Geopolitics, Energy Prices & Latvia’s Heating Shift to Electrification
Latvia’s district heating sector is bracing for potential energy price volatility linked to geopolitical instability, though a significant surge in heating costs this year is considered unlikely, according to Ina Bērziņa-Veita, President of the Latvian District Heating Association and board member of SIA “Salaspils Siltums.”
Even as diesel fuel price increases are already impacting energy resource costs, Bērziņa-Veita indicated that these increases are not expected to translate into substantial tariff hikes for consumers in the immediate future. The approaching end of the heating season, coupled with pre-purchased fuel supplies, provides a buffer against immediate price shocks. Greater clarity regarding price trends will likely emerge when new procurement contracts are negotiated for the next heating season, she stated.
“Currently, there is a certain uncertainty in the market, as any international events can affect energy resource prices and the overall situation in the sector,” Bērziņa-Veita explained, according to reporting by NRA.lv.
The sector is undergoing a broader shift towards electrification, with increasing consideration given to heat pumps and other electric solutions for heat supply. However, Bērziņa-Veita cautioned that this transition is still in its early stages, and the full impact on the sector will only become apparent in the coming years. The pace of electrification will depend heavily on electricity price fluctuations and collaboration with grid operators, AS Augstsprieguma tīkls and AS Sadales tīkls, to develop suitable models for electricity usage in district heating.
Simultaneously, efforts are underway to integrate renewable energy sources, including solar and wind power, into the heating system. “Here’s a process in which the best models of cooperation between electricity and heat energy must be gradually found so that the solutions are economically justified for both companies and consumers,” Bērziņa-Veita said.
Māris Kānītis, Business Manager of Adven Latvia, noted that the district heating sector has experienced moderate development in recent years, but the availability of co-financing for projects is now providing a new impetus for electrification, energy storage, and the implementation of residual heat solutions. He added that while the recent decline in fossil fuel prices has temporarily reduced the economic rationale for alternative technologies, the renewed geopolitical tensions could reverse this trend.
Kānītis emphasized the importance of maintaining a balance between current consumption demand and future forecasts in new project implementation. He also highlighted the varying levels of renovation progress in different municipalities, which significantly impacts heat consumption levels. “Fully supporting people’s desire to improve energy efficiency in their properties is important, but maintaining system balance requires connecting new customers as well,” he stated.
Kristaps Mors, CEO of Power Mining, pointed to the growing number of data centers globally and the resulting increase in heat generation as a potential resource for district heating systems. He believes that data centers, operating 24/7, could offer heat at a lower cost compared to cogeneration stations. “We believe that the potential for using waste heat from data centers in district heating systems is very large, as Latvia and especially Riga have a fairly extensive district heating network,” Mors said.
Raivis Širmelis, Sales Manager of Industrial Energy Solutions at Adven, underscored the need for economically viable projects based not only on technical feasibility but also on sustainable financial models. He cited the importance of predictable heat flows, adequate infrastructure, and the ability to integrate energy storage and electrical equipment. Adven’s partnership with Cytiva in Sweden, where heat is recovered from production wastewater and integrated into the heating system, serves as an example of this approach.
Kalvis Kalniņš, Chairman of the Board of AS Rīgas Siltums, acknowledged that the era of cheap natural gas in Riga’s district heating system has ended, exposing structural risks and necessitating new choices. He stated that the company is focusing on infrastructure modernization, including the renovation of heat networks and the commissioning of a 49 MW electric boiler. While residual heat from data centers and industrial processes could play a supplementary role, Kalniņš indicated it would not be sufficient to replace a substantial portion of natural gas consumption in the near term. He also highlighted the potential of biomass projects and waste-to-energy solutions.