Power system of the Baltic States is facing changes. On the one hand, it is being gradually integrated into international energy markets by establishing new connections with Nordic countries. At the same time increasing the share of renewable energy sources is at the top on the political agenda. Therefore questions of the role of interconnections and renewable energy integration are becoming increasingly topical at national and regional levels. Both increase in the share of renewable energy, and improvements in energy efficiency are equally important. This article presents results of a research aimed at turning the Baltic power system towards a more renewable-based electricity generation. A dynamic energy-economy model was developed applying system dynamics modeling approach in order to evaluate changes in the energy system till 2050. Underlying structure of the model is based on energy resource flows according to the national electricity mix of each Baltic State. The model calculates electricity generation costs of each technology taking into account national support schemes. Based on cost estimation, the installed capacity of each energy resource is determined. Modeling results suggest that wind energy has the potential to become dominant in the Baltic region. This is explained by increasing competitiveness of wind-generated power price compared to fossil-fuel-based generation. The market share of other renewable electricity technologies, such as biogas or biomass power plants, will continue to increase reaching maximum between 2020 and 2030. Solar PVs are still not expected to play considerable role in electricity generation.