Electricity prices continue to fall: the cheapest April in the last five years

April has been significantly more favorable for Latvian electricity consumers, thanks to more sunshine, higher air temperatures, and lower prices than in March, according to data compiled by the energy company Enefit. The average electricity price in April dropped to 5.7 cents per kilowatt-hour, which is about 24% less than in March and more than a quarter cheaper than in April of last year. The last time prices were this low in April was in 2021, when the average exchange price was 4.4 cents per kilowatt-hour.

Significant decline in fossil fuel production

Romāns Tjurins, Head of Portfolio Management and Market Research at Enefit, explains that the price drop was driven by a combination of several favorable factors: “The price reduction observed in April is logical, as demand for heating continued to fall, while solar and wind energy production in the region increased significantly, pushing more expensive fossil fuels out of the market. This is particularly evident in the data on fossil fuels: while in January and February, the volume generated in this way in the Baltics was nearly 1,000 GWh per month, by April it had shrunk to a mere 120.5 GWh. The active hydropower season in Latvia also provided additional support.”

The Dominance of Renewable Resources and Latvia’s Role in the Baltics

In the Baltic region’s overall energy balance for April, wind farms accounted for nearly a third, while solar power and Latvia’s hydroelectric power plants each contributed approximately one-fifth of total consumption. In terms of solar energy generation, Latvia ranked second in the region with 35% of the total volume, slightly behind Lithuania, whose share reached 40%. At the same time, the contribution of Latvia’s wind farms to the overall system was quite small this month. It was precisely these factors—seasonally lower demand and a favorable energy generation mix—that were the main drivers of lower electricity prices.

Market sensitivity persists: what to expect next?

Electricity prices tend to fluctuate throughout the year—in winter, the heating season drives prices up, while in summer, high production volumes can even exceed domestic consumption, creating a surplus of energy for export and driving prices down. Spring and fall are typically the most stable periods. Market trends in May are expected to remain similar to those in April, though the impact of hydropower will gradually diminish. “Since the region still lacks flexible capacity, such as battery storage, seasonal variations will persist; however, new solar capacity this summer could allow prices to reach or even fall below last year’s low levels,” comments Romāns Tjurins on market specifics.

Thanks to the fact that an increasing volume of cheap solar energy with broader geographic coverage is entering the market, it will continue to influence prices throughout the Baltic region.