 |
|
Electricity market in Latvia becomes fully liberalized
Starting from the 1st of July, 2007 Latvia’s electricity market will become fully liberalized. Both industrial consumers and private households will be free to choose their electricity supplier.
Similar changes are taking place in the other two Baltic States as well. Estonians are expected to be the first ones to take advantage with Estonian Eesti Energia’s subsidiaries already present both in Latvia and Lithuania.
Market liberalization will give even more possibilities to local businesses even though electricity prices for industrial use in Latvia in 2006 according to Eurostat were already the lowest among the EU countries at 0,0409 per KWh (see graph).
Source: Eurostat
According to Latvenergo (the main provider of electricity in Latvia), there are no significant changes expected in foreseeable future because of the following factors:
1) Hydro based and environmentally friendly power generation fleet. Compared to other EU countries or companies Latvenergo’s generation fleet is mostly based on renewable energy. Approximately 60% of electricity is generated by the local hydroelectric power plants and 40% by “half-green” modern and efficient CCGT cogeneration power plants.
2) Highly interconnected system. Both the existing and planned connections to Scandinavia, Poland and Russia are high capacity connections. Strong interconnections ensure competition, diversity and high exchange volumes.
3) Lowest electricity price area in Europe. Due to the specifics of the generation fleet, the configuration of the power system and the geopolitical location, Latvian customers experience the lowest prices in Europe. Planned integration with other low price areas in Europe (Scandinavia and Poland) will facilitate low prices in the future and enhance the competition among generators significantly.
4) Cheaper fuel costs. Besides Latvenergo’s power generation being dominated by hydroelectric energy, which is not affected by the global trends in fuel prices, electricity generated from Russian natural gas in Latvenergo’s cogeneration power plants has been generally cheaper than western Europe, a trend which is expected to continue into the future because the geographical proximity results in significantly lower transportation costs.
5) Fully liberalized market. As a member state of The European Union, Latvia and other Baltic countries have liberalized electricity markets and customers are able to switch electricity suppliers.
