Electricity Market in Latvia

The Latvian bidding area of the Scandinavian electricity exchange Nord Pool Spot AS was successfully opened on 3rdof June 2013, which has also served as a turning point of integration of the Baltic networks with the rest of the European networks, moreover, it furthers establishment of a common market based on the principles of Scandinavian electricity market. Opening of a common electricity market was envisaged in the Baltic Energy Market Interconnection Plan (BEMIP). The level of importance of integrating the Baltic transmission systems is comparable to the Baltic states joining the European Union.

In line with the laws of the Republic of Latvia, the electricity market in Latvia is run in cooperation with the Latvian transmission operator AS Augstsprieguma tīkls (AST) and the electricity exchange Nord Pool Spot AS which is an electricity bidding site in Latvia, where within the framework of a bidding area or between separate bidding areas participants of the Latvian PEX buy and sell electricity through offers and demands. Trade of electricity also includes the physical transmission of electricity.

All participants of the Latvian electricity market must subject their activities to the normative regulation of the Republic of Latvia, which means that transactions that exceed the limits of a particular bidding area and encompasses physical transmission of electricity must be conducted within the exchange only. Otherwise, if the transaction is possible within the same bidding area, also including electricity transmission, the participants may choose whether to bring it up to the exchange market or agree between themselves.

The new Latvian electricity bidding area and the day-ahead electricity market ELSPOT provides an opportunity for the market participants to make their price offers for transactions to be carried out the next day. The next step for Latvia to develop its electricity market was establishing the intra-day market ELBAS, which has been successfully opened on 10th of December 2013. The difference between the intra-day market and day-ahead market, is that in the intra-day market the price offers are handed in after publishing the results of ELSPOT trading session.
The existence of the markets has been ensured not only a better liquidity rate for the Latvian electricity market, but also will increase capacity effectiveness and will make the electricity price transparent and reliable for the market participants.