May was marked by a sharp increase in electricity prices in the Latvian market following a relatively calmer April. The average electricity price in Latvia’s bidding area reached EUR 82.14/MWh in May, representing a 43% increase compared to April, when the average price stood at EUR 57.45/MWh. Compared to May 2025, the price in Latvia was also 21% higher.
From Latvia’s perspective, the most significant driver of the price increase was a change in the domestic generation mix. According to AST, hydroelectric generation declined substantially in May following the end of the spring flood season, making it one of the primary reasons why electricity prices increased not only in Latvia but across the Baltic region. On a regional level, the price rise was further reinforced by a 28% month-on-month decline in total electricity generation across the Baltics, while electricity prices in the Nordic countries increased by 20%, making imported electricity more expensive as well.
This means that Latvia’s May price increase was not merely a domestic story related to the Daugava River’s hydropower resources. Electricity imports into the Baltic States increased once again during May, with total imports rising by 18.1%, including a 27.6% increase from Finland and a 1.6% increase from Poland. In practical terms, as local and regional generation weakened, Latvia and its neighbouring countries were forced to rely more heavily on electricity imports from external markets, where prices were not significantly lower than those in the Baltics.
Another important signal in May was the growing volatility of the electricity market. Although the monthly average price increased sharply, Latvia simultaneously recorded 97 negative-price 15-minute intervals, 15% more than in April. This illustrates the current state of the electricity market: while the overall pricing environment is becoming more expensive, prices can still fall below zero during specific periods—particularly when solar generation is high or import flows are strong.
From the perspective of Latvian businesses and consumers, this trend is particularly important. Customers exposed to spot market pricing experienced significantly higher electricity costs in May compared to April. At the same time, market data indicates that price volatility continues to intensify. As a result, smart consumption management, flexibility solutions, and procurement strategies are becoming increasingly important, especially for companies capable of shifting electricity consumption away from high-price periods toward lower-priced or even negative-price intervals.
In the broader European context, the increase in electricity prices during May was not unique to the Baltic region. According to AleaSoft, prices rose across most major European electricity markets in May 2026, driven primarily by higher natural gas prices, rising CO2 emission allowance costs, and lower wind generation in several markets. This is particularly relevant for Latvia, as domestic electricity prices are becoming increasingly influenced not only by local generation conditions but also by regional and wider European energy market dynamics.
A further increase in electricity prices is currently expected during the summer months. As of mid-June, the forward market forecast for the month ahead stands at approximately EUR 104/MWh, although market conditions may still improve.
