2023 country-specific recommendations. Notably, the reform measure (7.1.r.) is expected to 
reduce the overall reliance on fossil fuels by accelerating the deployment of renewables. The 
investment measures (7.2.i., 7.3.i., 7.4.i.) are also expected to reduce the overall reliance on 
fossil fuels and to accelerate the deployment of renewable energy by increasing the uptake of 
sustainable  biomethane,  by  digitalising,  upgrading  and  securing  the  national  electricity 
transmission and distribution networks, and by increasing electricity storage and capacity. They 
are  also  expected  to  ensure  sufficient  capacity  of  interconnections  and  to  continue 
synchronisation with the Union electricity grid.   

The modifications of the measures in components 1, 2, 3, 5 and 6 do not materially change 
their  contribution  to  addressing  a  significant  subset  of  the  challenges  identified  in  the 
relevant CSRs, while some of the modifications address parts of the 2023 CSRs. As such, 
the modified plan effectively addresses a significant subset of the challenges identified in the 
relevant country-specific recommendations (CSRs). No reforms are removed and their level of 
ambition is maintained in all the components.. The reforms of the digital component related to 
digital transformation of businesses (2.2.1.r.) and development of support framework for adult 
learning  (2.3.1.r.)  are  improved  to  clarify  the  target  groups  and  account  for  delays  in 
procurement  procedures  and  continue  to  address  the  country-specific  recommendations 
regarding  digitalisation  (CSR  2020.3.7.,  2019.3.5.)  and  skills  and  adults  learning  (CSR 
2020.2.4., 2019.2.2., 2019.2.4.). Despite delays to the implementation and cost increases for 
part of the investments, only one is removed. The investment on infrastructure for 5G coverage 
along  the  Via  Baltica  corridor  (2.4.1.1.i.)  has  been  removed,  however  the  funds  are 
redistributed to increase the ambition of  the development of broadband or very high-capacity 
network  “last  mile”  infrastructure  (2.5.1.2.i.),  thus  the  modified  component  on  digital  trans 
continues 
the  country-specific  recommendations  on  digital 
transformation and infrastructure (CSR 2020.3.7., 2019.3.5.) and skills, including digital skills 
(CSR 2020.2.4., 2019.2.2., 2019.2.4). It is positive that, with the amendments, the component 
on  inequality  reduction  is  supported  with  an  additional  funding,  in  order  to  maintain  the 
ambition to the extent possible, despite the high inflation and as such the modified component 
on inequality reduction continues to address the country-specific recommendations on social 
inclusion (CSR 2020.2.1., 2020.2.4., 2019.2.1., 2019.2.3), affordable housing (CSR 2019.3.2.) 
and regional disparities (CSR 2019.4.1.). Moreover, at the time of submission of the modified 
RRP, Latvia has made substantial progress in addressing the recommendations related to fiscal 
policy  (2022),  anti-money  laundering  (2020),  liquidity  support  to  combat  the  impact  of  the 
crisis (2020) as well as expanding public investment in green and digital transitions (2022). 

to  significantly  address 

The  REPowerEU  chapter  is  expected  to  contribute  to  addressing  energy-related 
challenges  (CSR  2022.4.,  CSR  2023.4.).  Notably,  the  reform  on  transforming  the  national 
energy sector (7.1.r) in the REPowerEU chapter is expected to reduce the overall reliance on 
fossil fuels by accelerating the deployment of renewables. The investments (7.2.i, 7.3.i, 7.4.i) 

12 

 
 
 
 
 
are also expected to reduce the overall reliance on fossil fuels and to accelerate the deployment 
of  renewable  energy,  by  increasing  the  uptake  of  sustainable  biomethane,  by  digitalising, 
upgrading and securing the national electricity transmission and distribution networks, and by 
increasing  electricity  storage  and  capacity.  They  are  also  expected  to  ensure  sufficient 
interconnection  capacity  and  to  continue  the  synchronisation  with  the  Continental  Europe 
electricity  networks.  The  investment  in  installing  a  Battery  Energy  Storage  System  is 
specifically  conceived  as  a  complementary  action  to  a  cross-border  synchronisation  project 
involving  Latvia,  Lithuania,  Estonia  and  Poland.  Component  1  of  the  RRP  contains 
investments in energy efficiency renovations of public and multi-apartment buildings, which 
partly address the challenge. Component 2 of the RRP includes measures aimed to improve 
participation in adult learning and better skills management; however, the modified plan does 
not include any new policy efforts aimed at the provision of green skills. 

*** 

Taking  into  consideration  the  reforms  and  investments  envisaged  by  Latvia,  its  modified 
recovery  and  resilience  plan  is  expected  to  contribute  to  effectively  addressing  all  or  a 
significant  subset  of  challenges  identified  in  the  country-specific  recommendations,  or 
challenges  in  other  relevant  documents  officially  adopted  by  the  Commission  under  the 
European  Semester,  and  the  modified  recovery  and  resilience  plan  represents  an  adequate 
response to the economic and social situation of Latvia. This would warrant a rating of A under 
criterion 2.2 in Annex V to the RRF Regulation. 

