Record solar energy output in June fails to halt the rise in electricity prices

Interconnection constraints continue to affect prices in the region

Although Latvia’s solar power stations reached an all-time high in output in June, the heatwave in Europe also affected the Baltic region, driving up electricity prices. Interconnection capacity between Estonia and Latvia remained limited, blocking the flow of cheap Nordic energy via Finland to the Latvian and Lithuanian markets. Consequently, the average electricity price in Latvia and Lithuania remained above 9 cents per kilowatt-hour, exceeding the average electricity price in Estonia by almost 38 per cent. Latvia had to rely more heavily on more expensive domestic generation and potentially more expensive imports via Lithuania from both Poland and Sweden, where prices have recently remained at the same level as in Latvia, or where it has not been possible to ensure sufficient generation volumes to bring prices down.

Significant decline in wind and hydroelectric power generation

Comparing June this year with June 2025, there are significant differences in electricity generation across the Baltic region. The volume of electricity generated by wind farms in the Baltic states – 320 GWh – was 37 per cent lower than a year ago and 42 per cent lower than in May this year.

Compared with June last year, the output from Latvia’s hydroelectric power stations also fell by approximately half.

Romāns Tjurins, Head of Portfolio Management and Market Research at Enefit, points out that low marginal costs meant that hydroelectric power was still able to help keep prices down during the evening hours: “Together with wind power and cheap imports, hydroelectricity replaced more expensive electricity generation capacity. However, electricity prices were high overall because there was a shortage of wind power generation when it was most needed, whilst imported electricity was not cheap enough to bring prices down across the region.”

At the same time, the Baltic states achieved their highest-ever level of solar electricity generation in June. Latvia, which fed almost 30 per cent of all solar electricity generated in the Baltics into the grid, was the clear leader in terms of growth rate: domestic solar power generation capacity has increased by approximately 2.7 times, significantly supplementing the renewable energy portfolio alongside hydropower.

A slight fall in prices is possible in July

It is expected that electricity price trends next month will also be determined primarily by the availability of imports and domestic wind and solar power generation. “Higher wind power generation in the Baltics means a cheaper supply of electricity, particularly in the evening hours, whilst intensive solar power generation during the day helps to keep prices lower across the region. Furthermore, current forward contract prices in neighbouring countries are lower than they were in June, so, should current market conditions persist, electricity prices could fall slightly in July,” explains Romāns Tjurins.