This paper presents some of the problems in the Latvian energy-system, the Latvian economy and how a sustainable restructuring of the energy system with renewable energy, co-generation and the production of energy technology can help solve some of the problems. Latvia has economic growth but a negative trade-balance. With this in mind, it is important that Latvia is able to meet the challenge and use the economic development to develop a sustainable energy-system and a sounder trade-balance. A combination of energy planning, national economy and innovation processes in boiler companies will form the reflective approach of this paper to the future of energy supplies in Latvia. (C) 2003 Elsevier Ltd. All rights reserved.