The Baltic countries imported record quantities of Russian electricity last year, with national energy giant Eesti Energia believing that cheap Russian power should be subject to environmental fees to stop it from flooding the market. Power transmission operator Elering finds that it would not deliver the Estonian oil shale power industry as cheap power from the Nordics would simply step in for its Russian counterpart.
If in 2013-2017, Russia sold the Baltics around 3 terawatt-hours of electricity a year, the figure had grown to 5.5 terawatt-hours by 2018 and 7.8 terawatt-hours by 2019, "Aktuaalne kaamera" reports.
Export to the Baltics exploded after the 2018 CO2 price hike.
With the Finnish grid included, Russia sold over 16 terawatt-hours of power to the region last year. Enough to cover Estonian demand for two years.
Environmental fees make up two-thirds of the operational costs of Estonian thermal power plants, while Russia has no such taxes.
"Naturally, their power is much cheaper without such a tax component affecting the price. We face a dilemma in that we have agreed on value-based taxation of energy production in Europe on the one hand, while we are consuming electricity that is not subject to these taxes on the other. The result is that the output of our thermal power plants was cut in half last year as Estonia became a massive energy importer and had to cut jobs in the sector," said Eesti Energia CEO Hando Sutter.
While the previous European Commission did not discuss a pollution quota tax on power from third countries, the new composition has made the environment a priority.
"The previous Commission did not consider this. The one today has other priorities, and we cannot rule out some changes. Steps taken by Estonia and Latvia include introducing transmission fees for power that moves through our countries," Minister of Economic Affairs and Infrastructure Taavi Aas said.
Estonia and Latvia have not introduced infrastructure usage fees for Russian power.
Both Taavi Aas and Elering said that until Estonia synchronizes with the European grid in 2025, Russian power will have access to the market.
"Disconnecting ourselves from the Russian grid will be the end of Russian power in Estonia – no lines, no traffic," CEO of Elering Taavi Veskimägi said.
He added, however, that taxing Russian power would not improve the situation of electricity produced in Estonia.
"We would simply have cheaper power from the Nordics at current CO2 prices as the Narva plants are the most sensitive to the price of CO2," Veskimägi explained.
Editor: Marcus Turovski