Andres Vainola, who spent years in senior roles at the Eesti Energia group and now works in the private sector, told the Vabadused portal in an interview that oil shale-based power generation has effectively been taxed out of existence through CO₂ pricing. He said he agrees with those who argue that the energy debate has essentially become an ideological battleground.

"This is primarily due to the political ambition in the Energy Sector Development Plan 2035 (ENMAK) to move to 100 percent renewable energy, which has consistently been set in opposition to the actual needs of the energy system. That is where the root cause lies of why oil shale energy has been taxed to death," Vainola said.

According to him, the goal of 100 percent renewable energy is utopian, as the laws of physics and the realities of the energy system impose their own constraints. Instead, agreement should be reached on three to four simple principles, starting with looking at the total cost of energy for consumers, excluding all subsidies and support mechanisms.

Second, consumption volumes should be taken into account, which in ENMAK have now been brought closer to reality, to around 9.5–11 terawatt-hours. Third, infrastructure must be considered, and fourth, security of supply.

"If we look at best practices to determine what the optimal energy mix might be today, we can take what has happened in Poland and Germany over the past two to three years. Looking at their energy mix, fossil fuels still account for a very large share and we do not see a declining trend at present," Vainola noted.

At the same time, he said that peak electricity prices in both Germany and Poland have been lower than in Estonia, even during difficult periods.

"Not only peak prices but also average prices have been lower. This means that energy production based on fossil fuels can also benefit from certain exemptions and that this market model can be used in a way that benefits the local consumer," he added.

Estonia has lacked the political ambition to seek an exemption

Vainola pointed out that Poland has secured an exemption from the EU and heavily subsidizes coal-based electricity generation. In other words, the producer does not purchase CO₂ quotas; instead, the state pays for them. The producer then competes on the market based on other variable costs, effectively acting as a market maker.

"If we look at how volatile electricity prices have been in Estonia and the Baltic market over the past two to three years, why not consider this best practice? As far as I'm concerned, the Auvere Power Plant or some other dispatchable generation units could operate as CO₂ quota-free market makers. That option is entirely available," Vainola said.

He added that Auvere's cost price — or at least its variable costs without CO₂ — would be around €50–€60 per megawatt-hour.

"This option exists in Europe; Germany and Poland have used it. For some reason, we have not," Vainola said.

Although Auvere's reliability has not been strong and that is the fault of the designer-builder, engineers in Ida-Viru County have done very good work, Vainola said, raising reliability from 60 percent to 90 percent.

"Perhaps we should focus on having Auvere act as a market maker, operating steadily — without ramping up and down — on the market, for example from October to April," he suggested. "We might also consider building a new hybrid oil shale power plant that uses, say, 50 percent oil shale and 50 percent our own low-quality wood chips. These are the kinds of measures that would bring additional generation to the market relatively quickly."

In Estonia, unlike Poland, there has been no political ambition or willingness to seek such an exemption, but Vainola noted that if total energy cost, necessary infrastructure, consumption volumes and security of supply are taken into account, it would be very straightforward to calculate a few possible scenarios.

Oil shale energy has been mistreated

"Someone in the Republic of Estonia should take on the role of chief energy officer and chief economist, so that the economic aspect would prevail over political ideology," he said. "That would allow us to reach a point where Estonia's market could accommodate both dispatchable generation — whether based on oil shale or biofuels such as wood chips — and renewable energy."

In Vainola's assessment, oil shale energy has been treated unfairly and Estonia needs certain generation capacities. From a security of supply perspective, he argued that in the near future the country should stop paying more than €60 million to Enefit Power to keep 1,300 megawatts of outdated oil shale capacity running.

"This is not reasonable — the cost keeps rising over time, while security of supply is declining. Today it's €60 million; tomorrow or the day after it will already be €100 million. A sensible approach would be to allocate part of that — say, half — and launch a procurement for new gas-based generation capacity, which would be much more distributed. That would help bring down the total cost of electricity," he suggested.

According to Vainola, a large influx of wind energy alone will not lower electricity prices.

"Finland has figured this out: there is no longer as much cheap wind-generated electricity there. Why? Because the Finns have started electrifying their district heating. In three to four years, 2,000 megawatts of electric boilers have been added to district heating networks, specifically to use low prices caused by wind overproduction to store heat," he explained.

Vainola added that sudden wind overproduction in a neighboring country does not, unfortunately, lead to sustained lower prices in Estonia. Both dispatchable capacity and wind are needed.

"There is certainly room in Estonia to develop onshore wind resources, but adding several terawatt-hours of wind in a situation where the region already has excess energy is probably not reasonable. This needs to be carefully calculated," he said, adding that the Finnish approach to electrifying district heating is a good idea.

Adding a ton of wind energy will not bring down the price

By significantly increasing wind power capacity, a situation arises where electricity is sold when prices are low but bought when prices are very high.

"If we look at what has driven peak prices so high, the reasons have been high prices in Finland, fully utilized EstLink interconnectors [between Estonia and Finland] and a lack of sufficient domestic generation. We need more dispatchable generation capacity and storage here — this would help cut the peaks," Vainola said.

He noted that the entire Baltic region consumes about 25 terawatt-hours of electricity annually, compared with 85 terawatt-hours in Finland. In the near term, Finland will certainly remain the price-setter in this regard, but according to Vainola, peaks and volatility could be reduced if Estonia had a market maker in the market, secured some form of exemption to take advantage of, brought more local generation capacity online, invested in storage and possibly electrified district heating.

"I believe that one day district heating companies themselves will be happy if they can move away from regulated pricing for heat and focus more on a heat carrier derived from the electricity market price. But there is still a long way to go," said the former Eesti Energia executive.

He added that he has nothing against nuclear energy, but Estonia also needs to get through the next 10–15 years and decisions must be made much more quickly.

"As an energy expert, I would rule out not taking a technology-neutral approach. We should not focus on a single option, but instead rely on the best technologies that are currently available. Once again, we need to get through the next 10 years — we cannot wait in some idealistic dream for a super-cheap nuclear technology to arrive someday," he stressed.

Undersea cable to Swedish nuclear power could be considered

Vainola noted that Sweden has begun renewing its nuclear energy potential and suggested that one alternative could be a storm-resilient subsea cable to a Swedish nuclear power plant. He added that it would likely be cheaper than building a domestic reactor if Estonia were to take, for example, a 10–15 percent ownership stake in a Swedish nuclear unit — though such options would need to be carefully calculated.

He described the Emissions Trading System (ETS) as a failure, saying politicians in Germany and other major countries should now grapple with it. According to Vainola, Estonia cannot ignore global political developments or wars; the country must ensure its own survival and secure a better future at home.

In his view, the time is ripe to invest in dispatchable generation capacity and if market volatility could be reduced and the Auvere plant or another facility brought into the market as a market maker, banks would gain enough confidence to finance such projects.

"May the Almighty grant us the wisdom and the will to act — not to remain so passive, to speak up on these issues and to agree on three or four very simple common principles, so that we do not make fatal decisions that could lead us into ruin in the future. We effectively have no time," Vainola said.

He added that, according to 2024 data, the European Union's global CO₂ footprint accounted for only about 6 percent of the world's total. Taking on the rest of the world with that 6 percent alone is quite difficult and since there is no silver bullet, a pragmatic approach is needed.

"Someone has to take responsibility and act as both chief energy officer and chief economist, otherwise we will make the wrong decisions," Vainola said, adding that he is "cautiously pessimistic" about whether politicians can solve the equation rationally. "I'm keeping my fingers crossed that nothing gets messed up over the next year."

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