Andres Sutt: Estonia will get both new cheap and dispatchable power capacity
Estonia must produce more of its own energy, ensuring energy security and affordable prices. On Thursday, the government made one of the most significant decisions of recent years to achieve this goal, writes Andres Sutt
We agreed in the government to organize the sixth and final wind farm reverse auction. There is not much further to go — another 100–110 turbines would be enough to bring Estonia's electricity price as low as possible. The final auction will take us to that goal. But that alone will not be enough.
To ensure that the lives of local residents improve immediately, not several years from now, we are preparing a wind incentive bonus that will give locals certainty that large investments will also take them into account. Naturally, if local communities are part of the future of energy, the state should support them in this. There are also more spatial plans than wind farms that will ultimately be built, meaning there will not be enough projects for everyone.
Wind power is critically important, but it is not the only part of the energy equation. This is both natural and the result of thorough analysis.
That is why the availability of dispatchable capacity is also crucial. Several hundred megawatts of gas-fired power plants have already been ordered, meaning we will finally have reliable, controllable power stations. We need more such plants and work toward that goal is ongoing.
Generating electricity with gas, like oil shale, is not particularly cheap, so clean electricity will remain very important for bringing down the average price even once all the new gas plants are completed.
Solar parks also make an important contribution and a very large number of them have been built over the past four years. Even now — let me remind you that winter will last several more weeks — solar parks provide Estonia with more energy during the daytime than the Auvere Power Plant.
As I have said repeatedly, oil shale power plants will continue to serve us until we have enough reliable gas plants to replace them. This requires extensive repairs and maintenance, but it is unavoidable until the new gas plants are completed. Building new oil shale plants, however, would be irresponsible, as constructing one would cost at least three times as much as building a gas plant of the same capacity.
Energy storage is a major help in distributing solar and wind energy more effectively and this market in Estonia has grown rapidly over the past two years and will continue to expand. Electricity storage can help reduce price spikes even when there is neither sun nor wind.
In March, I will also bring the Nuclear Energy and Safety Act to the government so that the legal framework is ready for the energy solutions of the future.
For large energy projects — such as nuclear energy, offshore wind and large-scale pumped hydro storage — we are designing a financial instrument to provide investment certainty for both investors and banks.
The details are set out in the Energy Sector Development Plan adopted by the government in January. It is quite an easy read and at 30 designed pages it is not very long. Work continues, but a major piece of the puzzle has now at least been taken out of the box, if not yet fully assembled.
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Editor: Marcus Turovski
