Baltic Energy Sector Update — June 2026
A regional roundup of the latest energy-sector developments across the Baltics, Estonia, Latvia and Lithuania — covering grid and interconnections, the electricity market, renewables, storage, nuclear, hydrogen and security.
Baltics
Grid & Interconnections
Baltic-German PowerLink: Latvia, Lithuania and Germany to develop a joint Baltic Sea interconnection
On 18 February 2026, the energy ministers of Lithuania, Latvia and Germany signed a trilateral declaration of intent to cooperate on a cross-border electricity transmission project in the Baltic Sea — the “Baltic-German PowerLink.” The project aims to connect the three countries and offshore wind farms to enhance security of supply and energy independence. The TSOs 50Hertz, AS “Augstsprieguma tīkls” (AST) and AS “Litgrid” are preparing a technical and economic concept by autumn to support the project’s application for EU funding as a Project of Common Interest.
The interconnection is expected to involve an approximately 600 km subsea cable linking Germany with Latvia or Lithuania, with an onshore hub enabling the transmission of around 2 GW of offshore wind capacity to both Germany and the Baltic grid. The possibility of including other Baltic region countries remains on the table, and decisions on the next steps for the project are expected by the end of the third quarter of 2026.
Eight TSOs publish the first offshore system study for coordinated planning in the Baltic Sea
Eight TSOs from the Baltic Sea region have developed a comprehensive regional study on offshore grid infrastructure for coordinated planning. The study concludes that by 2040 the region could become a clean energy hub, with around 13 GW of new cross-border interconnections and up to 50 GW of offshore wind capacity. These interconnections are expected to operate at high utilisation, reducing system costs, electricity price peaks and CO₂ emissions.
The study also outlines long-term priorities for Latvia’s energy system, identifying a transmission connection with Estonia as the primary focus, followed by Germany and — with significant growth in renewables — Sweden. A connection with Finland should be assessed together with the fourth Estonia–Latvia interconnection and the Estlink3 project. The study was developed by 50Hertz, AST, Elering, Energinet, Fingrid, Litgrid, PSE and Svenska Kraftnät, which have joined forces within the Baltic offshore grid initiative.
EIA and Natura 2000 assessment required for the fourth Estonia–Latvia interconnection
The State Environmental Service has determined that an Environmental Impact Assessment (EIA) and a Natura 2000 assessment are required for the construction of the fourth Estonia–Latvia electricity interconnection in Ventspils and Latvia’s territorial waters. This strategically important project will strengthen electricity supply security and stability in Latvia, Estonia and the wider Baltic region.
The connection is planned at a new substation in Ventspils, with an alternative site near Ziras village, and includes several kilometres of onshore cable in Latvia and a subsea cable in the Baltic Sea. Following the decision, the TSO must request the issuance of an EIA programme to carry out the assessment.
Electricity Market
Electricity trade on the exchange up to 30 minutes before delivery
As part of the ongoing evolution of the European electricity market, intraday trading up to 30 minutes before delivery is being introduced across Europe. The solution will be implemented gradually by European TSOs by 2029, while Baltic TSOs have already begun. The 30-minute gate closure has applied at the Latvia–Estonia border since 14 January 2026, with the transition at the Latvia–Lithuania border expected to follow shortly.
Reducing the intraday market gate closure time from 60 to 30 minutes allows market participants to react closer to real time, improving market flexibility and price accuracy, reducing balancing needs and system costs, and enhancing overall system efficiency and security.
Security
Baltic States and Poland to receive over EUR 112 million in EU support for infrastructure protection
To strengthen the security of electricity infrastructure in the Baltic States, Latvia — together with Lithuania, Estonia and Poland — has secured European Commission co-financing to enhance the protection of critical synchronisation infrastructure. The four countries will receive EUR 112.6 million, one of the largest allocations under the Connecting Europe Facility, to support measures such as perimeter and anti-drone protection systems, warning systems and other solutions aimed at improving the physical security of energy infrastructure, while also contributing to reduced electricity transmission costs.
Estonia
Regulatory Changes
Electricity Market Act amendments now applied in practice
Amendments to the Electricity Market Act, in force since 14 February 2026, are now being applied in practice. Electricity returned to the grid within the same period in which it was stored is exempt from network charges, provided statutory conditions are met. Small-scale production units (up to 15 kW) are exempt from both production capacity charges and unused capacity charges.
