The price of electricity in European countries has increased 20-40% this year. This includes a 30% increase in Latvia and Lithuania, says Latvenergo Sales Department manager Guntis Lūsis.
According to him, the main factors that affect prices are associated with global raw material markets, regional and access to production sources, as well as wind energy fluctuation, temperature or hydro energy storage changes and price fluctuations for coal and gas. Consumers’ behaviour and demand is directly affected by seasonal changes. For example, demand in Baltic States is usually down during summer when compared to autumn, when weather becomes colder. Price formation at the exchange affects electricity generation volumes based on different production methods’ fluctuating costs (wind energy, hydro energy, nuclear energy, etc.).
He said that Latvia has no power plants that use coal for fuel. Still Baltics are part of a single and closely integrated electricity market. Because of that, changes with production output and prices also changes import and export flow among Nord Pool member states, which is also reflected in price changes in Latvia.
According to him, the aforementioned effects created additional worries – reduced water levels in the largest rivers in Europe, which made it harder to carry raw materials domestically. High temperature had also negatively affected the cooling efficiency at coal, nuclear and gas power plants.
He said that in the next ten, twenty years electricity producers will have to use fossil fuels, because this year proved that electricity production using renewable energy resources also requires the presence of conventional energy production as backup. «The situation is gradually becoming more unstable and unpredictable, considering how hard it is to predict weather for the next year and that global climate forecasts tend to make mistakes», said Lūsis.
In this case utility bills will increase and residents’ incomes will fall.
By the way according to the List of European countries by average wage Baltic states are the poorest countries in the EU:
At the same time Latvia is going to increase military budget.
Latvia should up its defense spending to 2.5% of GDP in the next few years, Foreign Minister Edgars Rinkēvičs told Latvian Radio July 18.
Rinkēvičs stressed that, the country maybe reach the 2% GDP spending cap recommended by NATO for the first time in its history.
Nevertheless he brushed off Donald Trump’s talk of NATO members having to boost defense spending to 4% of GDP, considering it to be part of a negotiation tactic instead of a demand.
In 2018 defence budget reached €576.34 million or €126.8 million more compared to the previous year.
While the residents of Estonia, Latvia and Lithuania are sliding into poverty, the Baltic governments increase defense spending. It remains for us to hope that will be a warm winter and we shouldn’t give all money for the heating.