The ongoing effects of the coronavirus crisis have led to lower consumption of electricity and in turn, a glut in CO2 quota allowances. This has in turn led to a fall in electricity prices, though the latter is largely caused by an increase in hydro-generated power, say energy sector spokespersons. The CO2 quota prices at the same time, while they have fallen, have not done so by enough to kick-start the oil shale sector.
Whereas CO2 quota prices per ton previously fluctuated around the €25-mark, it currently stands at €18, and has fallen as low as €14 recently.
While this should have acted as an incentive to increase large-scale oil shale-generated electricity at power plants in Narva and Ida-Viru County, this has not been the case yet, since the fall has not been high enough to make this economical, according to ERR's online news in Estonian.
"As the quotas are around €18 per ton and the price of electricity is also somewhere between €17-18-mark per Mwh, this makes oil shale electricity production relatively difficult," said Raine Pajo, board member at state-owned electricity generator Eesti Energia.
Pajo said the cause of the fall in the price of emission allowances is lower consumption during the current crisis, and the accompanying oversupply of emission allowances.
Electricity generated from oil shale as low as a quarter of figure this time last year
Oil shale-generated electricity in Q1 2020 has reportedly been around a quarter of what it was in Q1 of 2019.
"We currently have one oil shale power unit in action, but at the same time we have had windy weather, so [wind power] turbines are running at almost maximum capacity," Pajo went on.
Eesti Energia operates wind farms via its Enefit Green renewables subsidiary.
As for signs of the future, there is nothing to suggest immediate recovery, Pajo said, though in the second half of 2020 this might happen.
"The April forecast does not paint a better picture, but going forward there may be hope in the second half of the year, as the economy recovers, that the hydrological situation (meaning water on and below the ground surface-ed.) will improve, so to speak, and some nuclear power plants are to be repaired. There is hope that we can utilize more oil shale blocks."
The significantly reduced price in the CO2 quota means for the state a fall in revenue from the sale of unused emission allowances. The supplementary budget submitted to the Riigikogu last week, in response to the coronavirus pandemic and its economic effects, estimated revenue from quota sales as falling by approximately €60 million, from which funds allocated for climate policy objectives will fall by €30 million.
"Right now, it is very difficult to say to what extent a measure will be affected and, if so, how much. This is a revenue forecast, and all forecasts will be more accurately estimated once that revenue is received. In other words, looking at a 2020 forecast, then the truth on whether the forecast was right won't be clear until December 31, 2020," said Getlyn Denks, head of climate department at the Department of the Environment (Keskonnaamet).
Hydropower behind low electricity prices
The low price of electricity is primarily fueled by hydropower, as there is currently a lot of water, Raino Pajo said.
"There's been a lot this year. We've seen a price of €5 here even at night, and this certainly been influenced by lower consumption during the crisis, but the major factor is definitely the hydroglogy situation," he said.
Editor: Andrew Whyte