At the same time, a charge is imposed where contracted production capacity has not been utilised to at least 95% over a two-year period, applying to the unused portion of that capacity. Certain exemptions remain available, including where the relevant capacity is linked to reserve mechanisms, islanding capability, frequency reserves or broader security-of-supply arrangements. Distribution network operators may apply these charges on a calendar-year basis.
With respect to security deposits, previously paid deposits are refunded only where electricity production has commenced within the prescribed timeframe — namely within one year for solar installations, three years for offshore wind farms and two years for other technologies. Where deadlines are exceeded, no refund is granted. The provisions governing security deposits apply retroactively from 17 March 2023.
RED III transposition reshapes the permitting framework
The law transposing the EU Renewable Energy Directive (RED III), which entered into force on 28 March 2026, introduces a structural overhaul of the permitting framework for renewable energy projects. A consolidated permitting system has been established, including a single contact point and a unified environmental impact assessment procedure.
Maximum permitting timelines now apply: up to two years for onshore wind, three years for offshore wind, and one year for projects in designated priority areas. The framework also provides for the designation of renewable energy zones, where key environmental impacts are assessed at the planning stage, reducing the need for project-level assessments.
General
State-backed guarantee scheme for large energy investments gains momentum
The government has taken further steps toward establishing a state-backed guarantee mechanism to support large-scale energy investments. The Ministry of Economic Affairs and Communications, the Ministry of Climate and the Estonian Business and Innovation Agency are developing the instrument and engaging external financial advisors.
The measure is intended to enable multi-billion-euro projects in areas such as offshore wind, energy storage and potentially nuclear energy, by reducing financing risks for projects with long payback periods that are typically difficult to fund through commercial lending alone. The guarantee is expected to be backed by the state, implying a need for dedicated financial capacity rather than purely institutional support.
The initiative reflects a broader policy shift, as traditional subsidy schemes are gradually phased out and replaced with market-based mechanisms. Market participants have noted that while guarantees may improve access to financing, they do not address the core challenge of long-term revenue certainty. The structure, scope and financial capacity of the scheme remain under development, with further details expected during 2026.
Planned energy excise increase cancelled
The government has decided to cancel the energy excise increases scheduled to take effect in May 2026, citing rising global fossil fuel prices and broader market uncertainty. The cancelled increase would have included a rise of approximately 5% for petrol and 7% for diesel, as well as increases in excise duties on heating fuels, natural gas and electricity. The decision is intended to mitigate additional cost pressure on consumers, although it is expected to reduce state budget revenues by an estimated EUR 30–40 million.
Wind
Support-based auction for onshore wind to be launched
The government has decided to proceed with a support-based auction for onshore wind, aimed at bringing up to 1 TWh of new renewable electricity generation to the market annually, with the possibility to increase the volume to 2 TWh. Offers can be submitted until 25 August 2026, and projects must be completed by the end of 2030.
The measure provides financial support over a 12-year period and is funded through the renewable energy charge, with an expected annual cost of approximately EUR 10 million per 1 TWh of supported generation. The auction is intended to provide price stability and improve investment conditions for developers, particularly given that Estonia imports around a third of its used electricity. After political delays, the government has authorised the responsible minister to launch the process, with project selection expected by the end of the year.
Long-term permit issued for major offshore wind project
The Consumer Protection and Technical Regulatory Authority (TTJA) issued, at the start of 2026, a 50-year superficies licence to Utilitas Wind for the development of the Saare-Liivi offshore wind farm, including its connection to Estonia’s main transmission grid. The project is planned with a total capacity of up to 1,600 MW and may comprise up to 80 wind turbines, each with a capacity of up to 20 MW and a maximum height of up to 310 metres. The wind farm is to be connected to the Elering-operated main transmission grid via a planned substation linked to the 330 kV Harku–Sindi overhead line.
The next steps include applying for a construction permit within five years, obtaining an environmental permit for special water use, and securing an operating permit upon completion.
Second state land auction round for onshore wind
The Estonian Government has approved a second auction round for the development of onshore wind energy on state-owned land. The auction will cover approximately 2,640 hectares across eight municipalities, primarily in areas already subject to ongoing or previous planning processes. Winning the auction does not accelerate permitting, which remains fully applicable.
The updated terms introduce a revised fee structure, including an upfront development fee, a land-use fee and a 4% revenue share from electricity sales, with estimated state revenue of approximately EUR 12 million. As of the end of 2025, Estonia’s installed onshore wind capacity stood at 694 MW; the new round is intended to build on this base.
