Distributed energy market in Latvia

Latvia is a European Union (EU) member with a fast-growing renewable energy (RES) market. Latvia is in the Baltic region of Northern Europe. The country already has one of the highest shares of renewable energy in Europe and continues to expand its clean energy capacity. Latvia’s energy policies focus on energy security and independence, reducing greenhouse gas emissions, and carbon neutrality. 

In recent years, Latvia has stopped importing energy from Russia and has disconnected from the BELL (Belarus, Russia, Estonia, Latvia and Lithuania), synchronizing its electricity system with the European grid instead. To support this change, the country is looking to expand renewable energy production in wind, solar, biomass, and distributed energy systems.  
 
For Canadian companies, Latvia offers:

• a growing, stable, EU-aligned regulatory environment
• strong interest in clean technology
• growing demand for modern energy solutions

Regulatory compliance and complexities: Canadian firms may find it challenging to navigate Latvia’s energy rules and EU-wide regulations. Permits, standards and reporting requirements can differ from those in Canada. 

Dependence on EU funding: Many energy projects rely on EU grants and incentives. These programs often favour EU suppliers, which may limit competition for some contracts for non-EU businesses. 

New government priority: Given the current geopolitical situation in the region, government spending on the defense sector has increased, with targets approaching 4% of GDP. This could limit the Government’s ability to support large energy development projects. 

Market concentration: The energy sector is dominated  by a very limited number of large players. This can make it difficult for new entrants to build partnerships or access larger infrastructure projects. 

Latvia is guided by national and EU energy strategies that aim to increase renewable energy to 57% of its energy mix by 2030. To do so, key priorities include: 

• wind farms along the coast and inland
• modern biomass energy facilities
• investments in solar power plants
• upgrades to the national energy grid to incorporate smart technologies
• integration of green fuels and hydrogen

Latvia estimates public and private energy-sector investments totaling EUR 34.4 billion by 2050. By then, Latvia expects to produce 25 terawatt hours (TWh) of electricity to consume 19 TWh, compared to 6.6 TWh produced and 7.2 TWh consumed in 2024. 

In 2024, the new Electricity Market Law came into effect. It requires  that distribution system operators need to co-finance 50% of the cost for new electricity connections. This change has been designed to ensure a more competitive environment and attract new investors. 

By the end of 2024:

• 550 solar power plants were connected to the grid
  • total solar capacity reached 660 MW (including microgenerators)
  • solar capacity was expected to grow to 900 MW by 2025, including hybrid systems and storage
  • most households had installed solar systems to protect themselves from fluctuating electricity prices and to achieve long-term savings.

More households and small businesses are generating their own renewable heat and electricity. Excess power is added back to the grid, supporting the growth of a broader distributed energy network.

Latvia is a promising and growing market for Canadian companies in renewable energy. The strongest opportunities include:

• wind and solar projects
• biomass
• energy storage
• hybrid systems
• smart grid technologies 
  

With supportive government policies and EU programs, Latvia is a strong option for Canadian businesses looking to enter the European clean energy market.

For more information on the distributed energy market in Latvia, please contact Irena Cirule (irena.cirule@international.gc.ca).