Latvia's electricity imports reach this year's highest level – 46%, market prices remain stable

Latvia's share of electricity imports rose to 46% in September due to a decline in local supply, according to data compiled by energy company Enefit. Meanwhile, the average price of electricity on the market remained stable compared to both last year and the previous month: in September, the price of electricity in Latvia was almost 5% higher than in August, reaching an average of 8.4 cents/kWh. Compared to the previous year, the price has not changed – in September last year, the average price in Latvia was also 8.4 cents/kWh.

The slight monthly increase can be explained by a sharp decline in solar energy production and greater reliance on local and Baltic fossil fuel-based electricity generation. Solar energy was no longer able to cover daily consumption, but import capacity was limited by the interruption of the Estlink 1 interconnection, as well as days when the Nordic countries were unable to export electricity due to their own consumption needs. In addition, Latvia's hydroelectric power production has declined after record high levels in the summer, so it was no longer able to reduce price peaks.

Latvia's share of imports rose to 46% in September as local supply declined. Hydroelectric power generation fell by about half over the month, reaching 114 GWh (from 230 GWh in August). At the same time, solar and wind generation also declined: together, they covered about 10% of demand in September, compared to about 21% in August. With the decline in local hydropower and total Baltic wind and solar power generation, Latvia was forced to rely more on electricity imports.

Production in Latvia reached approximately 280 GWh in September, which is 27% less than in August. This decline was mainly due to a 58% decrease in solar generation compared to August and, as already mentioned, a decrease in hydro power by approximately half.

"Looking ahead to next month, a clear seasonal transition is emerging. At the end of September, weather conditions were already similar to early winter – shorter days, cooler mornings, so this trend will continue in October and is likely to intensify: heating consumption will increase, while cheap midday solar energy will continue to decline. At the regional level, the main factors will be wind energy in Estonia and Lithuania and fossil fuel power plants in the Baltics – prices may fall on windy, warmer days, while during cold and calm periods, the importance of gas will increase and prices will peak. October prices will also largely depend on the export capacity of the Nordic countries, which will be determined by the development of hydro and wind energy in the region. Transmission constraints – repairs to the Estonia-Latvia interconnection, the planned unavailability of the Lithuania-Sweden interconnection at the beginning of the month, and the expected repair of Estlink 2 at the end of October – could limit cheaper imports, putting additional pressure on prices in Latvia. A larger difference between the maximum and minimum prices is expected, as well as more pronounced daily fluctuations: lower prices in conditions of strong winds and moderate demand, but higher prices when the wind dies down and peak heating hours begin in the evenings," explains Romāns Tjurins, Head of Market Research and Analytics at Enefit.