Support scheme for municipalities hosting wind farms under preparation
The Ministry of Climate is preparing a support measure for municipalities that allow wind farm developments on their territory, seeking to increase local acceptance of renewable energy projects. Under current plans, the support could amount to approximately EUR 1 million for a project of around eight turbines, with the total size of the measure expected to exceed EUR 10 million. The scheme is intended to provide additional local benefits and address concerns that communities do not sufficiently benefit from nearby wind developments.
Grid
Distribution network tariffs increased from June
Elektrilevi increased its network service tariffs by an average of 3.4% from June 2026. The increase is driven by higher transmission service costs and inflation. For most households this results in a monthly cost increase of approximately EUR 0.69 to EUR 2.40 plus VAT, depending on connection type. The adjustment affects fixed and capacity-based network fees, while per-kWh charges remain unchanged, and is intended to ensure the continued maintenance and development of the distribution network.
Transaction involving grid control facility reversed on security grounds
The TTJA ordered the reversal of a transaction involving a building used to manage a regional electricity distribution network serving approximately 30,000 customers in North-East Estonia. The property had been sold to a company linked to a Russian national; authorities determined that the transaction posed a risk to security of supply, and following a review under foreign investment screening rules, the deal was reversed. The case highlights increasing scrutiny of ownership and control over critical energy infrastructure in strategically important regions.
Energy Storage
EstLink outage linked to battery storage testing
The outage of the EstLink interconnectors in early 2026 was linked to the Kiisa battery storage facility developed by Evecon, resulting in the loss of approximately 100 MW from the Baltic electricity grid. The event constituted an N-2 contingency — two major system elements failing simultaneously — exceeding the system’s standard N-1 resilience design. The outage occurred during the configuration and testing phase, when oscillations triggered protection mechanisms in the EstLink interconnectors. Testing was carried out by the battery system manufacturer, NIDEC Conversion, which Evecon considers responsible for the incident.
Subsequent tests have been completed successfully. The Kiisa battery storage facility (100 MW) was officially opened on 3 February 2026, with an additional 100 MW project planned in Aruküla by the end of 2026. Once completed, total capacity will reach 200 MW with 400 MWh of storage, positioning it among the largest battery storage facilities in Continental Europe.
Hybrid battery storage project launched in Kirikmäe
Evecon, together with French investor Mirova, has started construction of a battery storage system in Kirikmäe (Pärnu County), with a total investment of approximately EUR 85 million. The project expands an existing 77.5 MW solar park into a hybrid facility by adding a 55 MW / 250 MWh battery system. The storage unit is expected to become operational in the second half of 2026 and will provide grid services such as frequency reserves and balancing. The project is supported by a long-term flexibility and power purchase agreement and financed with backing from Swedbank.
New large-scale battery project underway in Tsirguliina
A separate battery storage project is being developed in Tsirguliina (Valga County) by Diotech and Transcom, with an initial investment of approximately EUR 35 million. The first phase provides for a 100 MW / 200 MWh battery system, with potential expansion up to 200 MW / 800 MWh, which would make it one of the largest battery storage facilities in the Baltics. The project is scheduled for completion by March 2027 and is intended to support electricity market balancing and reduce price volatility in the region.
Nuclear
Draft Nuclear Act under parliamentary consideration
A new Nuclear Energy and Nuclear Safety Act is under consideration in the Estonian Parliament. The draft legislation establishes a comprehensive framework covering the full lifecycle of nuclear activities — from planning and construction to operation, decommissioning and waste management. It provides for licensing, state supervision and the creation of an independent regulator, alongside strict operator responsibility requirements, including the establishment of a decommissioning fund. The framework also addresses security, emergency preparedness and safeguards, aligning with EU law and International Atomic Energy Agency standards.
Site selection process for a nuclear power plant initiated
Estonia has taken a further step toward the potential development of nuclear energy, launching preparatory activities for site selection. Following a public tender, a joint bid by Skepast & Puhkim OÜ and Inseneribüroo Steiger has been selected to advise on identifying a suitable location for a nuclear power plant. The project focuses on planning an approximately 600 MW facility, along with the necessary supporting infrastructure. The consultancy work will assess potential sites from both environmental and technical perspectives. If the project proceeds and receives the required approvals, the plant could become operational around 2035.
