Latvian electricity market overview

In 2023, the average electricity price in Latvia decreased by 59% compared to 2022, to 93,89 EUR per megawatt hour (EUR/MWh), and the amount of electricity produced from renewable energy sources increased significantly to 77,6%, reaching the highest share of renewable energy in at least the last 13 years. At the same time, Latvia covered 88,3% of its consumption with local generation, which is the highest rate since 2017.

The most important events in the market in 2023:

Price:

• After the volatile and unprecedented 2022, last year saw a stabilisation and a decline in prices both in Latvia and in Europe: already in January, the average monthly price in Latvia slipped below the 100 EUR/MWh mark for the first time since August 2021;
• In 2023, the average electricity price in Latvia fell to 93,89 EUR/MWh, 59% lower than in 2022;
• The lowest monthly price level was 65,89 EUR/MWh in April 2023, while the highest was 117,25 EUR/MWh in September;
• Electricity prices fell all across Europe over the year, with the Nordic countries remaining at a lower level. Lower electricity prices in the Nordic countries are due to higher electricity generation from renewable sources - hydro and wind farms - which is cheaper, as well as insufficient capacity which prevents cheaper electricity from the Nordic countries from flowing to Latvia in sufficient quantities to level out electricity prices;
• Across Europe, the number of hours with sub-zero electricity prices increased repeatedly, driven by high renewable energy production at a time when demand had fallen significantly. Finland had the highest number of hours with negative electricity prices in 2023 - 467 hours, around 16 times more than in 2022;
• The decrease in electricity prices was mainly driven by lower prices for gas and other fossil resources, which reached a record high in 2022, as well as higher development of wind and solar power plants.

Production and consumption in Latvia and the Baltic States:

In Latvia:

• In 2023, 6 083 gigawatt hours (GWh) of electricity were produced in Latvia, 26,2% more than a year earlier, while the amount of electricity consumption decreased by 3,4% to 6 887 GWh per year;
• In Latvia, consumption was covered by local generation in the amount of 88,3%(an increase of 21 percentage points), which is the highest level since 2017. The shortfall of 804 GWh was imported from neighbouring countries;
• The amount of production has increased in renewable resources - hydroelectric power plants produced 38% more electricity, wind power plants - 42% more, and the amount of electricity produced by solar power plants increased significantly - by 329%, although their total contribution to the total Latvian electricity balance is still small - 2,1%;
• Hydroelectric power plants produced a significant amount of 3 778 GWh, which was made possible by the floods that started in January 2023 and lasted until April, as well as the increase in water inflows in the last two months of the year, which contributed to high electricity generation at hydroelectric power plants. This brings the share of hydropower in 2023 to 62% of total electricity generation;
• The amount of wind power production has increased by a factor of around 2 in the last two years, including a historic high of 37 GWh per month in October 2023 due to autumn storms. The overall increase is due to the first full year of production of the Targale Wind Park, as well as windy weather conditions;
• Overall, Latvia's capacity to cover its consumption with domestic generation in 2023 is stable and has the potential to grow. Dependence on fossil resources has decreased - 77,6% of the electricity produced was generated from renewable energy sources, including the highest recorded share of green electricity in May, when 99,9% of the electricity produced in Latvia was generated from renewable energy sources;
• The 3% decrease in Latvian electricity consumption is due to the installation of solar power for self-consumption by households and businesses, so the actual amount of electricity produced and consumed in Latvia is higher, as some of it is not injected into the grid but used for immediate self-consumption.

In the Baltic States:

• The overall situation in the Baltic States in terms of the balance between electricity production and consumption is similar to Latvia - the Baltic States' electricity production increased by 1% to 16 171 GWh, while electricity consumption decreased by 3% to 26 675 GWh;
• The coverage of national consumption by local generation varied widely between the Baltic countries last year - 88,3% in Latvia, 46,6% in Lithuania (up 13 percentage points) and 57,4% in Estonia (down 13 percentage points). However, last year's ratio of 60,6% for the Baltic countries as a whole is the highest since 2018, including Latvia's significantly higher ratio among the Baltic States.

