Power generation began in a water mill on the river Aiviekste, in Kalsnava municpiality, in the second half of the 1920s. Electricity was supplied to the nearest towns Jēkabpils and Krustpils, with specific consumers in Krustpils being the railway station and the Latgale artillery regiment. In 1927, the joint stock company “Aiviekste” was founded, with the aim to produce, distribute and supply electrical power. At first it was made up of individuals, later the municipalities of Jēkabpils and Krustpils and the Latvian Farmers Credit Bank also joined. In 1932 a new power station building was erected, where 2 turbines were installed, and a system of dams and sluices was built. A major current consumer was the nearby radio station transmitting Riga radio programs to Eastern Latvia. Before the Second World War, Aiviekste electricity was also supplied to Gulbene, Lubāna, Ļaudona, Madona and it was used by the farmers of the region. In the 1940s, the plant was incorporated into a shared power network with Ķegums.