Following the launch of NordBalt and LitPol Link connections, the price of electricity on the market had reduced significantly, and the average expected price calculated based on exchange quotations is 34.14 EUR/MWh.
The reduction of the price and enhancement of the connection network are the most notable changes that appeared after the liberalization of the electricity market. The opening of the gas market, expected to take place next year, will provide consumers with more options. Before the upcoming Energy – 2016 conference, which is expected to address topical matters of the energy industry, specialists have compiled the most notable advantages of an open electricity market and perspectives for the liberalization of Latvia’s gas market.
The liberalization of Latvia’s electricity market has contributed much to the country’s overall energy sector. The market continues to fulfil its main goal – supply electricity to consumers at appropriate market prices, admits Chairman of the Board of Latvenergo Aris Zigurs.
«One other important event that is expected to have an effect on enterprises and most households in Latvia is the opening of the gas market. Similar to the electricity market, multiple suppliers will appear to supply gas to households and enterprises. In addition, it is no less important to fulfil the European Commission’s requested separation of sales and supplies of gas. This will provide consumers with a transparent and appropriate market price for all components – tariffs for trade and supplies of natural gas,» – explains Latvenergo production director Maris Kucinskis.
The previously predicted merging effect in conditions of a free electricity market surfaced quickly: market statistics show that electricity price in Latvia had come close to prices present in Scandinavia in February and March – around 30 EUR/MWh. Three or four years ago, on the other hand, the price was close to 50 EUR/MWh.
«In 2016, the biggest influence on the market was provided by the Lithuania-Sweden connection, which has effectively equalized electricity procurement prices for Latvia and Lithuania with Estonia. We expect the price fluctuation amplitude will increase in the future. This means that daytime amplitude will no longer be higher than before. On top of that, night-time amplitude may become lower than it is now,» – admitted Aris Zigurs.
With that, Baltic States have become the most integrated region in Europe after the launch of NordBalt and LitPol connections. This opens new procurement opportunities for traders and consumers in Scandinavian countries. Ten years ago, Baltic States were somewhat isolated in the field of energy. Now, on the other hand, the region is not only well-connected with other countries, but is also an important transit point for electricity supplies.
A single exchange for Latvia and neighbouring countries makes the price on electricity clear, transparent and comparable.
«Market price is the best price. It is a valuable advantage for all consumers – the population and legal persons: the option to pay for electricity as much as it is worth. Furthermore, it is clear now which factors form end tariffs. Conditions have changed – now regulated prices do not make the wrong impression as to how much electricity truly costs,» – explains energy expert Reinis Aboltins.
Speaking of conditions for supplies, experts remind that two electricity tariff components are regulated by the government. Regulations are currently in the process of improvements. With that, consumers can expect certain changes.
The main benefit for consumers provided by the liberalization of the electricity market, and the gas market soon, is the ability to choose traders. All traders offer equal supply conditions. Because of that, consumers should pay attention to prices, contract conditions, payment method convenience and other services related to the supply of electricity.
A free market often affects the lifestyle of the population: while it was a regular utility payment in the past, now consumers can use ‘personal energy efficiency programmes’ to cover payments for electricity at market prices.
Consumers are free to review and change their habits in using electricity, reducing its consumption at peak hours. The beneficial package is currently in the hands of consumers who have smart counters installed and who procure electricity at market prices, admits Aboltins.