The price drop was mainly driven by reduced heating demand and high solar and wind output across the Baltics, Eesti Energia reported.

The Estlink 2 undersea cable linking Finland and Estonia was unavailable in both April 2024 and April 2025, so was not a factor.

The market overview was prepared by energy trading analyst Karl Joosep Randveer and provided two explanations for the higher price.

First, Latvian hydro-electric power production fell to a record low, increasing reliance on more expensive fossil fuel-based sources.

Whereas in April last year Latvian hydro-electric power accounted for about a third of consumption, this year its share dropped to 11 percent. Latvia produces significant hydro-electric power but little wind power.

The price of the latter is directly linked to high natural gas prices, which consistently rose and pushed up electricity prices in Estonia, Latvia and Lithuania.

Meanwhile, Eesti Energia reported a clear trend: Lithuania leads the Baltics in wind and solar energy, followed by Estonia.

Lithuania's wind and solar production covered nearly 26 percent of total Baltic consumption, Estonia's output 11 percent, and Latvia's only 2 percent.

Of total Baltic electricity consumption, 39 percent came from wind and solar, 22 percent from fossil fuels, 14 percent from hydro-electric power, 11 percent from other sources (including biomass), with the rest met by imports.

With April's longer days, growing solar energy production played a larger role across the Baltics.

This means more days when prices are much cheaper between 9 a.m. and 4 p.m., yet much higher in the evening and morning.

Once the sun sets, energy production drops and more expensive dispatchable capacities meet demand.

More extreme volatility in prices

Lower hydro-electric generation this April increased reliance on costly oil shale and gas plants, raising evening prices.

Record solar and wind output, combined with record-low Latvian hydro power, led to more extreme price swings than in previous years.

Morning peak prices were previously 20-30 percent above the monthly average and evening prices 40-60 percent higher. This year, morning prices were nearly double the average and evening prices up to triple.

Eesti Energia forecasts that with abundant solar production and Estlink 2 still offline, similar patterns will continue through summer. Cheap Nordic electricity won't be available in the evenings.

This will push Baltic electricity prices very high at those times.

Compared with past Aprils over the last decade, the share of solar and wind in Estonia's consumption has risen dramatically.

Natural gas prices in Europe fell

European natural gas prices dropped to €32.5 per megawatt-hour by the end of April, nearly 22.5 percent cheaper than at the month's start.

The drop was mainly due to warmer spring weather and strong solar and wind generation Europe-wide, reducing demand for gas-based generation.

Stable Liquefied Natural Gas (LNG) imports from the U.S. and Canada maintained supply.

The price fall was also driven by reduced industrial demand caused by high electricity prices and a cooling economy.

In May, Eesti Energia said LNG demand in Asia, especially China, could raise prices. Maintenance in Norway or LNG delivery delays could also tighten the market.

Weather could be a factor too. An unexpected cold snap might quickly hike gas prices — nighttime temperatures in Estonia have sometimes fallen to zero or lower recently.

Carbon allowance prices showed a slight fall

At the start of April 2025, European carbon allowance prices stood at €71 per tonne but fell to €67 by month's end.

Prices fell further in early April, mainly due to EU-U.S. trade tensions.

Speculation about declining economic activity amid the Trump tariffs reduced demand for allowances.

Paradoxically, falling natural gas prices also lowered carbon prices. Gas became cheaper than coal in April, boosting gas production and curbing emissions and demand for allowances.

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