3.3. Growth  potential,  job  creation,  economic,  institutional  and  social  resilience, 
European  Pillar  of  Social  Rights,  mitigating  the  impact  of  the  crisis,  and  social 
territorial cohesion and convergence  

*** 

The nature and extent of the proposed modifications to Latvia’s recovery and resilience plan 
do not have a material impact on the previous assessment (rating of A) of the plan’s impact on 
the  growth  potential,  job  creation,  and  economic,  social  and  institutional  resilience  of  the 
Member State, on contributing to the implementation of the European Pillar of Social Rights, 
including  through  the  promotion  of  policies  for  children  and  youth,  and  on  mitigating  the 
economic and social impact of the COVID-19 crisis, thereby enhancing the economic, social 
and territorial cohesion and convergence within the Union. 

3.4. The principle of ‘do no significant harm’  

The modified RRP of Latvia, including the REPowerEU chapter, is expected to continue 
to ensure that no measure included in the plan does significant harm to the environmental 
objectives within the meaning of Article 17 of the Taxonomy Regulation ((EU) 2020/852). 
None of the measures included in Latvia’s REPowerEU chapter require a ‘do no significant 
harm’ (DNSH) derogation.  

Latvia has conducted and provided an adequate  DNSH assessment of  the  reform and of  all 
investments included in the REPowerEU chapter. Similarly, for modified measures that require 

13 

 
 
 
 
 
 
 
an update of the existing assessment, Latvia has provided the revised assessments accordingly. 
The  DNSH  assessment  was  performed  in  line  with  the  methodology  set  out  in  the 
Commission’s  Technical  Guidance  on  the  application  of  DNSH  under  the  RRF  Regulation 
(2021/C58/01). It covers the six environmental objectives, namely climate change mitigation, 
climate  change  adaptation,  sustainable  use  and  protection  of  water  and  marine  resources, 
circular  economy,  pollution  prevention  and  control,  and  protection  and  restoration  of 
biodiversity and ecosystems. The assessment applies a two-step approach and is performed at 
measure-level, meaning that each reform and investment is assessed individually. The first step 
assesses whether there is a risk that a measure could do significant harm to one or more of the 
environmental objectives (Part 1 DNSH assessment). In cases where the analysis identifies a 
risk, a more detailed assessment is performed (Part 2 DNSH assessment).  

Based  on  the  information  provided  by  the  Latvian  authorities,  there  is  either  no  risk  of 
significant harm or, where a risk has been identified, a more detailed assessment is performed 
demonstrating  the  absence  of  significant  harm  associated  with  the  implementation  of  the 
measure. 

The majority of  the modifications to  Latvia’s RRP concern decreasing  targets  and delaying 
implementation due to the impact of inflation and supply-chain disruptions. Any such decrease 
did  not  necessitate  a  revised  DNSH  assessment.  However,  for  measures  that  have  been 
substantially  amended  or  introduced  in  the  context  of  the  revision,  such  as  the  measures 
introduced  in  the  REPowerEU  chapter,  Latvia  has  provided  revised  and  new  DNSH 
assessments.  

*** 

Taking into consideration the assessment of all the measures envisaged, no measure for the 
implementation  of  reforms  and  investments  projects  included  in  Latvia’s  modified  RRP, 
including  its  REPowerEU  chapter,  is  expected  to  do  a  significant  harm  to  environmental 
objectives within the meaning of Article 17 of Regulation (EU) No 2020/852 (the principle of 
‘do no significant harm’). This would warrant a rating of A under the assessment criterion 2.4 
of Annex V to the RRF Regulation. 

3.5. Green transition 

The measures in the REPowerEU chapter are expected to significantly contribute to the 
green  transition,  or  to  addressing  the  challenges  resulting  therefrom,  as  well  as  to  the 
achievement of the Union’s 2030 energy and climate targets and the Union’s objective of 
climate neutrality by 2050, by preparing the national energy grid for a higher integration 
of renewable energy and by increasing the uptake of sustainable biomethane. The reform 
is expected to  (i) introduce an enabling framework for energy communities, self-consumers 
and owners of micro-generators, (ii) lay down conditions for a more efficient use of existing 
transmission and distribution infrastructures, and (iii) lay down conditions for increasing the 
uptake of sustainable biomethane to be injected into the existing natural gas supply network. 
The investment in the  security  and stability  of  energy supply, and synchronisation with  the 
Union grid will further contribute to Latvia’s green transition away from fossil fuels in general 
and  Russian  energy  imports  in  particular.  The  investment  in  upgrading,  digitalising  and 

14 

 
 
 
 
 
 
securing the electricity transmission and distribution networks is expected to accommodate a 
higher  amount  of  variable  renewables  in  Latvia’s  goal  to  become  a  clean  energy  exporting 
country.  The  investment  in  sustainable  biomethane  will  complement  the  national  effort  to 
increase the share and accelerate the deployment of renewable energy sources. All measures 
included in the REPowerEU chapter are, therefore, expected to significantly contribute to the 
green transition, or to addressing the challenges resulting therefrom.  

