Latvia, a favourable environment for energy-sector investments

OPINION | By 2030, renewable energy is expected to account for half of Latvia’s total energy consumption. Additionally, more than 60% of electricity will need to be generated from renewable energy sources. Latvia has significant potential in renewable energy, particularly through the use of hydropower, wind and solar energy.

On one hand, Latvia has several advantages compared with other Baltic countries, since hydropower plants are already operational here; on the other hand, we lag behind our neighbours in wind-energy production. From a regulatory perspective, Latvia is in a reasonably good position: clear and open market rules, along with precisely defined national goals and requirements, create a favorable environment for private investments in the energy sector.

Sunly has been operating in Latvia for four years. Considering our experience in other Baltic countries and Poland, we can look at this market from a comparative perspective. We are investing in and developing production of wind and solar energy, as well as battery storage systems, in recognition of the significant potential in the Latvian market.

Our immediate plans in Latvia involve the construction of four solar parks with a total capacity of 553MW. All parks in Latvia are designed as hybrid parks, with future plans to integrate wind turbines or battery storage systems—or a combination of both. This will ensure stable energy supply and help the Baltic states transition to safer and more sustainable energy sources. These parks will allow for an effective response to demand fluctuations and ensure the continuity of energy supply even in crisis situations.

It is no secret that the Baltic states need to reorient energy supplies towards local sources to strengthen their energy security. It is crucial to achieve energy independence from Russia, which includes not only abandoning Russian gas but also decoupling from the Russian electricity system, which has historically been linked to the Baltic states. Our approach and technologies enable the Baltic states not only to produce enough electricity to meet the demand of their consumers but also to create reserves for crisis situations.

Furthermore, the Baltic states can use their shared energy network to promote independence from Russia. By establishing a strong internal market and developing their resources, the Baltic states can support each other and reduce Russia’s influence on the region. To achieve these goals, innovative technologies that combine wind and solar energy, as well as battery storage systems at a single connection point and direct line with consumers, play a crucial role. This allows for more efficient management of energy production and consumption, thus reducing the need for external energy sources.

The state also plays a crucial role in renewable-energy production and greater energy independence—though this does not necessarily imply investments. It should be noted that, compared with other Baltic countries, Latvia stands out for its decision not to subsidise renewable energy, which can largely be explained by bad experience. Such an approach, where avoids using financial instruments to encourage  market participants, can also be beneficial, as it pushes companies to seek effective and innovative solutions on their own.

In fact, it is much more important for the state to ensure a stable and clear regulatory framework so that companies can plan long-term investments. Appropriate market regulation and clearly defined goals are essential to attract private investments and allow companies to plan their activities in line with the state’s energy strategy. The Baltic states, including Latvia, need to move away from the Soviet legacy where the state controlled most of the energy production. To achieve effective renewable energy development, the market needs to become more liberalised, creating opportunities for private companies to participate in energy production.

Another important pillar in the development of renewable energy is the overall understanding and attitude of policymakers and the public. While various prejudices still exist in parts of Latvian society, the overall attitude towards the energy sector and renewable energy is changing. With the advent of new technologies, people are beginning to realise that energy is no longer just a state-controlled resource; for example, more and more households are choosing to install solar panels and battery systems to produce and store their electricity.

The shift in public opinion is significantly influenced by the clear financial benefits—if people can control their electricity expenses and even gain financially by adjusting their energy consumption based on market conditions, the overall attitude towards renewable energy also changes. At the end of August, the climate and energy ministry approved financial benefits to councils and residents living near wind park. The minister has noted that large-scale wind-energy projects can help ensure cheaper energy for everyone, increase energy security and promote investment inflow into Latvia’s state budget, which could be used, for example, on healthcare.

Of course, there is still much homework to be done in this area to improve awareness and understanding of energy issues. The state and the private sector need to help people understand how they can benefit from new technologies and what opportunities renewable energy offers.

The public must be informed that renewable energy is a tool that helps ensure the continuity and security of electricity supply, as well as use energy more efficiently to reduce bills and promote sustainable development. Public understanding and participation in energy issues are critical to promoting sustainable energy production and consumption. The shift in public perception, driven by new technologies and information availability, can significantly impact how energy is produced and consumed in Latvia and the Baltic region as a whole.

As mentioned, Latvia already has significant advantages in renewable energy development, particularly thanks to hydropower plants and the future potential for wind and solar energy use. Furthermore, Latvia, unlike other Baltic countries, is better positioned to achieve energy independence from Russia by utilising local energy resources and modern technologies. The benefits will be felt across various sectors, as cheaper energy will allow businesses to increase their competitiveness, while the investments obtained will allow the state to increase its budget and use the funds, for example, to raise the pay of teachers and police officers, or to provide social services, healthcare and other services.

Pritt Lepasepp is the co-founder and CEO of Sunly.