Estonia’s Ministry of Climate has published a modelling study outlining how the electricity system in Estonia, the Baltic states and Finland could develop through 2050.
The document is not a forecast, but a structured set of scenarios testing how different combinations of generation, demand and infrastructure shape the system.
The model is built around six scenarios, ranging from a continuation of the current structure to systems dominated by renewables, as well as variants including offshore wind, nuclear generation and expanded interconnections. Across all scenarios, electricity demand increases steadily, driven by electrification, transport and new industrial uses.
Data Card — Baltic electricity baseline (2025)
- Estonia: ~8 TWh consumption | net importer in most periods | oil shale remains a key dispatchable source
- Latvia: ~7–7.5 TWh | hydro-based system, imports vary by hydrological conditions
- Lithuania: ~12–13 TWh | structurally import-dependent, but increasingly exporting during high wind periods
Estonia remains the only country in the region with significant dispatchable capacity based on oil shale, which continues to play a role in system stability. The region as a whole remains structurally import-dependent, but short-term export episodes — particularly in Lithuania — are becoming more frequent as renewable capacity grows.
The figures below reflect the market-based baseline scenario used in the model, with other scenarios testing variations around it.
Data Card — Estonia (model baseline, market-based scenario)
- Demand: ~9 TWh (2026) → ~11 TWh (2040) → ~12 TWh (2050)
- Structure: wind and solar expansion with gas for peak load
- Oil shale: retained until ~2035 for system adequacy
- Nuclear: included only in a separate long-term scenario (~600 MW from 2040)
- Interconnectors: assumed expansion from 2035 (+700 MW Finland, +1000 MW Latvia)
Wind and solar form the core of the system in all market-based scenarios. Their expansion lowers average prices in the first phase but increases volatility over time, particularly in high-generation periods. As renewable output grows, capture prices decline, reflecting increasing competition within the system.
Oil shale remains in the system not because it is competitive, but because it provides reliability under the island operation requirement. This mechanism assumes that the system must be able to operate with limited external support. After 2040, this role is gradually replaced by gas-fired capacity.
Nuclear generation appears only as a long-term option. It is introduced in a dedicated scenario from 2040 onward, contributing to system adequacy but not shaping the system in earlier stages.
Interconnections are treated as structural components of the system. They contribute to balancing and adequacy, but their full cost is not reflected in the modelling framework. The model captures their system impact, but not their complete investment economics.
Scenario 2: market logic and system balance
The market-based scenario (Scenario 2) provides the clearest view of how the system evolves under economic optimisation. It allows investments in renewables, interconnections and flexible capacity, while introducing a capacity mechanism after the mid-2030s.
In this configuration, renewables expand rapidly, but do not eliminate the need for dispatchable generation. Gas-fired capacity remains in the system not as a dominant source of electricity, but as a flexible balancing component. Its role becomes more visible after 2040, when oil shale is phased out and the system requires a replacement for peak load and reliability support.
Gas in the model does not disappear; it shifts from baseload to a system-balancing role.
At the same time, demand dynamics reshape the regional price structure. Finland experiences the strongest growth in electricity consumption, driven by industrial demand and large-scale electricity users, including data centres. Despite continued expansion of renewables, this leads to rising marginal prices in the Finnish system.
As a result, the price relationship in the region changes. Finland, historically a lower-cost market, becomes more expensive than the Baltic states in the model. This shift has direct implications for cross-border flows and the role of interconnections.
Latvia: a hydro-based stabilising system
Latvia’s system remains anchored in hydropower, with moderate expansion of solar and more limited wind development in the base scenario. Its role in the model is less about large-scale generation growth and more about stabilising the regional system.
At the same time, Latvia’s trajectory is sensitive to system design. Under stricter adequacy assumptions, wind capacity increases significantly, indicating that investment outcomes depend on market rules as much as on resource potential.
Data Card — Latvia (model baseline)
- Demand: ~7 TWh → ~10 TWh → ~11 TWh
- Core: hydropower + solar
- Wind: moderate, scenario-dependent
- Gas: remains in balancing mix
- Role: regional stabiliser
Lithuania: wind-driven expansion
Lithuania shows the strongest expansion of renewable generation in the model. Both onshore and offshore wind grow significantly, supported by solar and storage solutions including pumped hydro.
This positions Lithuania as the main renewable generation centre within the Baltic system, with a larger role in regional supply compared to Latvia.
Data Card — Lithuania (model baseline)
- Demand: ~13 TWh → ~18 TWh → ~20 TWh
- Wind: primary growth driver (onshore + offshore)
- Solar: strong expansion
- Storage: pumped hydro
- Role: renewable generation hub
Conclusion
The study provides a structured view of how the Baltic electricity system could evolve under different assumptions. It shows a system increasingly dominated by renewables, supported by interconnections, storage and flexible generation.
At the same time, the model operates within defined boundaries. It treats demand largely as given and only partially captures broader economic effects such as industrial clustering, infrastructure costs and long-term investment dynamics.
As a result, it outlines how the system can function — but leaves open how the key investment decisions will ultimately be made.