Estonia has been a member of the World Energy Council since 1937. Estonia was then represented by the National Power Committee, led by Director J. Veerus and Professor P. Kogerman. In 1998, the 17th World Energy Congress in Houston formally reinstated Estonia’s membership of the World Energy Council. The Estonian Member Committee of the World Energy Council was founded on 16 July 2003 by the Ministry of Economic Affairs and Communications, Estonian Academy of Sciences, Estonian Power and Heat Association, Tallinn Technical University, Eesti Energia AS and AS Eesti Gaas.
Hando Sutter has served as the Chairman of the Management Board of Eesti Energia since December 2014. Prior to this he was the regional manager of Nord Pool Spot power exchange in the Baltics and Russia. He has also previously worked in the management teams of regional companies such as ESS Group (renamed to G4S Estonia), Tolaram Investments and Olympic Entertainment Group.
Energy in Estonia
2018 saw steady and continuous efforts towards a more environmentally friendly, secure and technologically advanced energy system in Estonia. However, a rapid increase in the electricity prices has raised concerns and it is clearly reflected in the Estonia 2019 Energy Issues Map.
From a geopolitical aspect, Russia has kept its position as a critical uncertainty, leading to the actions of desynchronizing the Estonian grid from Russian grid and connecting it with the Central Europe by 2025.
Digitalisation continues to be a strong action priority for the Issues Monitor 2018. With 100% smart meters for electricity showing hourly consumption data and enabling supplier switching digitally, a momentum has been created which flows to sectors other than electricity, i.e. gas, district heating and water supply. At the same time, the subthemes of digitalisation like Data AI and IoT/ Blockchain are constantly under discussion and pilot projects are being run but regarded as Critical Uncertainties presently.
As a Critical Uncertainty in the previous Issues Monitor map, the issue of energy subsidies has dropped because of a law amendment. The new subsidy scheme, based on renewable energy auctions, was enacted by the Parliament in 2018. This amendment will pave the way for further development of the renewable energies, as an action priority, for the next decade.
2018 has brought about a rapid increase of electricity prices in Estonia. The annual average price for electricity on the “Nord Pool power market Estonian price region” in year 2017 was €33,20/MWh, whereas in 2018 the average electricity price was €47,07/MWh. This issue is further intensified by the high network charges, which will also be affected by the uncertain cost of desynchronization of the Estonian grid from Russia by 2025, coupled with high national taxes and subsidies for renewable electricity.
Uncertainties concerning Russia have resulted in all Baltic States Prime Ministers declaring the need to desynchronise the Baltic electricity grid from Russia and to connect it to Central Europe. This uncertainty has raised debates about the actual need to desynchronise, the risk of blackouts and the impact on network tariffs.
Data AI and IoT/Blockchain are constantly under discussion and pilot projects are already running. With digital advancements like full transition to smart meters in electricity, data hubs with hourly consumption data, demand side response, and consumption tracking applications, it is easier to understand the potential value of these digital issues. The full potential, however, is unclear and requires further exploration.
Energy Efficiency, specifically concerning buildings, has been a continuous action priority for the Estonian Government. With subsidies of up to 40% of the reconstruction cost of old buildings, it has enabled old buildings to get renovated and insulated with the overall monthly costs for the residents remaining the same as prior to renovation works. The proportion of subsidies depends on the energy efficiency results achieved with the subsidised construction works.
Energy Subsidies related to renewable electricity have long been debated. In 2018, a new subsidy scheme based on renewable energy auctions was introduced by the Estonian Parliament and it is paving way for further development of renewable energies. In addition, a new subsidy scheme for the use of biomethane has been introduced with the main purpose of increasing the consumption of biomethane in the transportation sector and it will be provided by the end of November 2020.
EU Cohesion: In 2018, 4 out of 8 legislative acts of the “Clean Energy for all Europeans” package have been agreed between the European co-legislators. With the implementation and application of the new rules at the national level, there will be a strong shift towards a more resilient and environmentally sustainable future. In Estonia, 60% of the electricity distribution network of the largest distribution system operator (DSO) delivers only 5% of the overall consumption. It is expensive to maintain a grid that is hardly used, and the expenses reflect on the network tariffs. The largest DSO in Estonia has started to use off-grid solutions based on Solar PV, electric storage and diesel generators to avoid the reconstruction of long electricity lines. With the further development of decentralised systems and electric storage, the efficiency of the distribution grid could be improved at a bigger scale and help in lowering the tariffs.
Renewable energies are capturing the attention of Estonian energy leaders as the main area of action. Energy efficiency and the EU Clean Energy Package indicate the direction of the country’s energy system for the next few years, with a strong focus on environmental sustainability and energy security.