Smaller differences between morning and evening peak hour prices and those in the middle of the day primarily reflect growth in electricity storage capacity, which has reduced the amount of excess renewable energy generation reaching the market.
Electricity prices in Estonia were volatile this week, with the daily average exceeding €100 per megawatt-hour on the first three weekdays before falling below €50 on nearly every day in the second half of the week. On Sunday, the average exchange price of electricity in Estonia is €25 per megawatt-hour (2.5 cents per kilowatt-hour).
On a weekly average basis, however, this week’s price is slightly more than twice as high as last week’s. The main reason is weaker winds and, consequently, lower wind power generation.
Tiit Hõbejõgi, member of the management board of Enefit and head of energy trading, told ERR that while wind power generation in the Baltic states exceeded 30 gigawatt-hours on some days last week, daily output during the first three days of this week was about 10 times lower, at roughly three gigawatt-hours.
A decline in Latvian hydropower generation as the spring season comes to an end has also contributed to rising prices. During peak periods, hydropower helps compensate for low solar and wind generation, but this support is no longer available to the same extent in summer. As a result, the system must rely on fossil fuel-based generation during those low-output periods even in the summer months.
Hõbejõgi noted that fossil fuel generation has its own seasonal characteristic during summer: because the load on combined heat and power plants has fallen significantly following the end of the heating season, short-term start-ups result in higher prices than in spring.
Taken together, lower wind power generation, reduced hydropower output in Latvia and the Nordic countries and more expensive fossil fuel generation compared with the heating season explain why electricity prices can rise to levels more commonly associated with winter, even during warm weather.
Storage reducing overproduction and leveling prices
Solar power generation, which continues to be added to the market each year not only in Estonia but also in Latvia and Lithuania, is unable to fully compensate for the fluctuation. In May, historically one of the strongest months for solar generation, the average electricity price in Estonia was €60 per megawatt-hour. The average for the first week of June is nearly €78.
Hõbejõgi said forecasts suggest that solar power generation in June will be similar to May’s level or decline slightly.
“Even so, June’s solar generation should be sufficient for intraday prices to maintain a U-shaped pattern: prices are higher when solar output is low and cheaper or even close to zero when solar generation is abundant,” he said.
This year, however, the U-shaped pattern is flatter than in previous years, meaning daytime prices are closer to morning and evening levels. The likely reason is the addition of more energy storage capacity.
“The smaller difference between the morning and evening peaks and the midday trough is likely due to continuously growing storage capacity. The fact that prices do not fall to zero at midday primarily shows that there is no overproduction in the electricity system on those days — that is, a situation where solar and wind generation exceed market demand,” Hõbejõgi said.
In June of last year, the average monthly electricity price in Estonia was €41.35 per megawatt-hour. The only month with a lower average price in 2025 was July, at €36.70. Kalvi Nõu, energy trading portfolio manager at retailer Alexela, told ERR this week that prices at the start of June already indicate that this year’s June average will not be that low.
“Forecasts suggest the average electricity price in June could remain in the range of €60 to €70 per megawatt-hour,” he said.
Hõbejõgi noted that local renewable energy generation and imports of Nordic electricity via Estonia and Lithuania should help keep prices at their usual springtime level in June.
“Whether prices end up lower than in June of last year will depend directly on weather conditions,” he said.
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