Climate target 

The  measures  in  the  modified  RRP  (including  the  REPowerEU  chapter)  that  support 
climate change objectives account for  42% of the plan’s total allocation (i.e. above the 
37%  target),  based  on  the  methodology  for  climate  tracking  set  out  in  Annex  VI  to 
Regulation (EU) 2021/241. 

Additionally,  the  proposed  measures  under  the  REPowerEU  chapter  in  support  of  climate 
change objectives account for 100% of the chapter’s total allocation (i.e. more than the 37% 
required),  based  on  the  methodology  for  climate  tracking  set  out  in  Annex  VI  to  that 
Regulation.  All  investments  under the chapter were assigned  to  the intervention field  033  - 
Smart Energy Systems (including smart grids and ICT systems) and related storage. 

*** 

Taking into consideration the assessment of all the measures envisaged, the modified recovery 
and resilience plan, including its REPowerEU chapter, is expected, to a large extent, to make 
a significant contribution to the green transition or to address the challenges resulting from it 
and ensures that at least 37% of its total allocation contributes to the climate target. At least 
37% of the total estimated costs of the REPowerEU chapter contribute to the climate target. 
This would warrant a rating of A under criterion 2.5 of Annex V to the RRF Regulation.  

3.6. Digital Transition 

The modified Latvian RRP broadly maintains its ambition towards the digital transition. 
The  modified  RRP  continues  to  contribute  towards  the  digital  transition  of  businesses, 
infrastructure, and public administration, as well as to foster the development of digital skills. 
The  modified  RRP  includes  26  reforms  and  investments  with  a  digital  target,  resulting  in 
contribution towards the digital transition of 23% (i.e. more than the 20% required) of the total 
allocation, based on the methodology for digital tagging set out in Annex VII. 

Latvia has not proposed to include any new measures related to the digital transition of 
the economy in the modified RRP. A number of measures are proposed to be modified, while 
one target is proposed to be deleted to defer the associated envelope towards another measure 
within the same component. The modified measures primarily relate to the identification of 
better alternatives for implementing the measures and the modification related to the delay in 
procurement  and  implementation,  primarily  due  to  unexpected  lengthier  preparatory 
procedures  than  initially  planned.  Moreover,  when  assessing  the  original  RRP,  measure 
1.2.1.5.i. of component 1 (Green Transition) was correctly assigned to the 033 - Smart Energy 
Systems  (including  smart  grids  and  ICT  systems)  and  related  storage  intervention  field,  to 
which a 100% climate contribution coefficient and a 40% digital contribution coefficient are 

15 

 
 
 
 
 
 
associated as per methodology in Annex IV to the RRF Regulation. However, the 40% digital 
contribution for the abovementioned measure was wrongly left out in the final table of climate 
and digital tagging included in the SWD accompanying the Commission proposal for a positive 
assessment  of  the  initial  RRP  (SWD  (2021)  162  final).    As  part  of  the  current  RRP 
modification,  the  Commission  assessed  that  the  measure,  alongside  a  100%  climate 
contribution coefficient, should also be attributed a 40% digital contribution coefficient, in line 
with the methodology contained in Annex VI to the RRF Regulation.   

Following the abovementioned amendments, the digital contribution of the RRP is increased 
to 23%.  

The digital component of the modified RRP still significantly contributes to and covers 
all the aspects of the digital transformation, especially concerning the digital transition of 
the public and private sectors, skills, and connectivity. The Commission’s assessment of the 
initial  RRP,  as  detailed  in  SWD  (2021)  162  final,  was  that  the  measures  envisaged  in  the 
original RRP were expected, to a large extent, to significantly contribute to the digital transition 
or to address the challenges resulting from it and ensure that at least 20% of its total allocation 
contributed to support digital objectives. This warranted a rating of A under criterion 2.6 of 
Annex V to  the RRF Regulation. The digital component continues to  structurally address  a 
number  of  digital  transition  challenges  that  are  important  for  Latvia.  The  modified  RRP  is 
expected  to  continue  to  focus  on  creating  medium-  and  long-term  changes  to  improve  the 
competitiveness of the Latvian economy. 

The REPowerEU chapter is expected to contribute to the digital transition and to addressing 
the  resulting  challenges,  by  investing  in  the  digitalisation  of  the  electricity  distribution  and 
transmission networks, and in the digital security of critical energy infrastructures. However, 
in accordance with Article 21c(5) of Regulation (EU) 2021/241, reforms and investments in 
the  REPowerEU  chapter  are  not  to  be  taken  into  account  when  calculating  the  plan’s  total 
allocation for the purpose of applying the digital target requirement set by that Regulation. 

