Green energy produced in Latvia may be beneficial not to us, but to the Swedes

Offshore wind farms such as Elwind are expected to provide Latvia with electricity export opportunities. A year ago, the Baltic States and Germany signed a joint memorandum of understanding on the construction of the Baltic WindConnector, which involves laying a 750 km long cable along the bottom of the Baltic Sea to transmit electricity. A cost analysis of the project is currently underway, assessing the benefits for consumers and electricity producers in the Baltic States and Germany.

In the future, a project to connect with Sweden – “LaSGo” (Latvia-Sweden-Gotland) – may also be implemented. When planning potential connections with Germany and Sweden, electricity prices in these regions must be taken into account.

The average exchange price of electricity in Latvia this year is 82.19 euros per megawatt-hour (until the beginning of July), last year – 93.89 euros, the year before – 226.91 euros. In Germany, the price of electricity this year is 67.91 euros per megawatt-hour, last year – 95.18 euros, the year before – 235.45 euros. At the same time, according to Nord Pool, on the island of Gotland, which is part of Sweden’s third electricity region, prices in recent years have been among the lowest in Europe, amounting to 43.54, 51.70 and 129.21 euros per megawatt-hour, respectively.

According to the Ministry of Climate and Energy, the key considerations that need to be taken into account today when assessing the benefits and costs of implementing such projects are different from those that needed to be taken into account when planning cross-border connections in previous decades.

It may turn out that, for example, the transmission line will be used primarily for exporting electricity produced by Latvian wind farms to German or Swedish consumers. Consequently, these cross-border connections will primarily benefit wind farm operators and consumers in the importing countries, but may not bring direct benefits to Latvian consumers commensurate with the expected investments.