Disengagement from BRELL – an impulse for Latvia's energy development

Why was it necessary, is it safe, and how much will it cost? These were the loudest questions asked when discussing the Baltic states' decision to disconnect from Russia's BRELL electricity grid in February this year. However, by focusing solely on today's challenges, we risk losing sight of the future perspective – the need to integrate electricity users more closely as an active part of the energy system and to accelerate the adoption of new technologies.

BRELL – just one of the challenges

It is impossible to accurately predict the impact that the Baltic states' disconnection from the Russian electricity grid will have on electricity prices, but the trend is likely to become more pronounced, with electricity exchange prices becoming increasingly volatile during the day. In 2024, the average daily price fluctuation was already 58%, compared to 34% in 2022 and 22% in 2019.

Disconnection from BRELL is only one of the factors that will contribute to price fluctuations in the electricity market, and not even the most significant one. For example, the sabotage and disruption of the Estlink 2 electricity connection between Finland and Estonia has a much greater impact on energy prices, not to mention Russia's invasion of Ukraine and the subsequent rise in raw material prices, which dramatically increased electricity prices in 2022, with the average monthly price on the exchange exceeding 50 cents per kilowatt hour.

Customers who have had the opportunity to install solar panels and batteries, thereby promoting their households' energy independence from external conditions, will feel the least impact on the market. Enefit has installed nearly a thousand solar panel solutions for customers in Latvia, and we see that interest remains high.

Not just consumers, but also active market participants

I also encourage you to view the disconnection from BRELL as a unique opportunity. After joining the European electricity grid, we are responsible for the stability or balancing of the grid. In this process, it is critically important to have the flexibility to immediately meet surges in demand and also to store excess energy.

A significant innovation is that users will also be able to participate in this process, both by changing their consumption patterns and by using energy storage devices or batteries. It is precisely this synergy between users and the system operator that will form the basis for creating an efficient and flexible energy system, while reducing its maintenance costs, as the balancing work will no longer rest solely with the system operator.

Businesses are expected to play a major role here as the largest consumers. While one of the most popular solutions to date has been to generate energy in-house using solar panels, companies are now also actively installing energy storage solutions or batteries. This makes it possible to increase the consumption of self-generated energy and reduce the need to sell it to the grid during off-peak hours when electricity prices are low. With the disconnection from BRELL, batteries gain new added value – companies can earn money by selling their reserve capacity to stabilize the power grid and receive additional compensation for flexible consumption, while the state gains a flexible energy system with lower maintenance costs that is ready for the addition of new production capacity.

Important to take advantage of new opportunities

In order to respond to rapid changes in energy demand, it is necessary to be able to store energy. This allows energy surpluses to be stored on sunny or windy days and supplied when production falls. This need is reinforced by the active development of green energy production, which is cost-effective and environmentally friendly but intermittent. If the grid includes both battery systems built by the system operator and large user batteries, this provides significant support to the entire system.

The energy sector is one of the main factors influencing the competitiveness of companies. Thanks to the fact that our energy system is relatively compact, any innovation is reflected very quickly. This is positive and allows significant changes to be achieved with just a few right decisions. Accordingly, disconnection from BRELL and the opportunities created by this step can provide a significant boost to the development of the entire energy sector, while opening up new opportunities for companies to build self-sufficient and highly competitive energy economies.