Latvian electricity market overview

The most important events in the market in 2022

Price:

• In 2022, both in Latvia and in Europe, electricity prices continued to rise, reaching a new highest historical price level in each summer month. Prices fell after the record in August, when the average monthly price of electricity reached EUR 467,75 per megawatt hour (MWh), but on August 17, in the period from 18.00 to 19.00, the price of electricity reached the maximum hourly price mark set by the NordPool exchange - 4000 EUR/MWh;
• The average electricity price in Latvia in 2022 reached 226,91 EUR/MWh - compared to 2021, the increase is 156%;
• The sharp increase in prices was caused by a number of factors, which were based on the reactions caused by the Russian invasion of Ukraine - due to concerns about the sufficiency of energy resources in the coming winter, gas prices in Europe rose dramatically in the summer months, which gradually decreased towards the end of the year, the price increase was also facilitated by the refusal of the Baltic States and Finland to import electricity from Russia and Belarus;
• Also, the price increase was facilitated by the hot weather in Europe, which resulted in an increase in energy consumption for cooling purposes and a decrease in water inflow to hydroelectric power plant reservoirs in Scandinavia.

Generation and consumption in Latvia:

• In 2022, 4,794 gigawatt hours (GWh) of electricity were produced in Latvia, which is 14,5% less than a year ago, while Latvia's electricity consumption decreased by 3,7%, reaching 7,106 GWh per year;
• As consumption and even more - production decreased, electricity import increased in 2022 - 2,311 GWh of electricity was received from neighboring countries, or 30,4% more than in 2021, and thus Latvia's consumption was covered by local generation in the amount of 67,5% ( a decrease of 8,52 percentage points compared to 2021);
• The amount of production in 2022 has increased in the generation of renewable resources - Daugava hydroelectric power stations produced 1,3% more, wind power stations - 34,5% more, small hydroelectric power stations have increased by 13,3% and significantly - by 122% - increased the amount of electricity produced by solar power plants, however, their total contribution to the total balance of electricity in Latvia is still small or 0,11%;
• On the other hand, a drop in production can be observed in fossil fuel stations - the amount of electricity produced in large cogeneration stations has decreased by 36,9%, the contribution of small cogeneration stations continues the steady decline observed for the last six years with a 67,5% drop in 2022, with biomass produced by 5,9 % less, with biogas - by 9,4% less;
• The changes in the production structure are associated with the high gas price, which resulted in the operation of large cogeneration plants in minimum mode from March to August, as well as the connection of new wind and solar power plants to the grid.

Import to the Baltic States:

• Taking into account the decision of the Baltic States to reduce the import of electricity from third countries from March 2022 and the complete rejection of electricity from Russia and Belarus from May 2022 due to the hostilities initiated by Russia in Ukraine, the annual import from these countries has fallen by 77% compared to 2021 year, and amounted to 1,095 GWh;
• Imports from third countries to the Baltics replaced those produced in Europe - with a total increase of 20%, 12,716 GWh of electricity was imported: 6,823 GWh from Finland (an increase of 6%), 4,947 GWh from Sweden (an increase of 43%) and 946 GWh from Poland (38% increase).

ELECTRICITY GENERATION IN LATVIA

* Rīgas TEC-1, Rīgas TEC-2, AS "Rīgas Siltums", SIA "Juglas Jauda", SIA "Fortum" 

INTERCONNECTION LOAD AND ELECTRICITY PRICES

COMPARISON OF PRICES BETWEEN NEIGHMOURING PRICES AREAS

CONGESTION OF THE BALTIC INTERCONNECTIONS

IMPORT OF ELECTRICITY TO THE BALTIC STATES

Balancing market in the Baltics

BALANCING ENERGY PRICES IN THE BALTICS

HIGHEST AND LOWEST BID PRICES

TOTAL ACTIVATED ENERGY BY COUNTRY, MWh

AVERAGE STANDARD BID IN HOUR, MW

Abbreviations and designations used:

LV-Latvia trade area, LT- Lithuania trade area, EE-Estonia trade area, PL - Poland trade area, FI - Finland trade area, SE4 - Sweden's fourth trade area, AT - Austrian trade area, BE - Belgium trade area, DE-LU - German- Luxembourg trade area, FR - France trade area, NL - the Netherlands trade area, DK1 and DK2 - Danish 1. and 2. trade area, LBI - Lithuania-Belarus Import trade area, LRI - Latvia-Russia import trade area

Load = monthly total commercial flow in kWh / monthly total net transfer capacity in kWh ("Net Transfer Capacity" NTC).

Nord Pool is a Nordic electricity exchange where, based on market principles, the electricity price of the Latvian trading area is determined.

[1] Here and in the following review, electricity imports are not commercial transactions, but electricity that physically entered the network from other countries.

[2] Here and in the following review, electricity exports are not commercial transactions, but electricity physically transferred from the grid to other countries.

[3] According to the (ENTSO-E) definition, which does not include electrical self consumption.