28.12.2024
While one of the most prominent features of 2023 was the energy price crisis, including record electricity market prices, in 2024, we saw a stabilisation of energy prices, which play a major role in the economic upturn. At AS Sadales tīkls, we have continued our investments in infrastructure and our work on increasing renewable energy generation capacity this year, and we will continue this work in 2025. Looking at the energy sector as a whole, building a balanced overall energy portfolio for the country and balancing generation and consumption capacities will remain key challenges in the coming year, bearing in mind the fact that solar energy is seasonal and will not provide electricity throughout the year or at night, so there must be “space” in the portfolio for the development of other, less volatile energy sources.
Already in November, the total generation capacity of solar panels connected to the distribution system (both micro-generators and power plants) reached 600 megawatts (MW) – at the beginning of 2024, we only forecast such a result for the end of the year. By the end of 2024, the total solar generation capacity has already reached 660 MW. Solar generation capacity in Latvia will continue to grow next year – we forecast that it could reach 900 MW in the distribution system by the end of 2025 (including hybrid power plants or micro-generators with storage solutions). The forecast is based on the projects submitted and their development status. This is more than what is needed to meet our consumption during the summer season, at least based on current data. The good news is that this will mean low or even negative electricity prices in sunny weather. The challenge will be where to put the surplus solar energy.
With the growth of solar generation, we have in a way gone from one extreme to the other, or from zero to a disproportionately rapid increase in capacity. Some solar developers may come to the conclusion that the planned business model will no longer be profitable, after all, who wants to sell electricity at a negative price. In this respect, the planned amendments to the Electricity Market Law are positive, as they provide that if the developer of a power plant decides to withdraw from the construction of the power plant and discontinue the connection, the developer will have until 31 January 2025 to claim a refund of the system capacity reservation fee paid. This will allow the release of capacity to other generation developers, possibly using different technology.
What can we do to ensure that not only electricity generation capacity but also total electricity consumption in the country grows rapidly? One answer is electrification, including the use of cheap solar energy in the heating sector. We are working on possible electrification scenarios together with the Association of Latvian Heating Enterprises. There is also great potential for electrification in the transport sector – the number of registered electric vehicles in Latvia continues to grow, and the charging network is expanding.
In addition, the use of electricity storage solutions is expected to increase significantly in Latvia next year.
This year, significant efforts have been made to access funding from the European Union (EU) Recovery Fund – admittedly, we face challenges with procurement bureaucracy, but we are making progress. Thanks to EU funding, we are able to invest ahead of schedule in rebuilding and modernising the electricity network, which is crucial for developing electricity services, strengthening network reliability and increasing capacity availability. Continuous and, where possible, ahead-of-the-curve investment in the electricity network significantly improves the quality, reliability and availability of electricity supply. This is demonstrated by the SAIDI indicator, which shows the average duration of power outages per customer per year. In 2023, the total annual duration of power outages per customer in Latvia was 268 minutes, while in Estonia, for example, it was almost twice as long – 530 minutes. Meanwhile, in Lithuania – 271 minutes.
In 2025, we will continue to invest in electricity network infrastructure to improve the quality and reliability of electricity supply and the availability of capacity. We must be prepared for the fact that, as we move towards ever more comprehensive electrification, the issue of outpacing investments in the network will become increasingly important.
Overall, 2025 is expected to provide clearer answers to important questions that we can only make predictions about at present. We’ll see how many solar parks will be developed both here and at AS Augstsprieguma tīkls, how wind generation will develop, and what the trend will be for hybrid power plants, including those with storage facilities. And also, how we’ll manage the electrification measures and how network flexibility services will develop. Finally, synchronisation with the European electricity network will take place in 2025 – a crucial event for the country’s energy independence.
Author: Sandis Jansons, Chief Executive Officer of Sadales tīkls