This week, the daily average price of electricity in the Estonian price region of the Nord Pool exchange has exceeded €300 on both days — the highest level in the past two years. Unusually, prices have been just as high in Finland. Also uncommon is the fact that, on several occasions last week, electricity prices in Latvia and Lithuania were lower than in Estonia and Finland.

The current price spikes are driven by a classic winter weather combination: cold temperatures increase consumption while wind power generation in the region remains weak, said Kalvi Nõu, head of energy trading at Alexela.

"When cheaper energy sources — wind, partially hydropower and imports — don't meet demand, the market price is set by the plants that cover the shortfall during peak hours. In these peaks, the price level is often determined by more expensive dispatchable plants and short-term flexibility services. These include gas-fired plants and, under certain conditions, older oil shale units or other reserve solutions," Nõu said.

Tiit Hõbejõgi, acting head of energy trading at Enefit, also noted that weather is the main driver of electricity prices. As consumption rises, more expensive fossil fuel-based plants are brought online to meet demand, pushing prices upward.

For instance, oil shale plants operated by Enefit Power, a subsidiary of Eesti Energia, have not been running at full capacity, even though high consumption and elevated prices would typically support it. As of Monday afternoon, nearly 640 megawatts of Enefit's production capacity was offline due to malfunctions.

On Monday evening, the 185-megawatt Unit 8 at the Eesti Power Plant returned to the market. Its repairs were initially scheduled to last until February 6 but were completed ahead of time.

The Auvere Power Plant, which has a capacity of 270 megawatts, is also expected to return to operation slightly earlier than planned — now forecast to reenter the market on February 8 instead of February 10.

Of the dispatchable capacities operated by Enefit Power, Unit 11 at the Balti Power Plant and Units 4 and 5 at the Eesti Power Plant were online and submitting offers to the power exchange on Monday.

Units 3 and 6 at the Eesti Power Plant also submitted offers but were each operating with only one boiler due to issues in the second: an overheating failure in one and a leak in the other. Together, the two boilers accounted for 183 megawatts of capacity that remained offline.

Old oil shale plants can't withstand constant restarts

Raine Pajo, chairman of the management board at Enefit Power, told ERR that it's important to remember the Eesti Power Plant was built in the late 1960s. Despite modernization efforts, most of its equipment dates back to that era and is more prone to failures than modern plants.

Pajo explained that the old oil shale units, designed to run continuously at a steady load, aren't well suited for today's electricity market, which demands rapid response and flexibility.

"Startup puts considerable stress on an old power plant, amplifying preexisting issues and increasing the risk of breakdowns," he said.

Preventing and predicting equipment failures isn't always possible, even with maintenance and repairs performed during warmer periods, Pajo added.

"Although we carry out maintenance and repairs during the so-called off-season, some faults only become apparent during operation and can't be foreseen. As a result, identifying and fixing these issues often coincides with periods of high market demand for that unit."

In short, Eesti Energia's oil shale plants do enter the market during cold weather and high electricity demand, but unfortunately, that's also when failures are most likely and units are temporarily forced offline.

Wind conditions difficult

Finland is facing the same high electricity prices as Estonia, with local media attributing the unusually expensive power primarily to low wind energy output, in addition to increased demand. The country has seen little wind and frozen turbine blades have also been a problem.

In Estonia, according to Elering data, wind power production on Monday — when the daily average price reached €315 per megawatt-hour or 31.5 cents per kilowatt-hour — was quite strong in the evening hours (between 7 and 10 p.m.), reaching around 500 megawatts. On Tuesday during the day, output was lower, ranging between 300 and 400 megawatts.

Kalvi Nõu pointed out that while strong winds during individual hours in Estonia certainly help, electricity prices depend on the broader regional picture — namely, what's happening in Finland and Sweden and how much cheap generation is available.

"In Finland, weak wind production is currently one of the main reasons for high prices because wind has a large share in their energy mix and any change in wind conditions quickly affects the price. When wind drops — whether due to calm conditions or frozen blades — the shortfall has to be covered by more expensive sources and that is directly reflected in the price," Nõu said.

