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There is potential to reduce the heat energy tariff in Riga, however, it is not used fully.
In a situation where usable heat from the thermal power plant (TPP) of JSC Latvenergo enters the atmosphere, thermal energy produced in biofuel boiler houses is purchased without promoting efficient use of energy resources. For this reason, Riga population overpaid almost 8 million euros for thermal energy in the 2024-2025 heating season while JSC Latvenergo did not receive more than 6 million euros of potential revenues.
In addition, due to the lack of cooperation among the parties involved and different interpretations of laws and regulations, JSC Latvenergo has had limited opportunities to offer cheaper heat more to Riga City on the days when the TPP was working in the electricity market. At the same time, without the participation of independent biofuel boiler plants in the Riga thermal energy market, Riga residents would pay an additional 25.2 million euros for thermal energy during the 2024-2025 heating season.
It confirms that a cheaper heat tariff can only be ensured by an efficient heat market mechanism involving all market participants and respecting the principle of economic gradualness.
By using the support of the European Union funds, Latvia has made significant progress in the modernization of heating supply in recent years such as inefficient Soviet-era boiler houses have been replaced, thermal energy networks have been reconstructed, and the transition from natural gas to biomass fuel has been carried out in many places by increasing the share of renewable energy resources and reducing CO2 emissions.
However, the State Audit Office of Latvia has concluded after the audit that thermal energy tariffs differ significantly in the regions and they are higher than in Riga in many places. It is especially pronounced in less populated areas with a small number of consumers, where outdated and economically difficult-to-maintain heating supply systems operate.
To prevent a significant increase in tariffs due to the modernization of economically unjustified systems, the Ministry of Climate and Energy must provide support to local and regional governments in determining the economic viability of these systems and planning their further development or transition to alternative solutions.
In addition, the potential of waste heat is still insufficiently used in Latvia, for which clear guidelines for integration into the heating supply system have not been established.
