In Latvia, the price of electricity has risen almost four times during the year

Why did the price of electricity rise even more in March?

The rise in prices in Europe in March 2022 was due to a number of factors:

• lower wind generation in contrast to record highs in January and February,
• increase in gas prices following Russia’s invasion of Ukraine
• carbon dioxide CO2 emission allowance prices, which fell by 18% in March, remain high.

Electricity imports to the Baltics from Russia will decrease by 38% in March compared to February and by 62% compared to March 2021, as Russia’s ability to export electricity to the Baltics has been significantly limited since March 3 in order to reduce the potential risk of negative effects. to the reliability and stability of the operation of the Baltic electricity transmission systems.

There is a big price difference in the Baltics compared to Finland

Imports from Finland to the Baltics have increased by 23% in March, while imports from Sweden and Poland have fallen by 7% and 13% respectively, but total European exports to the Baltics have increased by 10% compared to February and by 42% compared to 2021. March. The increase in imports from Finland was driven by significantly lower electricity prices as well as available interconnectors, which were up 95% in March.

In Finland, the average electricity price was 86.48 euros per megawatt hour (MWh), and only 34% of the hours were the same as in Estonia.

The large difference in Baltic prices from Finland indicates that, although all the installed capacity of the Finnish-Estonian interconnector was available on the market, the local generation in the Baltics is not large enough with such a low price offer.

What explains the low price of electricity in Finland?

In Finland, the low price of electricity can be explained by the amount of cheaper electricity available in the adjacent areas, Sweden’s 1st commercial area, technical restrictions on exporting to other Swedish commercial areas, and sufficient local generation ready to work at such a price.

On March 14, the new Unit 3 of the Olkiluoto nuclear power plant was connected to the grid, providing an average of 400 MW of additional permanent grid capacity on the grid. Imports from Russia to Finland, unlike in the Baltics, have not decreased either, but have even increased in the last year, and so far there has been no reduction in trading capacity for either the bilateral trade or the NordPool exchange.

AST is a Latvian electricity transmission system operator that provides continuous, secure and sustainably efficient electricity transmission throughout Latvia. Its vision is to become the leading transmission system operator in the region, which is rapidly and successfully implementing development-oriented changes. AST owns 68.46% of the shares in the natural gas transmission and storage system operator JSC Conexus Baltic Grid.

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