There are many reasons why Estonia has failed to attract major energy investments, including the lack of a clear understanding of which electricity generation capacities the state prefers and issues related to planning. However, a key drawback is also the lack of awareness that large investors expect revenue certainty from the state, said Erkki Raasuke, chairman of the supervisory board of the Estonian Business and Innovation Agency (EIS).

"We have now reached a point that not all of our stakeholders have understood — that a large share of these investments, at least in the near term, will not come on their own; they need some support. This does not mean large-scale subsidies, but revenue certainty is needed. The level of uncertainty is so high, the world is full of opportunities and people can just go invest elsewhere," Raasuke said.

According to him, this does not mean the state would cover all business risks with taxpayers' money.

"By no means all. The state does not step in to bail out, but if we create a model under which we need to build our energy production and we see that some investments are not coming, then what do we do — we go out and procure those investments," he said.

A state loan guarantee for major investors is not sufficient and work on developing such a measure has now been abandoned, Raasuke said. "We dropped it because we saw that no one needs it. What is needed is revenue certainty," he noted.

Raasuke, together with Anne Sulling, compiled a study titled "Feedback from Foreign Investors on Making Large Energy Infrastructure Investments in Estonia," which found that attracting major investments requires more than state-backed loan guarantees. Above all, investors need a clear plan from the state on what areas of the energy sector are to be prioritized.

According to Raasuke, existing documents such as the national energy development plan (ENMAK) or any previous state strategies are insufficient, as Estonia has not yet fully carried out what could be described as an "exercise" to define its future energy portfolio, nor does it currently have the necessary expertise.

"Historically, ENMAK has had a different focus and purpose, but the world around us has changed. Today, investments do not happen sporadically or on their own — they need to be curated and attracted. And for that, a plan is needed. We may not have entirely missed the moment, but we are late in creating that plan. Our current energy strategy does not measure up to such a plan," he said.

Raasuke added that the current plan lacks concrete actions.

"We describe what could happen, we describe that some things will happen one way or another. But what should we actually do? You need to draw up a table: by this point in time, we want to have this much dispatchable capacity; by that point, we assume — based on certain conditions — that we will have this much solar generation, this much storage. Then we combine that with decisions on what else — onshore wind, offshore wind, cogeneration and other components. We need to find the optimal mix and make it very clear both to ourselves and externally because that shows we know what we want to do," Raasuke explained.

He noted that developing a near-term energy model would also eliminate much of the current unconstructive criticism and make the situation clearer for everyone. However, external assistance is needed to compile such a model.

"We do not have that expertise in Estonia. It is not something that couldn't be built up over a few years, but at present it does not exist. We should cooperate with someone. But there are no obstacles to making even the latest studies transparent. Either we don't know how to do it or we don't want to," Raasuke said.

According to him, discussions with foreign investors revealed that while Estonia may believe it is acting competently, its actions and understanding are not aligned with developments in the international energy market.

"We tend to think for ourselves in a situation where we could learn more and rely less on our own thinking," Raasuke said.

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