*** 

Taking into consideration the assessment of all the measures envisaged, the modified recovery 
and  resilience  plan  is  expected,  to  a  large  extent,  to  make  a  significant  contribution  to  the 
digital transition or to address the challenges resulting from it and ensures that at least 20% 
of  its  total  allocation  (excluding  the  measures  in  the  REPowerEU  chapter)  contributes  to 
supporting digital objectives. This would warrant a rating of A under criterion 2.6 of Annex V 
to the RRF Regulation 

3.7. Lasting impact of the plan 

The overall nature and extent of the modifications have  no impact on Latvia’s growth 
potential,  and  economic  and  social  resilience  in  the  medium  term.  The  changes  in 
investments are tied with the trials stemming from economic and geopolitical challenges due 
to Russia’s unprovoked invasion of Ukraine and its impact on supply chain and inflation. These 
challenges are proportionally and reasonably reflected in the modified RRP and have no impact 
on its structural long-term impact. In particular, the RRP is still intended to improve labour 
supply, with measures such as upskilling and reskilling, and helping private firms to become 
greener, digital and more innovative, with energy efficiency and R&D support measures. 

16 

 
 
 
 
 
The new reform and investments in the REPowerEU chapter are expected to have lasting 
positive effects on the Latvian economy and boost its green and digital transitions.  The 
REPowerEU  reform  and  investments  are  expected  to  have  a  lasting  impact  on  the  national 
energy sector and contribute to the green transition, by promoting energy communities, self-
consumers and self-generation, and by upgrading the electricity distribution and transmission 
networks to meet the challenges linked to i) a higher integration of variable renewables, ii) a 
decoupling from Russian and Belarusian energy systems, and iii) Latvia’s ambition to become 
a clean energy exporting country. 

*** 

The nature and extent of the proposed modifications to Latvian recovery and resilience plan 
do not have an impact on the previous assessment (rating of A) of the lasting impact of the 
plan. 

3.8. Milestones, targets, monitoring and implementation 

The  nature  and  extent  of  the  proposed  modifications  to  Latvia’s  RRP  do  not  have  an 
impact on the previous assessment of the effective monitoring and implementation of the 
RRP. The milestones and targets of the modified Latvian RRP enable an adequate monitoring 
of the plan’s implementation. The milestones and targets reflect the key implementation steps 
of the measure and, thus, are relevant for the implementation of the proposed changes. Each 
measure has, on average, one milestone and one target. The first step is usually a milestone that 
tracks the initiation of implementation, often the publication of the relevant legislation or call 
for tender. The second step is, wherever appropriate, a target monitoring the accomplishment 
of a tangible objective, such as the outcome of a certain number of projects. The milestones 
and targets appear clear, relevant, acceptable, and robust to ensure that their completion can be 
traced and verified. 

The performance of the new reform and investments included in the REPowerEU chapter 
will be assessed on the basis of the achievement of clear, relevant and robust milestones 
and targets. The reform contains four milestones reflecting the key steps and deliverables. The 
milestones and targets of the investments are consistent with the underlying objectives, cost 
estimates and the indicative implementation timeline, allowing to ensure that their completion 
can be traced and verified.  

The  overall  organisational  arrangements  remain  unchanged  and  the  adequacy  of  the 
RRP’s  implementation  arrangements  has  been  further  strengthened.  The  Cabinet 
Regulations  on  the  implementation  of  RRF  investments  includes  references  to  the  relevant 
exclusion criteria, to ensure the protection of the financial interests of the Union in accordance 
with  Article  136  of  Regulation  No.  1046/20182.  The  existing  EU  funds  management  and 
control system KPVIS is used as a tool for collecting data held by the Enterprise Register and 

2   Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the 
financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) 
No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 
223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 
966/2012. 

17 

 
 
 
 
 
 
 
the Ministry of the Interior’s Information Centre, for the purposes of checking the compliance 
with the exclusion criteria. In addition, appropriate horizontal checks pursuant to Article 11.2 
of the Law on International Sanctions and National Sanctions of the Republic of Latvia will be 
carried out.  

*** 

The arrangements proposed by Latvia in its modified recovery and resilience plan are expected 
to  be  adequate  to  ensure  effective  monitoring  and  implementation  of  the  recovery  and 
resilience  plan,  including  the  envisaged  timetable,  milestones  and  targets,  and  the  related 
indicators. This would warrant a rating of A under the assessment criterion 2.8 of Annex V to 
the RRF Regulation. 

3.9. Costing 

Latvia  has  provided  individual  estimated  costs  for  all  new  cost-inducing  measures 
included under the REPowerEU chapter. Latvia has also provided individual justifications 
for  all  the  measures  whose  modifications  entailed  a  change  in  the  cost  estimates  or  related 
targets, including on the proportionality of the change in targets proposed by the amendments. 

The cost information provided by Latvia is overall sufficiently detailed and substantiated. 
Latvia provided estimates and assumptions on costs using the standard template table, 
which was intended to summarise key information and evidence on costing. Latvia also 
submitted  additional  supporting  documents  for  the  cost  estimates,  including  tender  offers, 
references to comparable investments conducted in the past, as well as detailed cost estimates 
prepared by qualified experts. Moreover, Latvia provided different vintages of its construction 
cost forecast, which justified inflation-related increase in costs. 

