Solar and wind power generation in the Baltics hits a record high, but price trends continue to be driven by interconnections

In August, the average price of electricity in Latvia was around 8 cents per kilowatt-hour, remaining at a similar level to that in July. Although this summer saw the highest ever levels of solar and wind energy generation in the Baltics, prices did not fall – this was mainly due to the limited capacity of the Estonia–Latvia interconnector and lower hydroelectric power generation, according to Enefit’s summary of data.

Solar and wind energy generation in the Baltics has risen by 43%

From June to August, the Baltic states collectively generated more than 3.6 TWh of solar and wind energy – 43 per cent more than in the summer of 2025. Solar energy accounted for approximately three-quarters of the total increase.

Solar energy production grew most rapidly in Latvia, where output more than doubled compared with last summer. In Lithuania, solar energy production rose by 56.4 per cent, whilst in Estonia it increased by 3.4 per cent. Lithuania also accounted for the largest share – 82.6% – of the increase in wind energy production across the Baltics.

Despite record-high renewable energy generation, the average electricity price in the Baltic states this summer was 7.4 cents per kilowatt-hour – 34 per cent higher than last summer. In Latvia, the average price from June to August reached 8.2 cents per kilowatt-hour, which is 45.8 per cent higher than a year ago.

Interconnection constraints are preventing cheaper electricity from reaching Latvia

One of the main reasons for the higher prices was the limited capacity of the Estonia–Latvia interconnection. As a result, a smaller volume of cheaper Finnish electricity was able to reach Latvia. In August, the average electricity price in Estonia was 5.9 cents per kilowatt-hour, whilst in Latvia and Lithuania it was around 8 cents. At the same time, the price in Finland rose from 1.5 cents per kilowatt-hour in July to 4.1 cents in August, making imports into the Baltic region more expensive as well.

Prices were also affected by lower hydropower generation in Latvia. Last summer, the volume of electricity generated by hydropower stations in the region was approximately 86 per cent higher, helping to reduce prices even during the evening hours when solar power generation declines.

Enefit’s Head of Portfolio Management and Market Research, Romāns Tjurins, points out that the growth in renewable energy generation is significant, but its impact on prices is also determined by the time of generation and electricity transmission capacity: “Solar energy helps to reduce prices during the day, but in the evenings, the availability of wind and hydro power, as well as import capacity, is becoming increasingly important. This summer, lower hydroelectric generation and the limited capacity of the Estonia–Latvia interconnector prevented Latvia from fully utilising the benefits of cheaper electricity from the Nordic countries. Consequently, despite record levels of generation, the average price was higher than last summer.”

The risk of price rises remains in autumn and winter

Electricity price trends in the Baltics over the coming months will be determined by the availability of wind energy, precipitation levels and air temperature, as well as the situation on global energy markets. Supply disruptions caused by the Hormuz crisis have contributed to a rise in natural gas prices, whilst rising emissions allowance prices are placing additional pressure on European electricity prices.

The hydrological situation in the Nordic countries is also currently unfavourable – water levels in Norwegian reservoirs ahead of the peak consumption season are at their lowest in 30 years. If there is insufficient rainfall this autumn, electricity prices in the Nordic countries could rise, which would also affect the Baltic region.

“Overall, the risk of price rises is currently greater than it was a year ago. If hydroelectric generation remains low in the Nordic countries and wind power generation is limited at the same time, Latvia will also feel the impact of more expensive electricity. However, price trends will still be closely linked to weather conditions – a windier autumn with heavier rainfall could significantly alter the situation,” explains Romāns Tjurins.