Narva power station biomass bill only benefits Eesti Energia, critics say

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Eesti Energia's Narva power stations. Source: Mihkel Maripuu/Eesti Meedia/Scanpix

A bill which will allow the use of low-grade woody biomass in a Narva power plant has passed its first Riigikogu reading. While the bill is presented as a temporary fix, and one which will help keep electricity prices stable given its green dimension – the woody biomass fuel will not be subject to Carbon Dioxide charges – critics say that it is simply an act of favoritism for one particular firm, i.e. the state owned electricity generator, Eesti Energia, and in one location, Narva, since its provisions cannot be applied to any other situation. Additionally, after two years, the issue will need to be dealt with again.

As reported by ERR News the Reform/Center coalition has to support Eesti Energia in its production of green energy from biomass raw materials (i.e. wood and wood-based material) and ways in which to do this.

The bill which would enable the support of the production of 1,000 GWh of electricity from biomass in Eesti Energia's power plants over the next two years passed its first Riigikogu reading (of three) Monday.

Supporters of the move point to previous support for similar drafts, which were put on hold with the change in government in January.

Reform Riigikogu group chair Mart Vorklaev also pointed to an economics affairs minister's claim that the proposed subsidy will be capped at €10 per MWh, while the current co-generation plants in the Narva area receive subsidies of €53.7 per MWh.

Taking into account production volume of 400 GWh per year, annual support would come to approximately €4 million.

The current bill also requires only low-grade biomass be used and supported.

Reform MP Kristen Michal told ETV news show "Aktuaalne kaamera" (AK) Monday that: "A bill currently at the Riigikogu … [amends] the original bill sent by the previous government limits the possible time to pay the subsidy in fewer parts, reduces the amount of money and nails down what kind of wood can be used. Only the lowest quality wood can be used as biomass, otherwise no support will be paid."

As to the rationale of support only for Eesti Energia and no other provider, economic affairs minister Taavi Aas (Center) said: "One of the main reasons is the price of heating in Narva, which, thanks to the price of CO2, is in danger of rising significantly."

"Biomass can certainly keep prices stable. Second, we certainly need to ensure that existing [power station] boilers remain operational. it is certainly possible to keep these boilers in operation more," he added.

However, Social Democratic Party (SDE) MP Jevgeni Ossinovski did not find the arguments in favor of the move, saying that costs will be passed on to the public.

Ossinovski said: "This is a bad plan for the consumer, because as a result of this decision, the renewable energy fee that the consumer has to pay out of their own pocket will increase, adding that the argument that it would maintain stabl prices was not a compelling one, since the plant in question, the Balti soojuselektrijaam (Baltic thermal electricity station) Block 11 will be using a combination of woody biomass and oil shale, meanig that price to consumers will be related to CO2 prices.

The Competition Authority's (Konkurentsiamet) director general, Märt Ots, was also critical of the bill.

"If there is a political decision to support the Narva power stations, this is totally understandable, because the Narva power station is both a guarantor of energy security and a very important social employer. However, what concerns the Competition Authority is how the support is sought after," Ots told AK.

Ots said that the Riigikogu should instead prepare a bill specifically aimed at supporting Eesti Energia; in effect the government has given itself and any favored company a blank-cheque for support.

"For example, if in city X or Y there is a producer, a private company, who turns to the government or to a ministry, saying 'I have a hard time and I want support'," Ots said.

"The problem is that if we announce a measure for that particular location, there is in practice only one company to whom it can be offered," he went on.

Reform's Mart Vorklaev had said last week that the bill had been a compromise agreed in the Reform-Center coalition agreement, which would allow ostensibly green energy being used to generate both electricity and heat (water from Narva power stations, rather than going to a cooling tower, is often used to provide heating for the city of around 57,000 people – ed.).

There would need to be proof that the woody biomass in question had no other viable alternative use.

The move was also a temporary one due to last about two years, he added.

When this support does expire, which Märt Ots pointed out could lead to issues locally in Narva, Taavi Aas had said that a new, co-generation plant to be built after that would resolve the issue.

The bill will need to pass a second and third reading before entering into law. The Riigikogu breaks up for summer this Thursday.

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Editor: Andrew Whyte

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