In the work, the development state of the Latvian power system is analyzed and the optimal sustainable development methods and technologies are considered. In particular, the authors describe: 1) the transmission networks and the model of their own of the generation system’s development; 2) the results of forecasting the development of Latvian power systems up to 2050. The research results have shown that in the current situation the Latvian power system in the nearest future (especially after decommissioning of the Ignalina NPP) is to face a power capacity deficit. Therefore, it is highly topical to construct new power plants and restructure transmission networks under the conditions of liberalized electricity market.