LATVENERGO: From Reliance to Resilience in Shifting Baltic Market

Across northern Europe, the energy map is being redrawn. As the Baltic states advance towards full independence from Moscow-influenced electricity grids, new investments are reshaping supply, infrastructure, and security. Latvia, a nation long reliant on fossil fuels, biofuel resources and cross-border imports, is now embarking on one of the region’s most dynamic transitions.

This transformation is being led by Latvenergo — the country’s largest energy producer and retailer, and one of the Baltic’s most important players in electricity generation and distribution. Established more than 80 years ago, the state-owned company has become a benchmark for reliability and resilience. But in 2025, its focus has shifted decisively to diversification, renewables, and regional collaboration.

Latvia’s energy sector remains at a critical juncture. According to the International Energy Agency, renewables already account for around 40% of the country’s energy mix, but a large portion still comes from imported fossil fuels. In February 2025, the region celebrated the Baltic states drive to synchronise with European power systems in what was labelled a ‘historic decoupling from the east’, marking the beginning of an era defined by clean energy independence.

“From February 2025, we have been totally connected to the European grid and European frequencies,” explains Latvenergo CEO Mārtiņš Čakste. “Now, everyone is welcome to our market and welcome to invest in our energy sector which is developing fast. There are many opportunities.”

BUILDING RESILIENCE

Latvenergo’s strategy is centred on a simple, urgent truth: the future is renewable. The company has committed close to €1 billion this year alone to developing new solar and wind capacity — a dramatic step change in scale that signals Latvia’s readiness to accelerate decarbonisation.

“Last year we invested half a billion, and this year it will be close to a billion Euros, into renewable projects – solar and wind,” says Čakste. “Onshore wind generation is showing strong potential in our country and that is the cheapest technology.”

While hydroelectric generation remains a bedrock of Latvia’s system — the Daugava River still providing more than a third of the nation’s electricity — Latvenergo’s generation portfolio is evolving rapidly. In its unaudited results for the first half of 2025, the Group reported that renewable electricity generation reached one of the highest levels in its history, with strong hydro output complemented by expanding wind and solar assets.

“We are steadily investing in our distribution network but that is connected to the change to renewable generation and the changing environment,” Čakste continues. “The network has to become smarter and more resilient.”

This emphasis on infrastructure modernisation is key. The company’s distribution arm, Sadales tīkls, manages a grid that must handle both variable generation and rising consumer demand, particularly as electric mobility gains traction. Latvenergo’s EV charging network, now expanding across cities and highways, complements this strategy — ensuring the transition reaches both households and businesses.

MAJOR PROJECTS

Much of the current investment surge is focused on three flagship projects: Telšiai in Lithuania, and Laflora and Pienava in Latvia.

“These are our currently our three biggest wind farm projects,” Čakste confirms. “There was a gap in Latvia where wind farms were not built and Laflora will be the biggest without subsidies, close to Jelgava. We recently concluded an agreement with the Swedish company, Eolus, to buy the 150 MW Pienava wind park.”

In May, Latvenergo laid the foundation stone for Laflora – a project developed solely by Latvian companies. Generation is expected to begin in summer 2026 and will eventually have the ability to supply more than 160,000 households. Pienava will generate 147 MW from 21 wind turbines and contribute significantly to the local economies of Tukums and Dobele. Telšiai, meanwhile, strengthens Latvenergo’s Lithuanian presence, broadening the Group’s reach across all three Baltic markets. Each of these projects plays a strategic role in diversifying Baltic capacity and aligning regional generation with EU climate targets.

“These are very interesting times and the transition from an old, stable, predictable market to something very new is exciting,” Čakste reflects. “It is similar to the changes in the telecoms sector in recent decades.”

PARTNERSHIPS AND TRUST

Partnerships are central to Latvenergo’s strategy. The company collaborates with global industry leaders to secure technology, expertise, and long-term operational excellence. “We work closely alongside power plants that are managed by international companies such as Iberdrola and GE,” Čakste says. “With wind generation, we work closely with European companies such as Nordex and Vestas. Hydro generation has historically been more connected with the Eastern markets but currently we are taking over many parts of that inhouse. Our connections are felt all over the globe.”

For Latvenergo, such relationships are not only about procurement — they’re about aligning values. “We consider ourselves one of the leading companies in sustainability and so it is important to partner with reliable companies that share the same qualities,” he adds. “Energy projects are very long and you need companies that you can trust to deliver over 20 or 30 years.”

This emphasis on trust extends to Latvenergo’s procurement process, which the company insists must remain transparent and competitive. “Our businesses are separate and they initiate their own purchasing processes. However, we have a central procurement department which can support across the group,” Čakste notes. “All of our tenders are very clear and open and transparent. The energy sector is sometimes difficult as there are not always too many companies to compete across these tenders. Currently, we are tendering for batteries and we want as many companies as possible to participate in what is a very open and structured process.”

Beyond generation, Latvenergo is looking ahead to new energy frontiers — smart technologies, storage, and digitised management systems that will underpin the next stage of transition. The Group has begun evaluating opportunities in smart energy and technology sectors, exploring how digital tools can enhance flexibility, reliability, and customer experience.

This evolution reflects broader shifts across Europe, where decentralised generation and electrified mobility are redefining the traditional utility model. Latvenergo’s mix of legacy hydropower, new renewables, and growing smart infrastructure positions it uniquely to lead this change in the Baltics.

Financially, the company remains in robust health. For the first half of 2025, Latvenergo Group reported stable revenue performance despite fluctuating wholesale electricity prices and record hydro generation. Approximately half of all electricity sold by the Group now goes to neighbouring Lithuania and Estonia — evidence of its growing regional role.

OPEN TO THE FUTURE

For Čakste, Latvenergo’s mission is about more than power generation — it’s about enabling the Baltic region to stand on its own feet in a cleaner, more connected Europe. “Our projects are very important geographically, for the Baltic states, as we have finally gained independence from the Russian and Belarussian electricity grids,” he says.

This independence, achieved through synchronisation with the continental European network, ensures not only energy security but also opportunity. “We trade a lot of gas and we import a lot of LNG through the Klaipeda terminal with the potential for sales into Finland and Poland. In the future, we would not exclude expansion to other markets,” Čakste reaffirms.

Latvia’s path to sustainability is well underway, and Latvenergo is at its centre — building wind farms without subsidies, upgrading networks, and driving innovation across borders. The coming years will bring continued expansion, fresh partnerships, and a smarter, cleaner energy system.

For Čakste and his team, it’s a vision of resilience, openness, and lasting value — one grounded in collaboration and a belief that the Baltic’s best energy days are still ahead.