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Latvian Renewable Energy Federation Protests Network Balancing Cost Mechanism
By Anya Sharma | RIGA – 2025/06/18 12:47:18
The Latvian Federation of Renewable Energy (LAEF) has voiced strong concerns over the acceptance of a new mechanism for balancing electricity network costs, which they say unfairly burdens renewable energy producers and autonomous market participants.
LAEF argues that this mechanism effectively acts as a hidden “Latvenergo tax,” creating an additional financial strain on the renewable energy sector and undermining investor confidence. The federation believes the new procedure disproportionately benefits the state-owned company Latvenergo AS, as only it can currently meet the conditions too provide the balancing service.
According to LAEF,this situation fosters unequal competition,disadvantaging other market players who have invested private funds in renewable energy projects. They also criticize the transmission system operator JSC “Augstsprieguma tīkls” (AST) for its reluctance to qualify other service providers that could offer competition in the balancing services market. This, they say, hinders the adoption of innovative solutions like electricity storage batteries, crucial for LatviaS energy future.
Baltic Comparisons Highlight Latvia’s Approach
LAEF points out that Latvia’s approach is the most aggressive in the Baltic region and Europe, lacking a transition period and failing to protect consumers and investors.In contrast, Lithuania has a three-year transitional period, where manufacturers and traders will cover 30% of balancing costs in 2026, 60% in 2027, and 100% from 2028. Estonia will cover these costs through its transmission system operator “Elering” untill the end of 2025, while developing a future model to prevent electricity price spikes. Estonia also utilizes flexible power sources like the Kiis power plant to mitigate non-power costs.
