Latvia's electricity exchange price jumps in November, reaching 80 cents per kilowatt-hour
Latvia's electricity exchange price in early November more than doubled compared with October, and in the evening peak hour on 9 November it reached 80 cents per kilowatt-hour. Experts link the rise to expensive gas, colder weather and weak wind and solar output.
Electricity prices on the exchange in Latvia have risen sharply at the start of November. In the first five days of the month the price climbed to 255 euros per megawatt-hour, more than twice the October level. On Monday, 9 November, the daily average approached 50 cents per kilowatt-hour, and in the evening peak hour at 6 p.m. it reached 80 cents. The situation was discussed on the LSM programme "Let's Discuss This Evening".
Price dynamics
In October the exchange price averaged about 11.2 cents per kilowatt-hour. In early November it was around 22.5 cents, roughly 101% higher, and on 9 November about 49.7 cents, roughly 344% above October.
Why prices are rising
Experts explain that the increase follows from market mechanics. As demand grows and wind and sun provide only a small share of energy in November, expensive gas-fired power plants have to be switched on, and they set the price. High prices are seen not only in Latvia but across Europe, except for Finland and the northern parts of Norway and Sweden. Gatis Junghans, a board member of Augstsprieguma tīkls, the Latvian electricity transmission system operator, names the tripling of natural gas prices over a year as the main cause.
Global gas prices have fallen by 17% since the US midterm elections. Dainis Gašpuitis, an economist at SEB bank, says the outlook will depend on how cold and how long the winter is, and on the war in Iran, so the positive trends may prove short-lived.
What specialists recommend
To reduce future price swings, experts urge Latvia not only to build new wind farms and solar panels, but also to lay new interconnection cables to Scandinavia, from where cheaper electricity flows, and to install large battery storage systems. Ivars Zariņš, executive director of the Association of Electrical Power Engineers and Energy Constructors, says the high prices will motivate investors to create capacity that can be switched on when needed, not only when the wind blows and the sun shines.
About 80% of households are protected by fixed tariffs, so the rise in exchange prices will not affect their bills.
