State to increase electricity market competition with distribution reform

Electric vehicle charging station in Tallinn.
Electric vehicle charging station in Tallinn. Source: Siim Lõvi/ERR

On Thursday, the government approved amendments to laws, which should force electric grid distributors to open larger competition in the electric market, opening distribution options and allowing greater competition in the electric vehicle loading infrastructure field.

"Primarily, it is directed toward our electric market being as transparent as possible and for all parties involved in the market to have equal opportunities to participate in the market and do their actions," said Minister of Economic Affairs and Communications Taavi Aas (Center) at a press conference on Thursday.

"If we are talking about specific things this change will bring, then primarily it gives better opportunities to produce electricity in sparsely populated areas, /.../ increasing the flexibility of networks, so that network companies would acquire more services from other providers, from a large circle of service providers and not just from the same company's associates. There are also restrictions on network companies, which are dealing with charging points and electricity production points," the minister explained.

"We know grid distributors always have a certain advantage over other parties in the market. With this amendment, restrictions are imposed on distributors, in simple terms, grid companies cannot offer services, such as charging points, on their own," Aas noted.

Grid distributor cannot own charging points

Stemming from an EU directive, the amendments to the Electricity Market Act and State Assets Act will change certain conditions on the distribution market to ensure equal competition, said Ministry of Economic Affairs and Communications spokesperson Kadri Laube.

The first large amendment she pointed to was that after the draft law is approved in the Riigikogu, grid distributors are forbidden from owning, developing and managing electrical vehicle charging points.

"It is important to incentivize charging network and storage unit competition. The restriction stems from the fact that grid distributors have access to information regarding the development of the network, which could be very useful in terms of dealing with the free market," Laube explained.

She said it is important to ensure that no company that has this advantage competes on the charging, storage or flexibility mechanism market with other companies, developing a significant advantage over others.

Grid companies must treat each provider equally

The ministry spokesperson pointed to another amendment, which states that grid distributors must no longer prefer their own associate companies when it comes to buying services.

This requirement will largely affect state-owned electricity generator Eesti Energia and its associate grid distributor Elektrilevi, which has more than 533,000 clients in Estonia.

"Grid companies have to include new production and storage technologies, especially when it comes to units that produce electricity from renewable sources, along with consumption volumes from electric vehicles," Laube said.

"Grid distributors draw up network development plans in a manner that supports the inclusion of units producing electricity from renewable sources, helping facilitate the development of energy storage units and electrifying the transport sectors. Also, they have to present relevant information about planned network extensions and upgrades," the ministry spokesperson added.

She said consumers are a major component in achieving this flexibility, which is necessary to adapt the grid to the changing production and of renewable electricity. "Developments in managing grids and producing renewable electricity open multiple new opportunities for consumers," Laube noted.

No plans to separate Elektrilevi from Eesti Energia

Thirdly, the amendment means increasing the independence of distribution operators from the producers and storage unit and charging network owners. "In the future, the the management of a network company must be disconnected from the producer. We see here that, in case of state-owned companies, the council is proposed by a nomination committee," minister Aas noted.

"For distribution network companies, who have connected at least 100,000 consumers, a board or council member or someone dealing with everyday economic activity, cannot be in a leading position in an electricity company belonging to the same concern," Kadri Laube said.

"Going forward, proposals on council membership will be made by a nomination committee consisting of council members of companies with state involvement, who must ensure that the proposal is in accordance with the aforementioned requirements," she added.

The ministry spokesperson, Eesti Energia and Elektrilevi confirmed that the amendment does not mean Elektrilevi will be separated from Eesti Energia. "No, the government approved draft law does not see Elektrilevi separated from Eesti Energia," Laube said.

Eesti Energia spokesperson Reimo Raja confirmed that there are no plans to do so and Elektrilevi board chairman Mihkel Härm told ERR that the company is not aware that the government's decision will change the current situation within the company.

According to Laube, the amendments affecting free market services will affect all electricity distribution companies, of which there are more than 30 in Estonia.


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Editor: Kristjan Kallaste

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