Anticipated Rise in Electricity Bills Coming in July for Latvian Residents
The Baltic States, including Latvia, are gearing up for a significant change in their energy system. The plan is to disconnect from the Russian-led BRELL ring and synchronize with the continental European power systems, a move aimed at achieving energy independence and enhanced system security.
This transition involves a series of technical upgrades, new interconnections, balancing market adjustments, and regulatory alignment. The exact cost and timeline for this change are yet to be determined, although typical estimates suggest a multi-year effort, with completion around the mid-2020s. The investment for this transition is expected to run into hundreds of millions of euros for the Baltic region collectively, with a substantial portion allocated for Latvia.
In the meantime, the operational Baltic balancing capacity market is set to become functional in February 2025. Augstsprieguma tīkls AS, Latvia's transmission system operator, has forecasted that the total cost for balancing capacity maintenance in Latvia in 2025 could reach EUR 40.74 million. Augstsprieguma tīkls will cover the costs in the first half of 2025, with the exact balancing capacity maintenance prices for the second half of 2025 to be published by February 1.
It's important to note that the costs for balancing capacity maintenance are not included in the electricity price for consumers. The changes in the Baltic energy system obligate the recipients of balancing services to cover these costs. However, if a person uses 100 kilowatt hours of electricity per month in their apartment, the increase in cost due to these changes will be approximately 50 cents per month.
The costs for balancing capacity maintenance are expected to decrease as Augstsprieguma tīkls' electricity storage battery systems become operational in the autumn. This reduction in costs, coupled with the increased market integration expected from synchronization with the European grid, could potentially lead to more competitive wholesale prices and greater supply diversity.
However, in the short term, infrastructure costs and system adaptations might cause price fluctuations or upward pressure on prices. Over the longer term, improved system security and market efficiency should stabilize or reduce electricity prices in Latvia.
Alda Ozola, chairwoman of the Commission's Supervisory Board, has stated that these changes in the Baltic energy system are related to its disconnection from the Russian energy system. This change in energy system independence is also a security issue for Latvia.
As the Baltic States move towards this transition, more detailed or updated project-specific data on the cost, timeline, and explicit price impact for Latvia's synchronization project will become available. Direct sources from Baltic transmission system operators or regional energy authorities would be most authoritative in providing such information.
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