The assessment of the cost estimates and supporting documents shows that most of the costs 
of the new measures are well justified, reasonable and plausible. Moreover, the changes in the 
cost estimates of the modified measures are sufficiently justified and proportional. Finally, the 
estimated total cost of the RRP is in line with the principle of cost-efficiency and commensurate 
with the expected national economic and social impact. 

Reasonable costs  

Overall, the assumptions used by Latvia to estimate the costs of the new measures, including 
those in the REPowerEU chapter, provide a reasonable explanation of the key cost drivers of 
the  measures.  The  calculations  are  generally  clearly  spelled  out,  allowing  to  identify  the 
methodology used, even if for a small number of measures this information is not as detailed. 
The  new  measures  included  in  Latvia’s  RRP,  including  those  in  the  REPowerEU  chapter, 
comply with the eligibility criteria set out in the RRF Regulation. All costs are incurred after 
February 2020, and after February 2022 for the measures in the REPowerEU chapter. Value-
added tax (VAT) is not included in the cost estimates. In the case of measures being amended 
under  Article  21(1)  of  Regulation  (EU)  2021/241  for  cost-related  reasons,  sufficient 
information has been provided to justify the objective circumstances underpinning the changes 
in the cost estimates or related target. In this context, the reasonability of the cost estimates, 

18 

 
 
 
 
 
 
taking  into  account  the  new  measures,  including  those  in  the  REPowerEU  chapter  and  the 
amended ones, has been established to a medium extent. 

Plausible costs  

The amount of estimated costs of new measures, including those in the REPowerEU chapter, 
is in line with the nature and type of the envisaged reforms and investments. For most of these 
measures, Latvia provided supporting documents and links to online sources to substantiate the 
cost estimates, including explanations on how past projects relate to the cost estimates of new 
measures.  For  a  few  measures,  the  justification  for  the  cost  was  based  on  particularity  of 
circumstances, which limited the assessment of their plausibility. Sufficient information has 
been provided to  justify the objective circumstances of the changes in  the cost  estimates or 
related  targets.  Considering  the  limitations  of  an  ex-ante  assessment  of  cost  estimates,  the 
amounts  proposed  for  financing  were  deemed  appropriate  and  seen  as  establishing  the 
plausibility of the cost estimates to a medium extent.  

No double funding  

Latvia  has  indicated  for  each  individual  new  measure,  including  those  in  the  REPowerEU 
chapter, that the costs to be financed by the RRF will not be funded at the same time by other 
Union  funding  sources.  Furthermore,  the  framework  to  prevent,  detect  and  correct  double 
funding has not been altered by the modification of the RRP. 

Commensurate and cost-efficient costs  

The  total  cost  of  the  modified  Latvian  RRP  is  commensurate  with  the  expected  social  and 
economic  impact  of  the  envisaged  measures.  The  RRP  is  expected  to  effectively  address  a 
significant subset of challenges identified in the CSRs. The main objectives of the RRP are to 
foster the twin transitions, improve Latvia’s growth potential, job creation and economic, social 
and institutional resilience, thereby reducing its vulnerability to shocks. The RRP contributes 
to  strengthening  social  cohesion  and  social  protection  and  to  the  implementation  of  the 
European  Pillar  of  Social  Rights.  The  RRP  enhances  the  economic,  social  and  territorial 
cohesion and convergence within the Union. The economic and social impact of the RRP, in 
combination  with  the  positive  cost  assessment,  indicates  that  the  cost  is  in  line  with  the 
principle of cost-efficiency. 

*** 

The justification provided by Latvia on the amount of the estimated total costs of the modified 
recovery  and  resilience  plan  is  to  a  medium  extent  reasonable,  plausible,  in  line  with  the 
principle of cost-efficiency and is commensurate to the expected national economic and social 
impact.  

Latvia provided sufficient information and evidence that the amount of the estimated cost of 
the reforms and investments of the modified recovery and resilience plan to be financed under 
the Facility is not covered by existing or planned Union financing.  

This would warrant a rating of B under the assessment criterion 2.9 of Annex V to the RRF 
Regulation. 

19 

 
 
 
 
 
3.10.  Controls and audit  

The  previous  assessment  had  concluded  on  the  adequacy  of  the  control  and  audit 
arrangements proposed by Latvia (Rating A) under criterion 2.10 of Annex V to the RRF 
Regulation.  The  nature  and  extent  of  the  proposed  modifications  to  Latvia’s  RRP  do  not 
impact the previous positive assessment, as the new reform and investments included in the 
REPowerEU chapter will be subject to the same audit and control procedures as those currently 
in place for the other measures of the plan.  

*** 

The nature and extent of the proposed modifications to Latvia’s recovery and resilience plan 
do not have a material impact on the previous assessment (rating of A) of the adequacy of the 
control and audit arrangements proposed by Latvia. 

