Today, when thinking about our energy system and its self-sufficiency, a Latvian proverb comes to mind: “other people’s bread is bitter.” If we are unable to meet our own consumption with hydro power plants, wind and solar parks or other locally sourced generation, then we need to import fuel. Here, the beginning of March has brought unexpected surprises.
The military conflict in the Middle East and its impact on oil product prices is visible to everyone.[1] Gas market analysts warn that, due to this conflict, the rise in gas prices could be greater than in 2022, when Russia’s full-scale invasion of Ukraine began.[2]
This is also suggested by the current increase in gas prices on the European TTF exchange – from 30.55 EUR/MWh on 24 February to 56.45 EUR/MWh on 9 March – an 85% price increase[3].
The price of natural gas and other fossil resources directly affects the cost of electricity generation, since a large share of electricity in Latvia is still produced in thermal power plants – especially in winter, when a large amount of heat energy generation is also required.[4]
It is true that in hours when the wind is not blowing, these plants are critical for ensuring the continuity of energy supply, but when the wind is blowing, they can be outcompeted by wind-generated electricity, which can offer cheaper electricity on the market – below are the electricity generation costs from different sources.[5]
In the market, the electricity price is determined by the last type of generation needed to meet demand in a given trading period. Accordingly, when electricity consumption is high and output from hydro, solar or wind power plants is low, the price is set by thermal power plants.
The output of renewable energy sources is determined both by weather conditions and by their installed capacity. In winter, because of the seasonality of solar and hydro power plants, they generate much less, so among renewables it is the wind that plays a significant role in shaping the electricity price in winter.
To illustrate the impact of wind power generation on electricity prices, it is worth looking at the next chart, which shows how the electricity price follows the share of wind generation in covering consumer demand. The data very clearly show – the more wind energy, the lower the price in the respective periods.
Source: Transparency dashboard, NordPool portal
It is important to highlight that although in the Baltics, led by Lithuania, we have increased our installed wind capacity (in Lithuania from 671 MW in 2022 to 2510 MW by the end of 2025[6]), this winter’s particularly low air temperatures have also significantly increased electricity consumption. This further underlines the need to install new generation capacity.
In the Baltic states, as well as in Finland and in Sweden’s 4th bidding area, which is connected to Lithuania, the higher prices in February were mainly due to lower renewable energy output and increased consumption related to low air temperatures. As a result, more electricity was generated by, and prices were set by, more expensive fossil-fuel power plants.[7]
If it were not for the renewable energy and battery system capacities already built and installed in the Baltic Sea region, we would likely have seen even higher electricity prices. The Baltic states are particularly vulnerable to global price shocks, including rapid increases in energy resource prices. When electricity generation depends on fossil fuels, geopolitical events can cause huge swings in energy prices[8]. By contrast, local renewable energy resources provide a reliable energy supply that is independent of the global instability of fossil resources. Therefore, it is particularly important to develop and plan a balanced energy system and electricity generation portfolio that coordinates the operation of renewables and conventional power plants, thereby ensuring affordable and stable electricity for the inhabitants of Latvia.
[1] BBC
[2] Delfi business – BBC analyst’s comment
[4] AST market review for January 2026
[5] Latvenergo analysis based on several studies Lazard, IRENA, Bloomberg, VGBE and others
[7] AST market review for February 2026
Originally published at https://inc-baltics.com/gazes-cenas-var-sadardzinat-ari-elektribu-atrakais-risinajums-atjaunigie-resursi/
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