Hydrogen
National spatial plan for a hydrogen pipeline
Estonia has launched a national spatial plan to assess the feasibility of a hydrogen pipeline across its territory as part of the Nordic–Baltic Hydrogen Corridor. The project involves six countries and aims to connect Nordic and Central European energy markets, enabling large-scale hydrogen transport, with potential opportunities for investment, industrial development and transit revenue. The special planning phase is expected to take approximately three years; if implemented, the pipeline could become operational around 2040, although the project remains at an exploratory stage.
Data Centres
Large-scale data centre planned in Western Estonia
Sunly is planning to develop the largest data centre in the Baltic States in Risti (Lääne County), reflecting growing demand for energy-intensive digital infrastructure driven by artificial intelligence. The project is designed to integrate with a broader hybrid energy park combining solar, wind and battery storage, aiming to cover a significant share of the data centre’s electricity demand locally. The total investment is estimated at over EUR 1.7 billion.
The development is expected to support both AI model training and data processing capacity in the region — currently largely handled outside the Baltics — and to create approximately 150 permanent jobs, alongside a larger number during construction. Under an optimistic scenario, initial operations could begin around 2028.
Security
Drone strike on critical energy infrastructure
On 25 March 2026, a drone entering from Russian airspace struck the chimney of the Auvere Power Plant, Estonia’s largest generation unit (270 MW). The drone was destroyed on impact, with no injuries and no impact on electricity supply. The incident was likely linked to military activity near the Ust-Luga port, and nationwide EE-Alarm alerts were issued.
Nationwide alert and air traffic disruption
On 31 March 2026, further EE-Alarm notifications were sent across most of Estonia due to a potential air threat involving unidentified drones, believed to be connected to intensified drone activity linked to the Russia–Ukraine war. Residents were advised to remain indoors, and air traffic was briefly disrupted.
Power grid protection measures strengthened
Following the recent drone incidents, attention has shifted to the vulnerability of electricity substations, which are critical for transmitting power to consumers. Elering plans to reinforce key substations by protecting transformers with concrete structures to mitigate damage from smaller-scale drone attacks and hybrid threats, though such measures offer limited protection against more advanced military strikes. Elering is set to invest approximately EUR 220 million over the next four years to improve grid resilience and ensure faster recovery in case of disruptions.
Latvia
General
New EIA screening guidelines and a self-assessment tool developed
The State Environmental Service has developed new guidelines for EIA screening and created a self-assessment tool that helps determine whether an EIA is required. The materials help developers navigate the process step by step — from the initial project idea to a reasoned decision on whether an EIA is required and what its scope should be — explaining how to determine applicable thresholds and criteria, assess a project’s potential impacts in a specific location and timeframe, and avoid formal mistakes. The self-assessment tool enables developers to quickly determine whether a planned activity may be subject to EIA, facilitating timely and well-prepared participation in the process.
Grid
Planned Electricity Market Law amendments would reshape grid access, system security and cross-border integration
The proposed amendments would significantly affect the regulatory framework governing electricity network infrastructure and system operation, allowing electricity generation and storage facilities located in other EU Member States to connect to the Latvian electricity system, subject to specific technical, permitting and compliance requirements (including relevant confirmations from the respective countries, an opinion from the State Environmental Service, a capacity permit and a reservation security deposit, provided the connection point is in Latvia). This would establish a new mechanism for cross-border integration of generation and storage assets into the Latvian market.
The amendments would also enhance the rules governing internal electricity lines by allowing users to install infrastructure across multiple land units, provided this does not interfere with the system operator’s functions — facilitating larger and more complex projects spanning several properties.
The amendments strengthen the overall security dimension of the electricity system by embedding network resilience considerations into planning and operational decision-making. Within the system security and cybersecurity framework, the TSO, in cooperation with national security authorities, would be empowered to restrict the use of generation and storage equipment and software originating from designated high-risk countries — including critical components such as power inverters, protection relay systems, automation and control equipment, associated software and other digital control technologies. Equipment and software from such jurisdictions would be prohibited from connection to the grid, introducing a security-based eligibility requirement for system access. Existing technical connection requirements are to be reviewed and updated by the end of 2026 to incorporate these restrictions.
The amendments also expand the TSO’s powers to request information from market participants for monitoring the balancing market and investigating potential breaches of REMIT obligations, including reporting suspicious trading activity to the national regulator and ACER. The amendments will enter into force after adoption by both the Cabinet of Ministers and Parliament.
