Eesti Energia conducted an analysis to assess the impact of various production units at the Eesti Power Plant and the generation capacity of the Balti Power Plant on electricity prices between 2022 and 2024. The study also aimed to estimate the financial impact of the two plants' production on the electricity costs of end consumers in Estonia.

The analysis covered the period from July 1, 2022, to November 30, 2024. During this time, Estonia's total electricity consumption amounted to approximately 19.2 terawatt-hours, while the combined oil shale electricity output from the Eesti and Balti power plants was 4.7 terawatt-hours, making up just under a quarter (24.5 percent) of total consumption.

However, the share of these two plants in Estonia's electricity consumption has been declining each year. In 2022, a period that could be described as an energy crisis in Estonia and across Europe, their output covered nearly 70 percent of domestic consumption. By the following year, this share had fallen below 20 percent, and in the first 11 months of 2024, it dropped to under 10 percent. As the market competitiveness of oil shale power plants continues to decline, their electricity production is decreasing, reducing their impact on electricity prices.

Eesti Energia told ERR that to assess the impact of their Eesti and Balti power plants on the electricity market price and end consumers' electricity costs, they analyzed hourly supply curves and simulated a hypothetical scenario in which Eesti Energia had not offered the generation capacity of these plants to the market. The results showed that from the beginning of last year until the end of November, the estimated average impact on electricity prices was €15.1 per megawatt-hour.

In the Nord Pool electricity market's Estonian price area, the average electricity price over these 11 months was €87.4 per megawatt-hour. According to the analysis, without the production from oil shale power plants, the price would have been €102.5 per megawatt-hour — €15 or 17.3 percent higher.

Lauri Karp, head of Enefit Power, Eesti Energia's subsidiary that operates the oil shale power plants, stated during a Riigikogu State Budget Control Select Committee this week that the estimated societal benefit amounted to approximately €120 million.

Only Auvere plant makes the cut when market price below €100

As mentioned, the share of oil shale power plants in Estonia's electricity consumption has been declining each year and is now below 10 percent. The oldest oil shale-based power plant units are able to sell electricity on the market for only 60 to 80 hours per year.

The key issue is cost — older units have higher production costs. Eesti Energia explained that power plants' ability to access the market depends not only on price but also on operational conditions, such as how long they can remain stably on the market. For oil shale plants, this means that market access is influenced by the number of hours when electricity prices are sufficiently high. For the oldest dust combustion units, the minimum price required is €200 per megawatt-hour, but in reality, an even higher market price would likely be necessary.

"This means that if the market price exceeds €200 for, say, three hours, it would still not be reasonable to start up the older dust combustion units because powering them up and increasing their load is a lengthy and costly process. To determine whether it makes sense for a plant to enter the market, we must consider a longer period and the entire day's average market price," said Eesti Energia's Head of Communications Mattias Kaiv.

Eesti Energia's newest plant, Auvere, which uses not only oil shale but also retort gas from oil shale processing and wood mass for electricity production, can enter the market when the electricity price exceeds €90 per megawatt-hour. Other fluidized-bed technology units can sell their electricity on the market if the price is at least €110 per megawatt-hour.

Environmental requirements, particularly carbon emissions and the allowances purchased to offset them, are also a key factor. Lauri Karp stated that for Auvere's electricity production, if broken down into two parts, the production cost per megawatt-hour is between €30 and €40, while the remainder of the price consists of CO2 allowance costs.

Eesti Energia noted that CO2 costs account for more than 50 percent of the production cost of oil shale power plants. In Auvere, at least 50 percent of the fuel used must be oil shale, as it cannot be reduced further for technical reasons to maintain the stability of the fluidized-bed process. To achieve a lower production cost, operations at Auvere are managed so that 40 to 45 percent of the fuel is alternative.

For comparison, Latvia and Lithuania's gas power plants enter the market when electricity prices range between €120 and €150 per megawatt-hour. This wide range is due to differences in their technical configurations and, even more significantly, fluctuations in global gas prices.

So far this year, Estonia's highest average electricity prices were recorded in February, when prices hovered just below €200 per megawatt-hour on some days and even reached €235 on one occasion. However, windier and sunnier days in March have driven prices significantly lower. For example, the four-day average price this week has been €74 per megawatt-hour, while the previous week's average was as low as €55 per megawatt-hour.

Last year, Estonia's average annual electricity price was €87.3 per megawatt-hour. In 2022, during the energy crisis, the annual average was significantly higher at €192.8 per megawatt-hour.

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