Electricity operators in the Baltic region to probe into suspected irregularities in pricing
The Baltic energy market has been grappling with significant price volatility in recent times, with intra-day spikes of over 1100% reported in August 2025[1]. This turbulence in the market can be attributed to several factors, including unstable renewable energy generation, the need for backup capacities, and market dynamics influenced by specific participants.
The instability in renewable energy generation, particularly solar power fluctuations, and the Baltic states’ recent desynchronization from the Russian-Belarusian BRELL energy ring have forced system operators to rely on traditional gas and coal-fired power plants and costly reserve voltage capacity[1][2][3]. These reliances, in turn, have led to soaring electricity prices.
Market dynamics also contribute to these spikes. Large price jumps on the frequency reserves market have been linked to pricing behavior by specific market players, raising concerns about competition compliance and opaque market supervision[2][3]. One such participant in Latvia has been under scrutiny for non-competitive bidding practices.
The switch from the BRELL system to synchronization with the Continental European grid (ENTSO-E) by early 2026 aims to enhance energy security and market integration for the Baltics but also temporarily increases balancing challenges and costs as new reserve markets are established and participants adjust[4]. The average daily balancing capacity needed is relatively small (~100 MW), whereas some large providers cannot operate below higher thresholds, complicating efficient market responses[3].
Regarding regulation, these markets fall under the REM (Regulation on Wholesale Energy Market Integrity and Transparency, REMIT) framework in the EU, which aims to promote transparency, prevent market manipulation, and ensure fair competition. System operators and national regulators monitor offers and bidding to comply with competition and transparency rules. The Baltic TSOs (Transmission System Operators) engage with national regulators—for instance, the Latvian regulator is assessing compliance issues related to price spikes from Latvian participants[2]. However, market supervision is currently viewed as opaque, as bid details are trade secrets, though efforts are underway to increase information transparency to market participants[3]. National laws complement REMIT by empowering regulators to investigate and sanction anti-competitive behaviors in these national segments of the Baltic market.
Any confirmed breach of the market rules will result in sanctions being applied. All market participants are expected to act in good faith and comply with the rules in force. In situations of electricity shortage, the price is typically around €360, while when there is a surplus, the price is around minus €75[1].
The Baltic Balancing Capacity Market, which launched on February 5, 2025, has been in operation since then. The Baltic transmission operators have been jointly procuring capacity for FCR, aFRR, and mFRR through a single auction mechanism since the market's inception[4]. The details provided are based on publicly available information.
The Lithuanian State Energy Regulatory Board reported price spikes of more than €10,000 per megawatt hour (MWh) in early August[1]. The REMIT Regulation governs the monitoring of the balancing capacity and balancing energy markets in the Baltic region, with the Baltic regulators monitoring both the balancing capacity and balancing energy markets under the REMIT Regulation[5].
The evolving Baltic energy market remains under close watch for ensuring balance between energy security, fair competition, and efficient integration of renewable sources. The Latvian Public Utilities Regulatory Commission (SPRK) has a Supervisory Board chaired by Alda Ozola[6]. Sanctions will be applied in accordance with REMIT (Regulation on Wholesale Energy Market Integrity and Transparency) and national law[7].
[1] [Source] [2] [Source] [3] [Source] [4] [Source] [5] [Source] [6] [Source] [7] [Source]
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