Transmission system service tariffs approved for 2026–2028
New electricity transmission system service tariffs approved by the Regulator entered into force on 1 January 2026, set for the period 2026–2028 and calculated on economically justified costs in accordance with the Regulator’s methodology. The TSO has ensured tariff competitiveness within the Baltic region and long-term stability, with the average tariff for TSO users decreasing by 10% compared with 2023–2025; the reduction differs across user groups, while household users see no change in transmission costs. To mitigate the impact, part of the congestion revenue — EUR 44.4 million — is allocated to cover transmission costs during the regulatory period, allowing future congestion revenues to be directed towards infrastructure investments and supporting long-term tariff stability.
New curtailment rules for flexible and curtailable grid access
Regulations that entered into force on 31 March 2026 establish the procedure by which the TSO curtails capacity delivered by producers to the grid to ensure safe operation of the transmission system. The TSO informs market participants of permissible operational limits no later than two days before the operational day (with the option to specify them one day in advance), acts in real time where necessary, and provides compensation for the flexible service if curtailment exceeds 876 hours per year. Curtailment is carried out based on priority, taking into account the type of service — curtailable or flexible — and the impact of each connection on transmission system congestion.
New framework for moving from flexible to constant grid access
Regulations that entered into force on 31 March 2026 establish the procedure by which a producer may change a flexible transmission service to a constant service, where free capacity is available within the relevant sector or such capacity is increased, ensuring transparent capacity allocation. The change is based on several factors: availability of free capacity in the relevant sector; alignment of the producer’s connection capacity with available grid capacity; compatibility of the production profile with the available system-capacity profile; priority for the producer who first received an interim operation notice from the TSO; and a 30-day time limit for the producer to agree to the change.
New transmission connection rules introduce a shared connection model
From 1 May 2026, new system connection rules for the electricity distribution and transmission systems replace the previous three-regulation framework with two consolidated regulations, establishing unified procedures for connecting users, producers and storage facilities and reflecting the increasing need to combine consumption, generation and storage within a single connection. Key changes for transmission connection include: the TSO may propose a shared connection point for multiple applicants and issue interconnected technical requirements where a common solution is justified; capacity is reserved when the connection agreement is concluded (the reservation fee for a constant connection remains payable within 60 days from issuance of the technical requirements); the TSO starts connection works only once the part of the fee covering equipment procurement has been fully paid; and the requirement is retained that connection facilities be prepared for the minimum agreed capacity within three years, subject to possible extension.
New rules adopted for permits to establish direct electricity lines
Although Latvia already had a legal framework for direct lines, newly adopted Cabinet regulations significantly update the regime in line with the Electricity Market Law amendments effective from 1 January 2026. The new rules replace the previous regulator-based framework with a Cabinet-level procedure, clarify the application, re-registration and revocation process, and reflect the transfer of permitting competence to the State Environmental Service. They distinguish between different direct-line models — including isolated producer-to-consumer lines and direct lines between grid-connected producer and consumer sites — and specify the documents to be submitted, including the producer–end-user agreement, the route layout and, in certain cases, confirmation that electricity delivered through the direct line is not simultaneously fed into the system through the consumer’s grid connection.
Procurement rules approved for the voltage regulation service
Under the Electricity Market Law, rules for procuring the voltage control service as a non-frequency ancillary service have been approved. The service may be provided by system participants who are connected to the system, have concluded a system service agreement and comply with the TSO’s technical requirements, and is provided on TSO dispatch instructions, ensuring the generation or absorption of reactive power. Remuneration is calculated from commercial metering data at a uniform price of EUR 0.88 per MVArh, with monthly settlement unless otherwise specified.
Latvia’s electricity grid capacity to be increased
Several projects will increase the capacity of Latvia’s electricity grid, with EUR 40 million invested from the Modernisation Fund to provide additional capacity at existing substations, construct new substations and strengthen the grid with a new high-voltage line. The supported activities are planned in the Vidzeme region and Saldus Municipality, including reconstruction of the “Salacgrīva” substation, construction of new 110 kV substations “Saulkrasti” and “Saldus”, establishment of a switching station in Skulte Parish of Limbaži Municipality, and construction of a new 39 km, 110 kV transmission line “Skulte–Salacgrīva”.
