Latvia's renewable energy sector has seen significant evolution over the past several years. Initially, the country's renewable energy strategy relied heavily on hydropower, a natural advantage, while other renewable sources, such as wind and solar, remained underdeveloped.
In the early stages, wind energy projects were scarce, and solar energy was not yet considered a viable large-scale option. Sunly began investing in Latvia around 2019, facing a market where outdated projects and equipment dominated, leaving little room for immediate growth. However, the groundwork was being laid as Latvia's promise to generate energy from more diverse and renewable sources began to take shape.
Today, Latvia is a much different player in the renewable energy field. Over the past few years, the nation has shifted its focus toward integrating wind and solar energy on a broader scale, developing hybrid energy parks that combine wind turbines, solar panels, and battery storage systems. This shift to decentralized, fuel-less energy solutions not only makes energy production cheaper and more efficient but also keeps money within local economies. It reduces the dependence on foreign fuel-based systems, which otherwise drain financial resources from local communities. This shift reflects not only technological advancements but also a growing awareness of the need for energy independence, particularly from Russian energy supplies.
Sunly’s plans, including the construction of solar parks with a capacity of over 500 MW, demonstrate how far Latvia together with Estonia and Lithuania has come from its earlier stages of renewable energy exploration. The country now stands at the forefront of regional efforts to decouple from older energy models and embrace a future driven by local, sustainable resources.
If fuel-based solutions are chosen, they come from countries Latvia does not control, leading to an outflow of money from local communities, creating long-term economic vulnerabilities. It is no secret that the Baltic states need to reorient their energy supplies towards local, renewable sources to strengthen energy security and reduce reliance on fuel-based energy, much of which is imported from other countries.
Achieving energy independence from Russia is critical, but it also involves minimizing reliance on foreign fuel, which leads to significant financial outflows from the state. In today’s global context, it’s important to consider where this money goes and the impact it has, as fuel-based economies are dominated by players who are profiting in ways that may not align with our values. By focusing on local renewable energy, such as wind and solar, and integrating battery energy storage systems at a single connection point with direct lines to consumers, the Baltic states can manage their energy production and consumption more efficiently. This not only reduces the need for external energy sources but also helps create reserves for crisis situations, fostering greater independence and strengthening the region's energy resilience.
The adoption of more fuel-less and decentralized production solutions offers a clear economic advantage, as it prevents money from leaving the local economy and encourages sustainable, cost-effective energy solutions.
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.
Public information
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.
However, if the focus shifts to expensive, fuel-based solutions, it is the consumers who will bear the cost of those choices, leading to higher energy bills. 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.
The author is co-founder and CEO of Estonian energy company Sunly. He also is a Founding Member of Energiaühistu, a renewables cooperative that develops renewable energy projects in Estonia and supports the transition to renewable energy. He is also co-ounder and member of the management board of the Tuleva pension fund's management company. Until 2018 he worked at Nelja Energia AS, a wind energy company.