When large baseload capacities such as nuclear plants operate as planned and cross-border connections are functional, the key price drivers become a combination of high demand, low wind and the need for flexible, more expensive production, Nõu added.

Tiit Hõbejõgi, however, disagreed that low wind energy was the primary reason for the high prices.

"Considering that over the weekend and early in the week, wind production in Finland reached up to 5,000 megawatts at times, we can't say that frozen turbines are the main cause of high prices. In the Baltics, wind energy covered about one-fifth of total consumption in January, despite seemingly weak wind conditions. Overall, wind accounted for around 30 percent of total electricity production in the region," he noted.

Terje Talv, CEO of the Estonian Wind Power Association, also emphasized that while it may feel calm at ground level, turbines operating at altitudes of several hundred meters still generate significant amounts of electricity.

"In January, Estonia's wind farms produced an average of 138 megawatts. If we had four times as many wind farms as today, their output could more than compensate for the production shortfall from the Auvere Power Plant," she said.

System in deficit while consumption soars in Finland and Baltics

With cold weather gripping the entire region, electricity consumption is also high across the board. Tiit Hõbejõgi noted that current demand in the Baltic states totals about 5,000 megawatts, while in Finland, where new records were set this January, it has at times exceeded 15,000 megawatts.

Strong cross-border electricity connections mean that prices tend to equalize between countries. While this is usually the case across the Baltics, Estonia has, for the past two days, been in the same price zone as Finland. And while electricity is typically cheaper in Finland, extended cold spells can push its system into a deficit, meaning demand outpaces supply.

"When there's a shortage of generation capacity and limited supply on the market, high consumption pushes prices up. In 2025, nearly 40 percent of Estonia's electricity consumption depended on imports. At the Baltic level, imports covered more than a quarter of total consumption. But during a prolonged cold period, Finland's system also runs a deficit, so imported electricity won't shield us from high prices," Hõbejõgi explained.

Kalvi Nõu added that when wind is weak in Finland, its large market size drives prices higher and local improvements in the Baltics may not be enough to offset that impact.

"Additionally, during peak hours, we often see that intraday and balancing market prices can end up significantly lower than the previously forecast day-ahead market price. This suggests that inaccuracies in consumption and production forecasts, as well as the cost of flexibility, also play a role in balancing the system," Nõu said.

Scant gas reserves also hiking prices

Due to the prolonged cold spell, Europe's natural gas reserves have been depleted faster than expected, which has pushed up gas prices. In turn, rising gas prices are affecting electricity prices, since gas-fired plants currently account for a significant share of power generation in the region, said Tiit Hõbejõgi.

On the Dutch TTF gas exchange, prices began climbing after January 8 when the price stood at €27 per megawatt-hour. Within two weeks, it rose to around €40 but has since begun to decline again — on Tuesday, the price was just over €32 per megawatt-hour.

In an opinion piece published by ERR, Margus Kaasik, member of the management board at Elenger, wrote that natural gas consumption in January was about 55 percent higher than the same month last year and approached record levels for recent years.

"In the other Baltic countries and in Finland, gas consumption reached record highs, with even greater increases since a significant portion of gas there is used for electricity generation," he noted.

In Estonia, peak gas capacity reached 1,612 megawatts — roughly the same scale as the peak of the electricity system, Kaasik said. "That comparison is important because, in cold weather, both gas and electricity are critical. When there isn't enough dispatchable capacity or flexibility during peak hours, prices can spike quickly and system reliability comes under stress," he added.

In Estonia, peak consumption on Monday and Tuesday reached nearly 1,600 megawatts. On Monday, generation peaked at nearly 1,450 megawatts, while on Tuesday it reached only slightly above 1,200 megawatts. On both days, consumption and production exceeded forecasts during most hours.

On Wednesday, electricity prices are expected to ease slightly, with the daily average falling just below €200 per megawatt-hour in Estonia, Finland, Latvia and Lithuania.

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