Lowest electricity price in Latvia in August in the last four years

Although the average price of electricity in Latvia in August was almost twice as high as in July, reaching 8.03 cents/kWh, it was still the lowest average price in August in the last four years, according to data compiled by the energy company Enefit. The trend since 2021 clearly shows the benefits of the rapidly growing share of renewable energy – solar and wind – in the Baltic region.

"The weather conditions in August were typical for the end of summer, when solar energy production usually decreases compared to July. However, the overall picture shows how much the market has changed in recent years thanks to the growing capacity of renewable energy production. For example, the number of hours when the price of electricity is 1 cent/kWh or lower has more than doubled compared to the previous year, and electricity production in thermal power plants in August fell to its lowest August level in ten years," says Romāns Tjurins, Head of Market Research and Analysis at Enefit.

In August, electricity prices in the Baltic region were affected by more expensive energy imports from Scandinavian countries, which were driven by maintenance work at Swedish and Finnish nuclear power plants, weak wind energy production in Scandinavia, and restrictions on its transmission system. However, although the use of local renewable energy resources decreased compared to July, in absolute terms it remained high, as the installed capacity is much greater than a few years ago.

In the Baltic States, solar energy production in August reached a total of 386 GWh, which is 18% less than in July and 6% less than in August last year. However, even at this level, solar energy production was still several times higher than in any period before 2024. Wind energy production, on the other hand, despite summer being the least windy season, reached 283 GWh in the Baltics in August, which is 10.4% more than in July and 19% more than a year ago.

In recent years, solar and wind farms have been increasing the number of hours of cheap electricity and replacing fossil fuel production (this trend is less pronounced in the winter months). In August this year, there were 122 particularly cheap hours of electricity in Latvia, when the price was 1 cent/kWh or less, 162 in Estonia, and 125 in Lithuania. Last August, there were just over 50 particularly cheap hours in the Baltic States. This is a great opportunity for retail electricity customers with dynamic exchange products to save money when the price of electricity is low, if the customer has the opportunity to influence the time of electricity consumption, for example, by planning the charging of an electric car, activating heating or cooling with heat pumps, and choosing the operating time of an electric water heater.

Meanwhile, electricity production in thermal power plants in August fell to its lowest August level in ten years. The total fossil fuel production in the Baltic States was 162 GWh, which is approximately 43% less than in August last year. In August, fossil fuel power plants had to meet only about 8.2% of the Baltic States' demand, compared to an average of 33% between 2015 and 2024.

"Looking ahead to September, the Baltic electricity market will be most significantly affected by import restrictions and the dynamics of renewable production. Although the availability of Nordic nuclear energy and transmission systems will improve in September, as planned maintenance will be completed between the end of August and mid-September, on September 1, there was an unplanned shutdown of the Estlink 1 interconnection (Finland-Estonia), which will significantly reduce the volume of electricity imports to the Baltics. Although market conditions in the Nordic countries are improving, reducing import prices, the overall decline in import volumes will mean higher price dynamics. As solar energy production declines seasonally, Latvia's hydroelectric power production is declining, and imports from Finland to Estonia are significantly reduced due to infrastructure damage, Baltic prices, especially at peak load, are expected to be tighter," notes Romāns Tjurins.