3.11.  Coherence 

The modified RRP presented by Latvia is structured around seven coherent components, 
which form a balanced and adequate response in view of the country’s main challenges. 
The modification of the RRP amends the six existing components and integrates an additional 
(seventh) component, the REPowerEU chapter. 

The amendments to the existing  RRP are  targeted, and  only  one measure is  removed. 
Therefore,  these  targeted  amendments  to  the  existing  RRP  do  not  change  the  previous 
assessment that the reforms and investments included in the plan are consistent and mutually 
reinforcing.  At  the  level  of  the  modified  RRP,  all  components  continue  to  pursue 
complementary objectives, with no contradictions.  

The measures included in the REPowerEU chapter are built around a consistent package 
of a reform encompassing four reform actions, and three investments. These measures, 
together  with  the  measures  included  in  component  1  on  climate  change  and  environmental 
sustainability, create a mutually reinforcing response to the country’s energy challenges related 
to energy security and increasing the share of renewable energy. The reform will facilitate the 
efficient use of the current capacity of the grid and promote self-generation. The investments 
will increase the capacity of the grid to accommodate a higher amount of variable renewables, 
accelerate  the  synchronisation  of  the  national  grid  with  Union  grid,  and  increase  storage 
capacity.  All  these  interventions  are  intrinsically  linked  to  reforms  on  the  wind  farm 
development included in component 1.  

In order to promote wider coherence across instruments, notably with the European cohesion 
policy funds, a balanced territorial allocation of resources is encouraged. 

*** 

The nature and extent of the proposed modifications to Latvia’s recovery and resilience plan 
do not have a material impact on the previous assessment (rating of A) of the coherence of the 
actions proposed by Latvia.  

20 

 
 
 
 
 
 
 
 
3.12.  REPowerEU 

The measures included in the REPowerEU chapter are expected to contribute to the objectives 
under Article 21c(3), points (b), (c) and (e) of Regulation (EU) 2021/41. The investment  in 
sustainable biomethane is expected to increase the uptake of this source by creating a regional 
injection point and by establishing a legal framework for injecting sustainable biomethane into 
the  existing  natural  gas  network.  The  investment  in  the  modernisation,  digitalisation  and 
security of the electricity grid is expected to increase the share and accelerate the deployment 
of renewable  energy, by implementing smart  grid management solutions, both transmission 
and distribution levels, and by increasing  the national  grid capacity to  accommodate  higher 
integration  of  renewables.  The  reform  aims  at  addressing  energy  poverty  by  establishing  a 
favourable  regulatory  framework  for  energy  communities,  and  by  introducing  under  this 
framework initiatives supporting vulnerable groups. The investment in the construction of a 
Battery  Energy  Storage  System  is  expected  to  contribute  to  addressing  internal  and  cross-
border energy transmission, as well as distribution bottlenecks resulting from the progressive 
desynchronisation of the national grid from Russian and Belarusian energy infrastructures. This 
investment should also support electricity storage and increase energy security. 

The measures included in the REPowerEU chapter are coherent with the efforts of Latvia to 
achieve the objectives set out in Article 21c(3) of Regulation (EU) 2021/41, taking into account 
the measures included in the original RRP, as well as other nationally funded or Union-funded 
complementary  or  accompanying  measures.  Investment  7.2.i.  –  ‘Security  and  stability  of 
energy supply, and synchronisation with the Union grid’ is complementary to a cross-border 
project  financed  by  the  Connecting  Europe  Facility.  Investment  7.3.i.  –  ‘Upgrading, 
digitalising  and  securing  the  electricity  transmission  and  distribution  networks’  presents 
synergies  with  investment  1.2.1.5.i.  –  ‘Modernisation  of  electricity  transmission  and 
distribution networks’ contained in the original RRP. The chapter’s objectives are aligned with 
Latvia’s efforts to further reduce reliance on fossil fuels, to accelerate the green transition, and 
to become a clean energy exporting country. 

As  part  of  the  consultation  process  with  stakeholders,  a  public  consultation  on  the  draft 
modified plan and REPowerEU chapter was organised from 18 May 2023 to 1 June 2023, on 
the dedicated legislative portal. A total of 12 contributions were received from four partners: 
the  Green  Freedom  Association,  the  Latvian  Association  of  Municipalities,  the  Latvian 
Chamber of Commerce and Industry, Latvian Information Technology Clusters. Latvia reports 
that  all  received  comments  have  been  examined  in  cooperation  with  line  ministries  and 
explanations were provided to stakeholders on the follow-up action. As the proposals advanced 
by stakeholders participating in the consultation were already addressed by existing measures 
in the national RRP or in other EU funds operating programmes, Latvia has clarified that the 
received inputs were not found to be relevant for REPowerEU measures. 

*** 

Taking into consideration the assessment of all  the measures envisaged in the REPowerEU 
chapter, the chapter is expected, to a large extent, to contribute effectively to energy security, 
the diversification of the Union’s energy supply, an increase in the uptake of renewables and 
in energy efficiency, an increase of energy storage capacities or the necessary reduction of 
dependence on fossil fuels before 2030. This would warrant a rating of A under criterion 2.12 
of Annex V to the RRF Regulation.   