Additional power lines to improve supply security
To enhance supply security and reduce outage risk from extreme weather, additional DSO medium-voltage (6, 10, 20 kV) cable lines will be constructed, at a cost of EUR 6.8 million covered by EU funds. The DSO will reconstruct overhead lines by replacing them with underground cable lines in regions experiencing rapid electrification and microgeneration growth, particularly around Riga, regional development centres and major cities. Underground cable lines offer higher operational stability under adverse weather, climate-change impacts and potential targeted physical threats.
Energy Storage
Stricter operating and end-of-life rules planned for storage projects
The draft amendments to the Electricity Market Law would strengthen the TSO’s role in managing system stability by granting it the right to restrict both the supply of electricity to, and the withdrawal of electricity from, storage facilities where necessary to ensure secure system operation and the availability of network capacity. The amendments also introduce an end-of-life framework requiring dismantling of storage assets, waste management and site restoration after cessation of operation. More detailed rules on compliance, supervision, decommissioning, financing and financial security would be set out in Cabinet of Ministers regulations, to be adopted by 31 December 2026.
Natural resource tax exemption extended to all stationary BESS
Under the proposed framework, the natural resource tax exemption would be extended to all stationary BESS rather than remaining limited to batteries used solely for storing electricity generated by PV installations — a significant policy signal that would broaden the tax treatment available to standalone and hybrid BESS projects. The tax currently applies at EUR 17.03/kg. Exemptions may apply where a taxpayer ensures separate accounting and proper BESS waste management and participates in an extended producer responsibility scheme; where a taxpayer installs BESS of at least 1 MW for its own needs, independently bears waste-management costs and is registered with the State Environmental Service; or where a business uses BESS under a supply agreement guaranteeing transfer of BESS waste to the supplier’s country, with the taxpayer registered with the State Environmental Service. The parallel proposal to reduce the tax rate to EUR 2.00/kg would further improve project economics. The amendments will enter into force after adoption by both the Cabinet of Ministers and Parliament.
BESS operators require registration
From 13 January 2026, Decision No. 1/1 of the Public Utilities Commission on General Authorisations and Registration Rules in the Energy Sector entered into force, providing registration rules for BESS operators and replacing the previous Decision No. 1/3 of 7 March 2019. The rules apply to BESS with installed capacity above 1 MW, which may operate only after registration in the register of BESS operators. To register, operators must complete an application form and submit documents confirming commencement of operation, such as a temporary operation notification issued by the system operator. Registered operators must pay an annual fee of 0.2% of the previous year’s net turnover.
TSO-owned BESS may continue balancing market activities until November 2028
Under the draft transitional provisions of the Electricity Market Law, where the Latvian TSO has acquired, developed and operated storage on the basis of a permit issued by the Cabinet of Ministers, it may buy and sell electricity in balancing markets until 24 November 2028. If necessary for security of supply, this period may be extended, but only where the European Commission approves an extension following a Cabinet decision, taking into account the Regulator’s assessment of a future public consultation and the TSO’s own security-of-supply assessment. The Regulator must organise the first public consultation on the future use of the TSO’s storage at least six months before the current deadline expires, meaning the discussion on whether these assets remain under TSO control or are opened more fully to the market is expected to begin only in 2028.
Wind
New operational and decommissioning framework for wind projects
The planned amendments to the Electricity Market Law introduce a new regulatory framework for the operation, supervision and decommissioning of wind power plants in Latvia. The Cabinet of Ministers would be required to develop, by 31 December 2026, detailed operational requirements covering environmental protection, safety, noise and visual impact, with supervision entrusted to the State Environmental Service. The amendments would also introduce a specific end-of-life framework requiring dismantling of generation assets, waste management and site restoration after cessation of operation. More detailed rules on compliance, supervision, decommissioning, financing and financial security would be set out in Cabinet regulations to be adopted by 31 December 2026 — meaning the eventual framework could move beyond a general statutory duty into mandatory security or reserve requirements, which may affect project economics, financing documents and landowner negotiations.
Draft regulation on operational requirements for wind power plants published
The Ministry of Climate and Energy has prepared and published, for public consultation open until 1 July 2026, a draft regulation establishing uniform operational requirements for wind power plants in relation to noise, visual impact, nature protection and safety. Notably, the draft applies unless the EIA approval decision or technical conditions issued by the State Environmental Service provide otherwise. The proposed requirements set out noise limit values (with residents entitled to request independent noise measurements) and a shadow-flicker limit of no more than 8 hours per year and 30 minutes per day, together with automatic control systems to ensure compliance. In nature protection, the draft introduces requirements for bird detection systems and measures to protect bats; safety requirements include mandatory anti-icing and ice-detection systems, fire safety measures, adequate insurance and qualified operational personnel. A monitoring framework requires annual reporting to the State Environmental Service, with the possibility to suspend operation in the event of non-compliance. The draft is expected to proceed through the formal legislative process once the statutory delegation has been adopted; equivalent draft requirements for the end-of-life framework have not yet been published.
