Electricity consumption in Estonia is increasing year by year, while oil shale power plants dating back to the Soviet era are growing older. The government plans to replace the aging plants within the next decade as their maintenance costs continue to rise over time.

For now, however, keeping the old oil shale plants running is still cheaper for the state than building new gas-fired power plants. Karin Maria Lehtmets of the Ministry of Climate said that will no longer be the case within a few years.

"Currently, maintaining an existing plant is indeed cheaper if we look at the annual cost, but it is becoming more expensive all the time because the Narva oil shale plants are very old. They require constant repairs... After 2035, we do not see the older units as even being capable of remaining in operation," Lehtmets said.

Keeping the old oil shale plants operational will cost the state about €60 million this year and that expense is expected to increase over time.

Lauri Karp, head of Enefit Industry, said it is difficult to forecast how much the maintenance costs of the old plants will rise each year.

"It is very difficult to find logic or a formula for how one or another cost arises. We can certainly say that these costs will increase. By how much — that would be pure speculation at this point," Karp noted.

Erkki Sapp of Elering said the point at which building new gas-fired power plants becomes cheaper than maintaining old oil shale plants should arrive sometime after 2030.

Under the government's plan, new dispatchable power plants — mainly gas-fired plants, but also various storage capacities — are expected to be completed by around 2035.

Transmission system operator Elering has forecast that Estonia will need to build a total of 1,000 megawatts of new generating capacity over the next decade that can operate even when the wind is not blowing and the sun is not shining.

The ministry hopes to announce a procurement for the construction of the new plants in about two to three years. Erkki Sapp, a member of Elering's management board, said the exact structure of the tender has not yet been decided.

"There are various options. It may be reasonable to organize one procurement for the full capacity or several smaller tenders with different completion timelines. It depends on an analysis of the alternatives to determine the most practical option," Sapp said.

But would electricity produced at gas-fired plants be cheaper than power generated by the old oil shale plants? Karin Maria Lehtmets said it likely would be.

"Of course, it depends greatly on the price of gas, but it would probably be around €100 per megawatt-hour. For the old units, it is around €180 to €200 per megawatt-hour, in some cases even slightly higher," Lehtmets said.

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