As a result of transmission system operator Elering's frequency reserve procurement, around 200 megawatts' worth of new gas-fired power plants will be added to Estonia's energy system in the coming years. These are needed as controllable sources of power to ensure grid stability, particularly as the current plans foresee an eventual end to the life cycle of oil shale power stations.

The emergence of new gas plants has also given renewed purpose to Estonia's gas transmission network, especially the pipelines leading toward Narva and Värska. These were once key entry points for cheap Russian natural gas, but are now effectively dead ends.

According to Elering board member Reigo Kebja, the addition of gas power plants means Estonia has a clear need to keep these pipeline routes operational at least through 2050.

The pipelines to Narva and Värska are on average 50 years old, with some sections even older. Kebja said the designed lifespan of gas infrastructure typically ranges from 50 to 60 years.

"On the one hand, the challenge is to avoid overinvesting, but on the other, not to underinvest either," Kebja noted.

Just a few years ago, there was discussion about whether to replace the entire eastern pipeline system to extend its lifespan by another 60 years. Kebja said the current plan is more modest, focusing instead on targeted investments to keep the aging network running until roughly 2050.

"We'll do everything we can to extend the lifespan of the gas network with the most reasonable measures possible, through to around 2050," Kebja said.

According to Elering's current forecast, keeping the Tallinn–Narva and Tallinn–Värska pipelines in working order until 2050 will require an estimated €130 million in total investment. Of that, about €40 million is expected to be spent over the next five years on these so-called dead-end pipelines.

To extend the pipelines' lifespan, additional diagnostics will be conducted along the Narva and Värska routes to better assess the condition of each section.

Where segments are in good enough condition, insulation work will be carried out to slow or halt deterioration. In some cases, local repairs will be made, while in others, entire kilometers of pipeline will need to be replaced.

Without the addition of gas power plants on this scale, Kebja said, there would be far less certainty that it's worth investing tens of millions of euros to keep the old pipelines operational until 2050.

Just two years ago, Elering CEO Kalle Kilk publicly questioned [link in Estonian] whether the pipelines to Narva and via Tartu to Värska still had any real future.

TSO wants to calculate network fee based on capacity

According to Kebja, part of the planned additional investment into the gas network will be covered by the current network fee. There are no plans to raise the gas transmission tariff next year, but what happens beyond that remains uncertain.

The more significant part of the equation, however, is that Elering — together with the Competition Authority and market participants — wants to change the way gas network fees are calculated, shifting from a volume-based model to a capacity-based one.

Currently, the gas transmission system operates on a volume-based fee, which suits consumers who use gas steadily over long periods, such as year-round or throughout the winter.

New gas power plants, on the other hand, require large volumes of gas only for short periods — for example, during cold weather when there's no wind or sunlight. Kebja explained that in such situations, both pipeline diameter and gas pressure are critical.

"In other words, the pipe supplying the gas-fired power plant needs to be relatively large and the pressure inside that pipe equally so. The current gas transmission tariff doesn't fundamentally support this," Kebja said.

Switching to a capacity-based tariff, Kebja added, would also help soften the long-term impact that investments in the aging gas network could have on transmission fees.

He noted that if the tariff structure is changed, any future increases to the network fee are unlikely to be significant in scale.

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