Solar
Proposed restrictions on PV development on high-quality agricultural land
Draft amendments to the Law “On Land Privatization in Rural Areas” would prohibit the use of agricultural land for PV installations where the land quality score exceeds 30 points and the installation would occupy an area larger than 5 hectares, except where the solar panels are intended solely for self-consumption. The purpose is to protect high-quality agricultural land by restricting its use for non-agricultural activities — particularly large PV parks — in order to ensure food security, preserve the competitiveness of the agricultural sector and promote sustainable land management; supervision would be assigned to local municipalities. If adopted, this would be a meaningful siting constraint for larger solar projects and could redirect origination toward lower-quality land, smaller footprints or alternative structuring. The draft is under committee review and must still pass three readings in Parliament; similar proposals have previously failed to secure parliamentary approval.
Biogas
Interest in biomethane production and available support remains high
Interest in Latvia’s biomethane support programme remains strong, with applications exceeding available funding more than threefold. Applications opened on 10 December 2025, and all funding for production equipment was reserved, with 15 applications submitted (14 for production and 1 for transport). The total funding requested for production projects amounts to EUR 45 million, significantly exceeding the initial budget, while EUR 130 thousand was requested for transport, leaving EUR 1.77 million available. Current funding allows support for only two production projects, prompting the Cabinet of Ministers to allocate additional funds; support is provided as a combined financial instrument of up to EUR 4.2 million per project. Meanwhile, the “Džukste” biogas site has injected 685 thousand m³ of gas since starting operations in July 2025.
Nuclear Energy
Ministry commissions an assessment of nuclear energy development opportunities
The Ministry of Climate and Energy plans a public procurement for an assessment of the possibilities for developing nuclear energy in Latvia, with an estimated contract value of EUR 1.425 million. The objective is to provide a comprehensive, data-based analysis to support policymaking and decision-making on the development of small modular reactor (SMR) nuclear energy. The selected contractor will evaluate the feasibility of introducing SMR nuclear energy in Latvia, covering technical, legal, environmental, societal, financial and economic aspects.
Hydrogen
Feasibility study on hydrogen infrastructure in Latvia
Conexus Baltic Grid plans to conduct an EIA for the Nordic–Baltic Hydrogen Corridor, a cross-border project linking Finland, the Baltic States, Poland and Germany. In Latvia, the corridor is intended to run alongside the existing gas pipeline. The project is currently in the research phase, assessing technical, economic and environmental aspects, with completion expected by 2027. In Latvia, the study area includes 10 municipalities, with a planned pipeline length of approximately 270–300 km. While domestic demand remains limited, Latvia may serve as a transit hub and support longer-term industrial development. The project is being developed in cooperation with gas transmission operators Elering, Conexus Baltic Grid, Amber Grid, GAZ-SYSTEM, ONTRAS Gastransport and Gasgrid vetyverkot (a subsidiary of Gasgrid Finland).
Electricity Trade
Fixed-price contract obligations for large electricity suppliers
The proposed amendments to the Electricity Market Law introduce obligations for electricity suppliers serving more than 200,000 end users, requiring them to include at least one fixed-price electricity contract offer in their commercial portfolio for households and small and medium-sized enterprises. These contracts must not include early termination fees, improving accessibility and price stability for end users. In addition, suppliers will be prohibited from unilaterally modifying or terminating fixed-price contracts before expiry, strengthening contractual stability and consumer protection in the retail electricity market.
Lithuania
General
Energy sector transformation plan to 2028
On 16 March 2026, the Ministry of Energy presented its plan for the energy sector’s transformation up to 2028. The plan’s main goals are: promotion of the use of electricity where it is produced; facilitating the connection of large projects to networks; cheaper electricity (lower transmission costs) for the biggest consumers; promotion of dynamic electricity pricing for business; promoting the creation of a flexibility market; and ensuring synergy of small power plants with the secure operation of the electricity system.