Import to the Baltic States:

• Taking into account the decision of the Baltic States to completely withdraw from Russian and Belarusian electricity as of May 2022 due to the Russian hostilities in Ukraine, no more electricity is imported from these countries in 2023, resulting in 0 GWh of imports;
• Third-country imports to the Baltic States were replaced by imports from the interconnectors in Finland, Sweden and Poland - a total of 13 053 GWh of electricity was imported to the Baltic States, which is 2,6% more than in 2022.

Guarantees of Origin (GOs):

• As demand for renewable electricity increases in Europe, the volume of GOs issued in the Latvian Domain for GOs increased by 36% in 2023 compared to 2022;
• In total, AST has issued GOs for 5,3 million megawatt hours (MWh) of electricity in 2023, or 88% of the electricity generated and injected into the grid in Latvia;
• In 2023, the largest imports of GOs into Latvia were from Germany, while the largest exports of GOs were to Norway.

Balancing market:

• Total activated energy upward in 2023 from Latvian balancing service providers amounted to 27 599 MWh, which is 40% less than in 2022 and the largest reduction among the Baltic States. This is due to the significant reduction of 74% in standard bid volumes. There is also a 29% decrease in total activated energy downwards;
• Balancing energy prices in 2023 in Latvia and all the Baltic States decreased compared to 2022. In Latvia, balancing energy prices decreased by 55% on average to 103,63 EUR/MWh, effectively approaching the 2021 average balancing price level of 92,07 EUR/MWh.

Raw data for 2022 and 2023 can be downloaded here.

Electricity production and consumption balance in Latvia*

* Here and in the following review, the electricity produced is the electricity injected into the grid and the electricity consumed is the electricity received from the grid for consumption.

** Corrected historical data.

*** Fossil energy source – fossil gas; renewable energy sources – hydro, solar, wind, biogas and biomass.

Balance of the electricity production and consumption in the Baltic States, GWh

Interconnection load and electricity prices

Price comparison between neighbouring bidding areas

Load of the Baltic States interconnections

Electricity import to the Baltic States

GUARANTEES OF ORIGIN (GOs)

Statistics of the activity in the Latvia Domain for GOs

Statistics on exports and imports in the Latvia Domain for GOs in 2023

Reflects data for countries with transactions above 1000 MWh.

BALANCING MARKET IN THE BALTIC STATES

Balancing energy prices in the Baltic States

Highest and lowest bid prices

Total activated energy

Average hourly standard bid size

In case of any doubts, questions or inaccuracies, please contact us at [email protected]. 

The information contained in the Market Overview is provided for informational and educational purposes only. Nothing contained in the Market Overview is to be construed or used as a basis for investment or as a basis for any claims against AST. 

Abbreviations and designations used:

Electricity production refers to electricity injected into the Latvian electricity grid, while electricity consumption refers to electricity received from the grid.

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.

Guarantee of Origin (GO) is an electronic document, that proves the origin of the generated electricity. GOs are uniquely identifiable, transferable, and therefore tradable and used (by cancellation) to provide information of supplied energy to the end-consumer. One GO = 1 MWh generated and injected into the grid that has an expiration of 12 months after the end of the production period.

* Here and in the following review, the electricity produced is the electricity injected into the grid and the electricity consumed is the electricity received from the grid for consumption.

** Corrected historical data.

*** Fossil energy source – fossil gas; renewable energy sources – hydro, solar, wind, biogas and biomass.

[1] In Latvia there are 10 distribution system operators – for more information visit https://www.sprk.gov.lv/content/pakalpojumu-sniedzeji-1

[2] Electricity received into Latvian electricity grid are not commercial transactions, but electricity that has physically entered the network from other countries.

[3] Electricity transmitted from the Latvian electricity grid are not commercial transactions, but electricity physically transferred from the network to other countries.

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