Climate minister justifies hundreds of millions of euros in renewable energy support

The government made one of its biggest decisions in recent history in the field of renewable energy, according to Minister of Climate Kristen Michal (Reform), while its goal remains cheaper electricity prices, be it from renewables sources, or on the more distant horizon, any potential nuclear power source.
Speaking to Vikerraadio's "Uudis+" show on Friday, Minister Michal said: "It is no major secret today that one of the coalition partners is very much against the granting of a mandate for nuclear energy, and this is of course their right, their worldview," referring to the Social Democratic Party (SDE).
"If this mandate [to erect a nuclear power plant] were to be granted, we could continue our preparations, while the worst thing that could happen to Estonia in the course of this process is that we get a large number of people coming here with a knowledge of the field of nuclear energy," he went on, referring to experts from elsewhere who would need to be drafted in during and after a nuclear plant's construction.
Estonia has no nuclear power station of its own; two nuclear reactors used at Paldiski in nuclear submarine training during the Soviet occupation of Estonia are now dormant.
As for energy price levels, Michal said: "Should anyone start saying that the goal here is a higher price, then of course he or she would be deeply mistaken on that."
When asked what the annual sum of support is expected and whether the figure of €100 million per year mentioned by SDE chair Lauri Läänemets, is true and fair, Michal replied that the price of electricity actually matters to a individual.
The current renewable energy fee volume is €88 million on the basis of consumption is 8.3 Terawatt-hours (Twh) per year, but if consumption near-doubles to 16 Twh per annum, while the fee will double in line with that, the cost-per-unit remains the same.
This would mean "the price of all electricity will be cheaper, which is the purpose of the exercise," Michal went on.
In short, the level of support is not so much a question as whether we have consumption with which to do it, plus a domestic limit, which is key in order to ensure we do not pay for what goes out of, but for what goes into, the Estonian economy, Michal went on.
Subsidies for new offshore wind farms require a total of about €2 billion over a 20-year period (ie. €100 million per year), though, Michal says, since the nuclear power debate is only at an embryonic stage in Estonia, it is not more sensible to build a nuclear power plant using the above funds, at this point in time.
In October last year, Michal's Climate Ministry issued a plan whereby Estonia's goal of 100 percent renewable electricity by 2030 can be met via onshore wind farms, whose construction would be supported by establishing a price guarantee for electricity production at six peak watt-hours, whose level in turn will be determined by the lowest bids.
On Thursday, however, the government approved a much more expensive solution, in which lower bids are given a price guarantee for a much larger production volume of four plus four peak watt-hours, part of which is reserved for the construction of offshore, as opposed to onshore, wind farms.
However, their construction is costlier to electricity consumers and society than the wind farms on dry land, it is reported.
According to the new plan, the subsidy scheme would be valid for 12 years for new onshore wind farms and 20 years for offshore wind farms.
In any case, the state does not foresee any support mechanism for nuclear energy, according to Michal.
Outgoing Climate Ministry Deputy Secretary General Timo Tatar has previously stated that the goal of 100 percent renewable electricity can be met in Estonia even now with on-shore windfarms as planned by private sector companies.
In the case of the offshore wind portfolio, however, the electricity consumer would have to subsidize it to the tune of €200 million more per year than in the case of hybrid farms with equivalent output.
This position was expressed by the Ministry of Climate three weeks ago.
When asked how the sudden change took place, Michal denied that it was particularly drastic.
"We carry out our work to find the best possible solution /.../ We are not so pompous that we think that our proposed solution is the best in the face of someone else's better arguments, calculations, or when we get new information /.../ This agreement, or balance, was born of the knowledge that market participants' feedback states that the offer would not have worked out if it was technology-neutral, that is, we probably wouldn't have gotten offshore wind farms. This is the feedback we have received from several market players. We would instead have gotten too much of the same thing," Michal said.
The earlier solution would also have required the setting up of a separate support scheme, but now this will not be the case, the minster added.
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Editor: Andrew Whyte, Karin Koppel.
Source: 'Uudis+,' interviewer Arp Müller.