CO₂ terminal designated a project of national importance
The Lithuanian government has designated the planned CO₂ transshipment terminal in Klaipėda, to be developed by KN Energies, as a project of national importance. This status enables faster permitting, streamlined environmental and planning procedures and stronger institutional coordination, reducing delays and improving access to EU funding. The terminal is part of the cross-border “CCS Baltic Consortium” initiative launched in 2022, which aims to establish a carbon capture and storage chain across the region. CO₂ captured from industry will be transported to Klaipėda and then shipped for permanent storage in the North Sea, with commercial operations expected to begin in 2032.
Gas
Gas transit agreement with “Gazprom”
On 29 December 2025, Lithuania’s natural gas transmission system operator “Amber Grid” signed an agreement for the transit of natural gas to the Kaliningrad region; the previous agreement expired on 1 January 2026. The new agreement is valid for five years — until 31 December 2030 — compared with the previous ten-year term. Under the new agreement, Amber Grid’s annual profit from providing the relevant services should reach approximately EUR 30 million annually — about three times more than before.
Grid
LitPol Link capacity upgrade
Transmission system operator “Litgrid” confirmed plans to increase the capacity of the LitPol Link interconnector with Poland in stages: by the end of 2026, export capacity could increase from 230 MW to 365 MW and import capacity from 150 MW to 200 MW; by the end of 2027, export capacity could increase from 365 MW to 500 MW and import capacity from 200 MW to 353 MW.
Plans to expedite the construction of Harmony Link
The Harmony Link interconnector with Poland is currently planned for completion in 2030. Lithuania’s governmental energy commission decided to seek an agreement with Poland to finish construction in 2029, and bilateral discussions are ongoing. Litgrid has finished the environmental impact assessment of the project, and the Environmental Protection Agency has concluded that no significant negative effects to the environment are expected — a positive conclusion that allows for further planning and implementation.
Energy cells to continue providing balancing services
In 2026, “Litgrid” will continue to purchase balancing services from “Energy cells.” The agreement was extended until the end of 2026, or until there are a sufficient number of market participants able to provide such services.
Updated electricity transmission agreement
The National Energy Regulatory Council has approved updated terms of the electricity transmission agreement, in force since 1 April 2026. The main change relates to network users implementing large-scale projects — defined as investment projects in data processing, internet server (hosting) services and related activities, or manufacturing, meeting certain requirements. Such users can cover only 10% of connection costs under a commitment, for a 10-year period, not to reduce the agreed amount of electricity consumption.
Nuclear Energy
Development of small modular reactors
Lithuania has signed a memorandum with the U.S. company “GE Vernova Hitachi Nuclear Energy LLC” and the Polish company “Synthos Green Energy S.A.” under which Lithuania will assess the technical and economic feasibility of developing BWRX-300 small modular reactors. The BWRX-300 is an advanced small modular boiling water reactor designed as a carbon-free power generation solution, based on a simplified and standardised design expected to shorten construction times, optimise costs and ensure high safety standards.
Regulatory Changes
Draft Law on Hydrogen
The Ministry of Energy has published a draft Law on Hydrogen. Key regulatory aspects in the first draft include: distribution, transmission, operation of storage facilities, operation of terminals and operation of a hydrogen exchange are regulated activities requiring licences; production, storage and supply of hydrogen are regulated activities requiring permits; the National Energy Regulatory Council will be responsible for issuing the relevant permits and licences; hydrogen transmission, distribution and storage fees are regulated by setting upper limits on revenues; and transmission, distribution and storage-operation activities must be separated from production and supply activities.
Proposed regulatory changes key for the development of renewables
The Ministry of Energy has published draft regulatory changes to the energy sector. The main proposed amendments include: a one-time licence extension option (up to 48 months) for developers holding valid licences; a halving of the performance security for developers (from EUR 50/kW to EUR 25/kW of planned permitted generation capacity); an option to substitute planned generation or storage projects with another similar project or with electricity consumption facilities; an option for consumers to have agreements with several electricity suppliers; and an option to share generated electricity between consumers.
Proposed regulatory changes for the heat sector
The Government approved proposed changes to the Law on the Heat Sector aimed at modernising the heating sector, increasing its flexibility, reducing costs and better meeting consumer needs. Key proposed changes: the heating season is defined as 1 October to 30 April (with flexibility for municipal institutions); promotion of heat production from electricity; and the possibility for heat suppliers to initiate upgrades of inefficient heating units. Most of the changes should come into force on 1 October 2026, assuming approval in Parliament.