21 

 
 
 
 
 
3.13.  Cross-border or multi-country dimension or effect  

The REPowerEU chapter is assessed to have, to a large extent, a cross-border or multi-
country dimension or effect. The REPowerEU chapter contributes to securing energy supply 
in the Union as a whole, by accommodating a higher integration of renewable energy through 
smart grid management solutions, by modernising and securing electricity infrastructures, and 
by accelerating the synchronisation of the Baltics’ electricity grid with  the Union grid.  The 
REPowerEU chapter also contributes to reducing the dependency on fossil fuels, by increasing 
the uptake of sustainable biomethane, and by investing in the modernisation, digitalisation and 
security of the power grid to accommodate a greater uptake of renewable energy sources.  

Of the four measures in the Latvian REPowerEU chapter, two have a cross-border and 
multi-country dimension and effect. The investment measure covering the installation of a 
Battery Energy Storage System (BESS) is precisely aimed at complementing a cross-border 
project implemented by Latvia, Lithuania, Estonia and Poland, with the objective of ensuring 
full  synchronisation  of  the  Baltic  States’  electricity  networks  with  the  Continental  Europe 
network.  This  investment  also  encompasses  ancillary  activities  aimed  at  enhancing 
cybersecurity  of  critical  infrastructures  and  ensuring  stable  operation  of  the  transmission 
network after the synchronisation, in view of a greater integration of renewable energy sources 
(RES). The investment on upgrading, digitalising and securing the electricity transmission and 
distribution networks also has a cross-border and multi-country dimension and effect, as it is 
expected to contribute to removing bottlenecks in energy flows and facilitating the integration 
of RES in the networks. The two investments account for 99% of the value of the REPowerEU 
chapter. 

Table 4: REPowerEU measures 

REPowerEU measure 

7.1.r. Transforming the national energy sector 
7.2.i. Security and stability of energy supply, and 
synchronisation with the Union grid   
7.3.i. Upgrading, digitalising and securing the 
electricity transmission and distribution networks 
7.4.i. Increasing the uptake of sustainable biomethane 

Costs 
(EUR million) 
- 
60.3 

Contribution to 
the target in % 
- 
45% 

72.9 

1.5 

54% 

- 

*** 

Taking into consideration the assessment of all the measures envisaged in the REPowerEU 
chapter, the measures in the chapter are expected, to a large extent, to have a cross-border or 
multi-country dimension or effect. This would warrant a rating of A under criterion 2.13 of 
Annex V to the RRF Regulation. 

22 

 
 
 
 
 
 
 
 
 
ANNEX I: CLIMATE TRACKING AND DIGITAL TAGGING  

Measure/Sub-Measure Name 
(with ID) 

Budget 
(EUR) 

Climate 

Digital 

Int. Field 

Coeff. 
% 
100% 

Int. Field 

Coeff. 
% 

74.400.000 

067 

1.1.1.1.i.1. Competitive rail 
passenger transport in the common 
public transport system of the city of 
Riga (acquisition of electric rolling 
stock) 
1.1.1.1.i.2. Competitive rail 
passenger transport in the common 
public transport system of the city of 
Riga (railway modernisation -TEN-
T) 
1.1.1.1.i.3.  Competitive rail 
passenger transport in the common 
public transport system of the city of 
Riga (railway modernisation) 
1.1.1.2.i.1. Environmental 
improvements in the city of Riga’s 
public transport system (clean urban 
transport) 
1.1.1.2.i.2. Environmental 
improvements in the city of Riga’s 
public transport system (clean urban 
transport infrastructure) 
1.1.1.3.i. Complete rolling 
infrastructure – (cycling 
infrastructure) 
1.2.1.1.i. Improving the energy 
efficiency of multi-apartment 
buildings and transition to renewable 
energy technologies 
1.2.1.2.i. Increasing energy 
efficiency in business, which is 
planned to be implemented 
nationally in the form of a combined 
financial instrument 
1.2.1.3.i. Improving municipal 
buildings and infrastructure by 
promoting the transition to 
renewable energy technologies and 
improving energy efficiency 
1.2.1.4.i. Improving the energy 
efficiency of public sector buildings, 
including historical buildings 
1.2.1.5.i. Modernisation of 
electricity transmission and 
distribution networks 

32.450.000 

067 

100% 

40.250.000 

069 bis 

100% 

14.270.000 

n/a[1] 

100% 

97.285.492 

073 

100% 

34.514.008 

075 

100% 

57.282.000 

025 bis 

100% 

120.586.000 

024 ter 

100% 

29.304.000 

026 bis 

100% 

23.956.000 

026 bis 

100% 

80.000.000 

033 

100% 

033 

40% 

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Measure/Sub-Measure Name 
(with ID) 

Budget 
(EUR) 

