Analytics, Energy, Energy Market, Latvia

Latvenergo Group's EBITDA amounted to EUR 270.2 mln, which is 10 % less than in the previous year.

The amount of electricity generated by Latvenergo Group has remained at the prior year's level and reached 4,052 gigawatt hours (GWh). The Riga combined heat and power plants (CHHPs) have played an indispensable role in the reporting period, as generation at the Riga CHPPs was able to make up for the demand for electricity during the prolonged downtime of the Nordbalt cable. In October 2018, the group started natural gas trade in Lithuania, which means that Latvenergo operates in all market segments in Latvia, Lithuania and Estonia.

The first nine months of 2018 are characterized by a significant and unexpected increase in electricity prices across Europe, particularly in the Nordic countries. The price of electricity at the electricity exchange NordPool increased by 47 % on the average, and in the Baltics prices increased by almost 40% (38% in Latvia), compared to the corresponding period last year. This was mainly due to the dry and warm weather throughout Europe, lower water levels at the Scandinavian hydropower reservoirs, smaller output at wind farms as well as rising prices of CO2 emission allowances and raw materials.

In these circumstances, the role of the Riga CHPPs in the market was particularly important. If the Riga CHPPs were not available for generation in Latvia, Latvenergo would have to use higher-cost electricity generation sources to satisfy the demand, such as a lower-efficiency gas plant in Lithuania, coal plants in Poland or other capacities designed to ensure the stability of the power system, Latvenergo explained.

Due to an efficient response to the situation on the electricity market, the electricity output by the Riga CHPPs in the reporting period was 71% higher than last year and amounted to 1,844 GWh. In turn, the amount of electricity generated by the Daugava hydropower plants (HPPs) decreased by 27% compared to the same period last year, down to 2,170 GWh. The reduction of the output at the Daugava HPPs was affected by lower water inflow in the River Daugava compared to last year. More than half of the Latvenergo Group's total electricity output of 4,052 GWh was generated from renewable energy sources.

The amount of thermal energy generated in the first nine months of 2018 was 14% less compared to the same period last year, reaching 1,545 GWh. The decrease was influenced by increasing competition with new heat generators in the Riga thermal energy market.

In the reporting period, a total of 5 TWh of electricity was sold to Baltic retail customers. Approximately one-third of the total retail electricity trade or 1.8 TWh was sold to customers outside Latvia.

In October, Latvenergo also started natural gas trade in Lithuania, thus Latvenergo is already operating in all segments of the market in Latvia, Lithuania and Estonia. The natural gas sales of Latvenergo Group and the number of customers continued to grow in the reporting period. As of the end of the reporting period, the total number of natural gas customers exceeded 300. In the reporting period, the amount of natural gas used for both operating consumption and trade reached 4.8 TWh.

In line with the strategic goals of Latvenergo Group to offer new products and services, retail sales activities involving additional products continued in the Baltic states during the reporting period. In the third quarter of 2018, the trade of Elektrum Solarais (Elektrum Solar) was launched in Estonia. In the reporting period, solar panels were installed for about 50 customers in the Baltics. The number of Elektrum Apdrosinats (Elektrum Insured) customers also continues to grow and by the end of the reporting period it reached more than 36,000.

In the nine months of 2018, the total amount of Latvenergo Group's investments decreased by 5 % compared to the corresponding period last year and reached EUR 158.5 mln. 80% of overall investments was made in the modernization of the power networks in order to ensure a higher level of quality and security of the services. EUR 16.9 mln was invested in the reconstruction of hydropower units of Daugava HPPs, which will ensure their operation for the next 40 years.

The investments in the Kurzeme Ring project, which significantly increases the security of energy supply in Kurzeme region and Latvia as a whole, amounted to EUR 184.6 mln by the end of the reporting period, while the reconstruction of substations and construction works continued in several 330 kV transmission lines. The Third Estonia–Latvia power transmission network interconnection project continues as well. This project is of major significance for the future electricity transmission infrastructure of the whole Baltic region.

As reported, Latvenergo Group posted EUR 925.627 mln in audited turnover last year, which is 0.6% less than in 2016, while the group's profit increased 2.5 times to EUR 322.021 mln.