Latvia Offers a Favorable Environment for Private Investments in the Energy Sector

By 2030, it is planned that renewable energy will 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 to other Baltic countries since hydropower plants are already operational here; on the other hand, we lag behind our neighbors 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.

The renewable energy producer "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 continuing to develop wind and solar energy production, as well as battery energy storage systems, recognizing the significant potential in the Latvian market. Our immediate plans in Latvia involve the construction of four solar parks with a total capacity of 553 MW. All parks in Latvia are designed as hybrid parks, with future plans to integrate wind turbines, battery energy 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.

Not Just to Meet Demand but to Create Reserves for 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, including Latvia, 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 production, as well as battery energy 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 Role of the State—Ensure Stable and Clear Regulatory Frameworks

In renewable energy production and strengthening energy independence, the state also plays a crucial role, though this does not necessarily imply investments. It should be noted that, compared to other Baltic countries, Latvia stands out for its decision not to subsidize renewable energy, which can largely be explained by negative past experiences. Such an approach, where the state does not encourage market participants with financial instruments, can also be beneficial as it pushes companies to seek effective and innovative solutions without state intervention. 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 liberalized, 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 realize 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 according to market conditions, the overall attitude towards renewable energy also changes. At the end of August, the Climate and Energy Ministry approved regulations that provide for contributions to local communities, namely financial benefits to municipalities and residents living near wind parks. The sector's 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, in 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 industry companies 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 utilizing 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, for teachers' and police officers' salaries, welfare, healthcare, etc.