Estonia's electricity system operator Elering plans to build gas-fired power plants across different parts of Estonia with a total capacity of 900 megawatts, with completion targeted for 2035, when older oil shale power plants are expected to fall out of use.

Elering CEO Kalle Kilk told ERR that establishing electricity system restoration capability does not necessarily require building gas plants, but they are the most suitable option and likely the most competitive under Estonia's conditions.

The total capacity to be procured is up to 900 megawatts, with each connection point required to fall between 90 and 250 megawatts. Each plant must reach full capacity within 15 minutes and be capable of operating for 72 hours without external power. The plants would be distributed geographically, with Elering identifying connection points in the Tartu, Virumaa, Pärnu, East Tallinn and West Tallinn regions.

"The regions have been selected purely based on how much consumption there is in that area, which the station would need to supply in an emergency," Kilk explained.

Such plants would replace the current island-mode mechanism, meaning that, according to Kilk, Elering can solve the system restart issue without requiring additional funding. The more new plants are added that can provide local restart capability, the more Elering can reduce the service it purchases from older plants to keep the electricity system running.

"Consumers will not have to pay more, according to our calculations," Kilk said. "The older a power plant is, the higher its annual maintenance costs. The cost curve keeps rising and at some point it becomes as expensive as building a new plant. In our assessment, that point will arrive in the early 2030s."

During periods when the plants are not needed for post-crisis restoration, they can operate on the market as they see fit and, according to Kilk, help bring down winter peak prices.

The national energy sector development plan through 2035 (ENMAK), approved by the government on January 8, does not include this plan, Kilk noted.

CEO: Feasibility of building a nuclear power plant would become questionable

Kalev Kallemets, head of Fermi Energia, said the new plan came as a surprise, given that the latest security-of-supply report assessed restart capability as adequate, citing both the Kiisa emergency power plant and the EstLink 1 subsea cable to Finland.

According to Kallemets, introducing a support mechanism to build gas-fired plants of this scale would have a major impact on the Baltic states' shared electricity market.

"If this procurement is successful and these capacities are built, oil shale energy will likely come to an end once they are completed," he said.

Kallemets added that with such a restart support mechanism in place, there would likely be no room in the market for other generation capacity and that it is worth analyzing whether natural gas supply from Latvia can truly guarantee Estonia's security of supply. He also raised security concerns.

"In a wartime situation, it is unlikely that LNG tankers would be able to access the Baltic Sea and ensuring long-term gas supply security would certainly be questionable in such a case. Especially considering that, in reality, gas reaches Estonia from a single storage facility in Latvia, which is not war-resilient, nor is the Karksi metering point," Kallemets noted.

At the end of March, the government approved a draft nuclear energy law that would create the legal basis for the use of nuclear power, though several stages still need to be completed. However, if Elering proceeds with its new plan, the prospects for building a nuclear power plant in Estonia would become uncertain, Kallemets said.

"This raises a very important question of whether a nuclear power plant can fit into the market if security of supply is largely ensured through subsidized gas plants," he said.

He added that gas-fired power plants are not cheap and that during this winter — when peak prices exceeded €200 per megawatt-hour — it was precisely these plants that shaped electricity prices. Given the ongoing conflict in the Middle East and Europe's declining gas production capacity, gas is a relatively expensive fuel. In other words, electricity could become significantly more expensive in both the short and long term.

Minister sees plan as neither new nor surprising

Minister of Economic Affairs Erkki Keldo (Reform) said he did not agree with the claim that there is anything surprising in Elering's plan. He noted that issues of energy security and security of supply have been discussed at several government cabinet meetings where proposals have been presented by Energy and Environment Minister Andres Sutt (Reform) and Elering representatives.

"This topic is not new in any way. Not long ago, the national energy sector development plan (ENMAK) was adopted, which outlines how we can achieve a competitive end price and address security of supply — all of this has been covered previously in the media and in ENMAK as well," Keldo said.

In the minister's view, it cannot be said that the procurement of gas-fired power plants under Elering's published conditions would undermine the case for building a nuclear power plant. He added that it is still too early to say whether and what kind of nuclear plant will be built, as the Riigikogu is still preparing the regulatory framework.

"We are talking about a nuclear power plant at the earliest on a ten-year horizon. It is also important to distinguish between two things: one is ensuring Estonia's overall security of supply /.../ so that when the wind is not blowing and the sun is not shining, there is actually energy available," Keldo said. "At present, security of supply is ensured by outdated oil shale plants, which start up more slowly. In the future, gas plants that start up faster and are more reliable will take over — this is a reasonable transition."

According to Keldo, a nuclear plant could serve as baseload capacity in ten years or more, particularly if new industries or data centers requiring large amounts of stable energy are developed. However, the situation with security of supply is already critical, as several old oil shale units have become worn out.

Elering is awaiting feedback on the plan published this week until May 19, after which it will submit the principles to the Competition Authority for approval.

Elering wants the gas plants to be built as quickly as possible: under the company's plan, the first plants could come online in 2031–2032, with all plants connected to the grid by 2035.

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