Climate 

Digital 

Int. Field 

Coeff. 
% 
100% 

Int. Field 

Coeff. 
% 

36.630.000 

025ter 

1.3.1.1.i.1. Capacity building for 
rescue services, in particular the 
upgrading of the infrastructure and 
the logistical base of the VUGD (tag 
increased to 100% - see section 4.5 
of the original SWD(2021) 162 
final) 
1.3.1.2.i. Investments in flood risk 
reduction infrastructure 
2.1.1.1.i. Administration 
modernisation and digital 
transformation of services, including 
business environment 
2.1.2.1.i. Centralised governance 
platforms and systems 
2.1.2.2.i. National Federal Cloud of 
Latvia 
2.1.3.1.i. Data availability, sharing 
and analysis 
2.2.1.1i. Support for the 
establishment of Digital Innovation 
Hubs and Regional Contact Points  
2.2.1.2.i. Support for the digitisation 
of processes in commercial activities 
2.2.1.3.i. Aid for business 
introduction of new products and 
services 
2.2.1.4.i. Financial instruments to 
facilitate the digital transformation 
of economic operators 
2.2.1.5.i. Fostering the digital 
transformation of media companies 
2.3.1.1.i. Delivering high-level 
digital skills 
2.3.1.2.i. Development of key digital 
skills of enterprises 
2.3.1.3.i. Development of a self-
accompanied training approach for 
ICT specialists 
2.3.1.4.i. Development of the 
approach to individual learning 
accounts  
2.3.2.1.i Digital skills for citizens, 
including young people 

32.967.000 

035 

100% 

13.677.280 

011 

100% 

011 

055 

011 

010 

010 

010 

100% 

100% 

100% 

100% 

100% 

100% 

010 

100% 

010 

108 

108 

108 

100% 

100% 

100% 

100% 

108 

100% 

108 

100% 

68.707.920 

12.490.800 

33.986.000 

10.000.000 

40.000.000 

24.300.000 

45.143.000 

5.700.000 

17.000.000 

20.000.000 

7.600.000 

14.306.000 

12.632.000 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Measure/Sub-Measure Name 
(with ID) 

Budget 
(EUR) 

2.3.2.2.i. Development of state and 
local government digital 
transformation skills and capabilities 
2.3.2.3.i. Closing the digital divide 
for socially vulnerable students and 
educational institutions  
2.4.1.2.i. Broadband or very high 
capacity network “last mile” 
infrastructure development 
3.1.1.6.i. Purchase of zero-emission 
vehicles for the performance of 
municipal functions and services 
3.1.2.5.i. Participation in the labour 
market of unemployed, job-seekers 
and people at risk of unemployment  
6.1.1.1.i. Modernisation of existing 
analytical solutions 
6.1.1.2.i. Development of new 
analytical systems 
6.1.1.3.i. Personnel training to work 
with an analytical platform and 
consultancy 
6.1.2.1.i. Linking railway x-ray 
equipment to Baxe and use of 
artificial intelligence for rail freight 
scanning image analysis 
7.2.i Security and stability of energy 
supply, and synchronisation with the 
Union grid 
7.3.i Upgrading, digitalising and 
securing the electricity transmission 
and distribution networks 
7.4.i Increasing the uptake of 
sustainable biomethane 

Climate 

Digital 

Int. Field 

Coeff. 
% 

Int. Field 

108 

Coeff. 
% 
100% 

108 

100% 

053 

100% 

8.250.000 

15.000.000 

16.500.000 

10.000.000 

n/a[2] 

100% 

28.710.000 

016 

40% 

2.100.000 

1.880.000 

20.000 

3.000.000 

011 

100% 

11 

100% 

108 

100% 

11 

100% 

60.343.378 

033 

100% 

033 

40% 

72.900.000 

033 

100% 

033 

40% 

1.500.000 

033 

100% 

033 

40% 

[1] The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation 
does not set out intervention fields that would allow for climate or environmental tracking of electric 
vehicles or plug-in hybrid vehicles, except for vehicles for urban transport falling under intervention 
field 074. According to Article 18(4)(e) of the Regulation, the methodology should however ‘be used 
accordingly for measures that cannot be directly assigned to an intervention field listed in Annex VI’. 
In this context, the Commission has applied a 100% climate contribution coefficient for zero-emission 
vehicles of all categories (this includes battery electric and fuel cell/hydrogen-powered vehicles). 

25 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[2] The ‘Methodology for climate tracking’ annexed to the Recovery and Resilience Facility Regulation 
does not set out intervention fields that would allow for climate or environmental tracking of electric 
vehicles or plug-in hybrid vehicles, except for vehicles for urban transport falling under intervention 
field 074. According to Article 18(4)(e) of the Regulation, the methodology should however ‘be used 
accordingly for measures that cannot be directly assigned to an intervention field listed in Annex VI’. 
In this context, the Commission has applied a 100% climate contribution coefficient for zero-emission 
vehicles of all categories (this includes battery electric and fuel cell/hydrogen-powered vehicles). 

26