Latvia is facing a challenging winter as a prolonged cold snap strains the country’s energy resources, leading to shortages of popular heating fuels like firewood and pellets. While officials report sufficient gas reserves to meet demand – currently holding enough to cover 90-100% of annual consumption as of January 25,2026 – concerns remain about the impact of the cold weather on energy prices for both households and businesses.A new report indicates that despite increased prices, the situation is currently manageable, with energy officials anticipating price stabilization in the coming months due to increased renewable energy production and stable wholesale markets.
Latvia is experiencing an unusually prolonged cold snap, leading to shortages of popular heating fuels like briquettes, firewood, and pellets. Many stores are reporting they have none of these options in stock, raising concerns about potential disruptions in other energy sectors – gas, wood chips, and electricity generation.
The question now is whether Latvia has sufficient resources to withstand a continued harsh winter, and what impact the cold will have on energy prices for both residents and businesses.
Situation is Manageable, with Improvements Expected
Despite a significant increase in prices, current fluctuations in the electricity sector are not considered abnormal, according to Gunārs Valdmanis, Director of the Energy Market Department at the Ministry of Climate and Energy. “The average electricity price in January has been roughly equivalent to the price observed in February 2025 – around 150 EUR/MWh,” he said in an interview with nra.lv. “Electricity production volumes in the Baltic states have also been similar. Given the continued growth of renewable energy production capacity in the Baltic countries, we anticipate that electricity prices will fall sharply in the coming months, mirroring the trend seen in 2025, leading to a decrease in average prices.” Valdmanis added that there is currently no basis to expect electricity traders to revise prices in fixed-price electricity contracts, which are used by a vast majority (around 90%) of households and a significant portion (61%) of businesses and institutions.
Wood Biomass Prices Have Even Fallen
Data compiled by the Latvian Heat Energy Producers Association indicates that wood biomass fuel (wood chips) prices in the “Baltpool” exchange in January 2026 remained similar to those in 2025, reaching approximately 24-25 EUR/MWh. In fact, prices even decreased by around 4% in the second week of January compared to the first, Valdmanis noted.
Analyzing price fluctuations throughout the year, the price range and levels for wood chips in both 2025 and 2024 have been nearly identical. Prices hovered around 20 EUR/MWh in July of both years, rising moderately to 24-25 EUR/MWh in January during peak heating season. Minor price fluctuations of a few percent are observed weekly, and these fluctuations are consistent across all three Baltic states.
Overall, initial analysis suggests relative stability in the wood chip resource market, with no indication of limited supply or a lack of competition, according to the KEM representative.
The conversation with G. Valdmanis continued.
Is There Enough Gas at Inčukalns? Are LNG Reserves Sufficient? Will the Cost Become Excessive?
On January 28, 2026, the price of natural gas on the wholesale market (TTF Natural Gas Futures) reached 38.86 EUR/MWh, a notable increase from the end of the previous month (December 30, 2025), when the price was 28.61 EUR/MWh – representing a rise of approximately 36%. However, compared to the same periods in the previous year, wholesale natural gas prices remain significantly lower. On January 31, 2025, the price was 45.4 EUR/MWh, 17% higher than current levels, while on December 30, 2024, it reached 43.6 EUR/MWh, 52% higher than at the end of December 2025. Price fluctuations between November 2024 and March 2025 were also roughly similar, and even smaller, than those observed from November 2025 to the end of January 2026 – the fluctuation range was approximately 15 EUR/MWh in the previous heating season, compared to around 10 EUR/MWh this season. This indicates a similar, and even more stable, situation in the global energy resource market than last year, and based on available information, there is no reason to anticipate a price increase for natural gas consumers due to developments in the global market.
Final natural gas prices for end-users, including households, remained relatively stable throughout 2025. Consumers using gas for cooking experienced only minor fluctuations, with the price offered by retailers in January 2026 being approximately 0.069 EUR/kWh (excluding VAT and excise duty), compared to 0.062 EUR/kWh in January 2025, representing a slight increase from the third quarter of 2025. Larger users, utilizing gas for heating, saw prices of approximately 0.0369 EUR/kWh (excluding taxes) for a 12-month contract starting in March 2026 – even lower than the current wholesale market price. Given that gas traders have not revised prices for consumers and the continued stability in the wholesale market, with current fluctuations typical for the heating season and not indicating a lasting price increase, there is reason to believe that natural gas consumers will not face price changes.
According to information compiled by the Public Utilities Regulatory Commission, the average weighted retail market price of natural gas in Latvia in the third quarter of 2025 increased to 54.46 EUR/MWh for households and decreased to 40.79 EUR/MWh for legal entities. Compared to the third quarter of 2024, prices were 7.26% higher for households and 5.8% lower for legal entities. In addition to the gas price, the total payment includes distribution services, transmission services, excise duty, and value-added tax.
As of January 25, 2026, the Inčukalns Underground Gas Storage (IPGK) held approximately 8.49 terawatt-hours (TWh), equivalent to 34% of the total technical capacity of the gas storage facility and approximately 48% of the volume pumped into the IPGK at the end of the pumping season.
When assessing the remaining gas volume in the IPGK, it’s important to note that the current volume is planned to meet customer demand during months with high demand for heat and fuel production, traditionally lasting from November to April in the Baltic states. This means that, roughly three months into a five-month period of traditionally higher demand, the Baltic states and other users, such as Finland, have used slightly more than half of the planned volume.
