Tallinn, December 23, 2025 – Baltic nations are bracing for constrained power flows next year, as system operators move to cap the transmission capacity between Estonia and Latvia.The move, designed to bolster grid stability, will limit how much electricity producers can move across the border, perhaps impacting prices and renewable energy output.
Baltic Grid Capacity Squeeze: What’s Behind the Limits?
A planned reduction in transmission capacity between Estonia and Latvia is raising eyebrows among energy traders and producers.
- Starting January 1, the maximum electricity flow from Estonia to Latvia will drop to 922 megawatts, down from 1,447 megawatts.
- The change is intended to ensure grid stability, but wasn’t discussed with market participants beforehand.
- Lower transmission capacity could lead to lower electricity prices in Estonia, but may also force renewable energy producers to curtail output.
- Capacity from Latvia to Lithuania will also see adjustments, increasing to 1,272 megawatts while the reverse flow decreases to the same level.
Q: What’s driving thes changes to Baltic power transmission? A: Baltic system operators are adjusting transmission capacities for synchronization with the European grid. The initial expectation was that full capacity would be available after grid reconstruction, but this will not be the case until 2026.
õgi, acting head of energy trading at Enefit, expressed surprise, stating, “Until now, market participants have assumed that once the grid reconstruction and growth work related to synchronization was completed, the transmission capacity available for market use from Estonia to Latvia would increase in full, up to 1,400 megawatts. that’s why the news about limiting capacity through 2026 was unexpected.”
Restricted transmission capacity will hinder Estonian producers from increasing exports when prices are higher in Latvia and Lithuania, and vice versa. Though,the impact on Estonian electricity prices is expected to be downward. This year, the average price of electricity in Estonia has been approximately five euros per megawatt-hour cheaper than in Latvia, a trend likely to continue.
Currently, the usable transmission capacity between Estonia and Latvia typically ranges from 600 to 700 megawatts, even with an installed capacity of 1,400 megawatts. According to Hõbejõgi, 200 to 300 megawatts are usually reserved for balancing and reserve markets.
The connection between Estonia and Latvia currently relies on three 330-kilovolt lines: the Tartu-Valmiera overhead line, the Tsirguliina-Valmiera overhead line, and a third interconnection completed in 2021, linking Harku-Lihula-Sindi in Estonia to Kilingi-Nõmme-Riga up to the Estonian-Latvian border. A fourth interconnection is in the planning stages.
As of January 1, transmission capacity from latvia to Lithuania will increase from 1,201 to 1,272 megawatts, while capacity from Lithuania to Latvia will decrease from 1,334 to 1,272 megawatts.
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