Latvian electricity market overview

The most important events in the market in 2021

Price:

• In contrast to the moderate and mild 2020 in terms of prices, in 2021 an increase in electricity prices was observed in Latvia from May, which set new historical monthly average price records every month since September, reaching 206,40 EUR/MWh in December;
• The average electricity price in Latvia in 2021 reached 88,78 EUR/MWh, which is 2,6 times higher than the average price in 2020;
• Electricity prices are rising throughout Europe: compared to last year, the rise in the reference price of the NordPool exchange zone system was even more significant than in Latvia - from 10,93 EUR/MWh in 2020 to 62,31 EUR/MWh in 2021;
• On December 7, between 8:00 a.m. and 9:00 a.m., the highest ever hourly price of electricity was reached - 1000,07 EUR/MWh, but on December 7, the daily average price in the Baltic States and Finland reached the historically highest level - 469,03 EUR/MWh;
• The increase in prices during the year was facilitated by a series of circumstances - multiple increases in gas prices and CO2 emissions quotas, lower development of wind power plants in Europe, less water inflow into reservoirs in Scandinavia, which reduced the amount of electricity produced by hydroelectric plants, and it had to be replaced by fossil resources;
• As prices increase during 2021, a new price record for gas and CO2 emissions quotas was reached in December - 92,37 EUR/MWh and 80,10 EUR/tCO2, respectively. The price of gas in December was more than six times higher than a year ago, but the price of CO2 emission allowances has increased 2,4 times during 2021 - from 33,51 EUR/tCO2 in January to 80,10 EUR/tCO2 in December.

Generation and consumption in Latvia:

• In 2021, 5 609 592 MWh of electricity was produced in Latvia, which is 1,8% more than a year ago, while Latvia's electricity consumption increased by 3,5%, reaching 7 382 226 MWh per year;
• In Latvia in 2021, consumption was covered by local generation in the amount of 75,9% (a decrease of 1,3 percentage points), thus creating a deficit of 1 772 634 MWh imported from neighboring countries;
• In the Daugava hydroelectric power stations, there is an increase in production by 4,2%, in large cogeneration stations - by 10,7% compared to 2020, while in other important types of production there is a decrease: in wind power stations, production is 20% less, in the contribution of small cogeneration stations, the trend observed for the last five years continues stable decline with a 26,9% drop in 2021, with biomass produced by 6,6% less, with biogas - by 15,3% less, while the amount produced in small hydroelectric power plants has decreased by 1,6%.

Import to the Baltic States:

• In 2021, the import of electricity from third countries to the Baltics increased by 18,3% - 4 671 229 MW of electricity was imported, last year import from third countries was possible only through the Latvian - Russian interconnection;
• Electricity produced in the European Union plays a significantly larger role in the Baltics - 10 576 386 MWh were imported from Finland, Sweden and Poland to the Baltics, which is 7,7% less than in 2020.

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

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.

Imbalance is the difference between the planned and the amount of electricity physically transferred to or received from the system in a certain interval of the imbalance calculation. According to the Electricity Market Law (ETL), each market participant is responsible for self-inflicted imbalance.