Over the past 20 years, Latvia has managed to reduce the share of imported electricity from 69.4% to 29.3%, yet we remain dependent on energy imports – this is shown by Eurostat data. At first glance it appears to be far below the EU average (57%), but this figure conceals a vulnerability. Whenever external markets are unstable, imported energy resources have a significant effect on the price of electricity. The worsening geopolitical situation, including the escalation of the conflict in Iran, has a direct impact on gas and oil prices, as well as on end consumers' bills in Latvia.
The European Union's energy balance reveals a systemic problem: according to current data, the EU produces only 43% of its energy, while more than half (57%) is imported. A substantial part of the energy balance consists of fossil resources – oil and petroleum products (38%) and natural gas (21%) – which are supplied mainly from external sources, including the USA, Norway, Algeria and other countries. This means that any external shock, from a military conflict to a logistics disruption, is immediately visible... in all prices.
“Against this backdrop, Latvia looks ambiguous,” explains energy expert Artūrs Toms Plešs, chief executive of Eurowind Energy Neue Energien. “On the one hand, the share of renewable energy resources in the structure of available energy reaches almost 46%, which is one of the highest figures in the EU and is comparable to Sweden and Denmark. On the other hand, petroleum products (33.3%) and gas still account for a substantial part of final consumption, and dependence on imports of certain types of energy, such as natural gas, persists. At times when there is less solar and hydropower available, namely during the cold months of the year, dependence on imports is very clearly visible in electricity prices. That affects everything, from food to services.”
If the Strait of Hormuz remains closed for a longer period, Latvia's electricity prices in the winter of 2026/27 could approach the record levels of the 2022 crisis, when monthly average prices exceeded EUR 300/MWh. For much of the winter we could see steady wholesale prices above EUR 150-200/MWh, and even higher on cold days.
As early as the spring of 2026, officials are warning that “heating costs are expected to rise in the autumn, and electricity will also become more expensive” if the geopolitical situation does not improve. Such a trajectory seems plausible – expert forecasts predict a price shock that could be similar to that of 2022. The Latvian government and consumers should prepare for high electricity prices next winter too, and consider measures that could soften their impact.
It should be understood that the overall import dependency figure does not explain everything. Even with a relatively moderate level of dependency, Latvia is part of a regional energy market where the price is set by marginal sources – often gas itself. This means that external crises, including the instability now being seen in the Middle East, continue to have a direct effect on electricity costs.
The experience of other countries shows that resilience is achieved not by formally reducing import dependency, but by developing domestic generation, primarily from renewable resources. Estonia, for example, has one of the lowest dependency figures in the EU – around 5% – while the Scandinavian countries invest continuously in wind and hydropower, reducing the influence of external factors on prices.
The greater the share of renewable energy resources (RES) in a country's energy balance, the smaller the impact of external crises and the more predictable the price becomes for businesses and residents alike. Latvia makes only partial use of this advantage. Although the overall RES share is relatively high, its most important element – wind energy – is still poorly developed. In 2024, wind generated only around 0.2 TWh of electricity, compared with around 3.8 TWh in Lithuania and around 1.3 TWh in Estonia. Latvia is therefore significantly behind in precisely the segment that underpins affordable electricity in Europe. Consequently, in periods of low hydropower and solar output, the country is forced to make up the shortfall with imports and more expensive resources, which has a direct effect on prices.
“For Latvia this means a strategic choice has to be made. In circumstances where global conflicts are becoming yet another factor of energy instability, the only long-term solution is to develop our own generation. Wind energy has an important role to play here: it is a local resource that does not depend on imports, and it is a highly effective way of reducing the influence of expensive fossil resources on the price of electricity,” comments A. Plešs, adding that otherwise Latvia risks remaining a hostage of external markets, with the corresponding economic consequences.
Eurowind Energy Neue Energien: an international renewable electricity producer that develops large-scale wind, solar and other green energy projects. The company was founded in 2006 and currently operates in 17 countries around the world. In Denmark it is the largest developer of onshore wind farms, and it currently owns more than 400 wind turbines. The group manages renewable energy assets with a total capacity of 1300 MW, while its portfolio of projects under development exceeds 58 GW.
In Latvia the company operates under the name SIA EWE Neue Energien, which reflects the joint venture with the German partner Neue Energien Ingenieurplanungen GmbH.