Estonia's TSO signs island operation capability contract with national power company
Elering and Enefit Power signed a contract to ensure island operation capacity, guaranteeing 1,036 MW of dispatchable electricity generation for up to €59.5 million a year.
Under the Electricity Market Act, the cost of the service will be covered by electricity consumers, who will see a new line item — called the security of supply fee — on their network service bill starting in January. In 2026, the fee will amount to €7.58 per megawatt-hour or €0.0076 per kilowatt-hour, excluding VAT. For an average household consuming 250 kilowatt-hours of electricity per month, this will mean an additional cost of about €2.35 per month, including VAT, according to transmission system operator Elering.
"As a result of the procurement, we have secured the necessary capacity of power plants for emergency situations, particularly in the event Estonia loses its electricity connections with neighboring countries, including the Continental European frequency area. If that happens during a windless and prolonged cold spell, we will have enough dispatchable and operable power plants in Estonia to get through such a difficult period," said Elering CEO Kalle Kilk.
"The state of the frequency and electricity markets clearly shows that Estonia needs dispatchable generation capacity. Enefit Power's dispatchable power plants account for 85 percent of Estonia's total dispatchable generation. The island operation mechanism helps ensure those plants remain operational even when they cannot participate in the market. At the same time, it allows their output to continue being offered on the market, which helps prevent extreme price spikes and lowers the cost of ensuring security of supply," said Enefit Power CEO Raine Pajo.
"To ensure security of supply, we still need our older [oil shale] energy blocks until modern dispatchable solutions are available in Estonia," Pajo added.
The cost of ensuring island operation capacity is based on actual expenses. This means Elering will only reimburse Enefit Power for costs directly related to providing the service. A winner of the procurement will be audited by an independent auditor using a special methodology.
Enefit Power will retain the right to participate in other energy markets with the same generation capacity. If the company earns more from selling electricity on those markets than anticipated in the contract, the payment for the island operation service will be reduced accordingly. This would lower the security of supply cost for Estonian electricity consumers.
Enefit Power, part of the Eesti Energia group, includes the Eesti Power Plant, the Balti Power Plant and the Auvere Power Plant.
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Editor: Marcus Turovski