Latvia’s annual natural gas consumption in recent years has been around 8.5-9 TWh per year, meaning the storage facility currently holds enough to cover approximately 90-100% of Latvia’s annual consumption.
This gas consumption dynamic indicates that the gas storage volume remains sufficient to meet projected demand in the coming months, and gas supplies to the Baltic states continue to be secured through the liquefied natural gas terminals in Klaipėda, as well as the LNG terminal in Inko (delivery on January 26, with the next planned for February 24). On January 27, the Klaipėda LNG terminal pumped 4781 MWh per hour into the Lithuanian system, while pumping from the Lithuanian gas transmission system reached 886 MWh per hour – roughly equivalent to the gas consumption of one power unit at Riga TEC-2, Latvia’s largest thermal power plant.
Given this, there is currently no reason to anticipate a natural gas deficit in the Baltic region. Furthermore, for Latvia’s energy security needs, reserves of 1.8 TWh are also stored in the facility, enough to power the Riga thermoelectric plants at full capacity for approximately 100 days.
Regarding the decision made in the autumn of 2025 to lower the IPGK fill level, utilizing the provisions outlined in EU regulations, Latvia’s overall position remains unchanged. Considering that gas supplies to the region during the heating season, unlike in the past, can also be implemented via pipelines, the total capacity of the IPGK significantly exceeds Latvia’s heating season consumption, and the volume of gas reserves needed for Latvian users is secured by safety reserves, there is no justifiable basis for increasing the storage fill level from an energy security perspective.
It should be noted that the Ministry of Climate and Energy does not collect information on liquefied natural gas reserves stored in Latvia, nor, according to the ministry’s information, is there infrastructure for forming such reserves on a scale significant for supply security. The ministry also does not collect information on liquefied petroleum gas reserves held by traders – this is due to the fact that the consumption of liquefied petroleum gas in energy production facilities (heat or electricity) is very insignificant, and the supply and circulation of petroleum gas are closely linked to the operation of the oil refining industry. Given that pipelines are not used to transport petroleum gas, but rather land or sea transport, and its availability is practically equivalent to that of other petroleum products in a competitive environment of several producers, the regulatory framework does not provide for mandatory formation of liquefied petroleum gas reserves.
Judging by recent statements from Latvenergo, the company is generating electricity efficiently – so prices shouldn’t rise sharply… But consumers are anxiously awaiting their January and February electricity bills – both price and consumption have been much higher than during milder weather.
While Latvia is currently fully self-sufficient in electricity and even able to export some, it’s important to note that neighboring Lithuania and Estonia produce less electricity than they consume, requiring a significant portion of the electricity demanded in the Baltics to be imported from Poland, Finland, and Sweden. Therefore, price fluctuations and the current price increase in the electricity market are significantly influenced by imported electricity. At the same time, it should be noted that fluctuations in wholesale market prices will not directly affect the majority of consumers, as approximately 85-90% of households use electricity contracts with a fixed price, while around 61% of businesses do the same.
Is KEM involved in providing recommendations or offers to mitigate the financial impact on households and businesses?
KEM maintains dialogue with stakeholders, including municipalities and energy companies, to identify the impact of cold weather on consumer bills and potential support for vulnerable users. However, KEM’s assessment indicates that the potential socio-economic burden during the heating months is not related to a significant increase in energy resource prices (excluding price changes for granules, which are consumed in significantly smaller quantities in Latvia compared to other energy resources). Therefore, housing benefits, which could be distributed through municipalities, are considered the most appropriate form of support.
Does KEM have a plan in case of accidents or cyberattacks from aggressive neighboring countries that cause widespread power outages across Latvia?
“KEM, in cooperation with transmission system operator AS “Augstsprieguma tīkls,” which is responsible for the stability and security of the electricity transmission system, has been paying attention to the security and ability to restore operation of the electricity transmission system since Russia’s aggressive invasion of Ukraine in 2022,” said Gunārs Valdmanis. “Latvia has several electricity generation facilities whose operation can be started even in the event of a complete shutdown of the electricity transmission system, using autonomous, small generators, gradually restoring energy supply to consumers and providing opportunities for other electricity generation sources to deliver generated electricity to the grid.”
Work continues to strengthen infrastructure, also utilizing European funding. “The Baltic states and Poland will receive 112 million euros in European support for infrastructure security and protection,” Valdmanis said, inviting readers to verify the information on this website.
A year ago, the European Commission’s legal plan to ban wood-burning stoves and wood heating devices by 2027 gained traction. Following strong objections from the Czech Republic and other countries, it was postponed. Has there been any new activity (pressure) from the EC in the meantime, and what is KEM’s position on plans to ban wood heating?
By basing our arguments on factual information, we can successfully represent the interests of Latvian residents in Europe. We clearly know that wood and biomass will continue to be an important component of Latvia’s energy resource structure, ensuring energy availability and strengthening energy security. Wood and biomass are significant for Latvia, enabling a successful break from energy imports from Russia. Importantly, wood is a sustainable, local resource that helps ensure energy independence. Furthermore, there are situations where wood and biomass are the only available heating source for residents, so I am pleased that, through methodical work, we have ensured that wood and biomass are included in the European list of renewable energy sources after 2030 and their use will not be associated with additional costs. The only question that needs to be clarified is wood heating in cities, which is related to air quality (particulate matter) in densely populated areas.
