State to analyze merging Elektrilevi and Elering

An electrician climbing a pylon.
An electrician climbing a pylon. Source: Elering

Ministries are organizing an analysis to look into a possible merger of state-owned energy group Eesti Energia grid operator Elektrilevi and transmission system operator Elering under one enterprise.

Ministry of Economic Affairs and Communications energy market department head Rein Vaks said the government wants electricity distribution network company Elektrilevi to be an independent company going forward, meaning it would no longer belong to the Eesti Energia group.

"On today's electricity market, we need a strong and independent distribution network company," Vaks said.

An analysis conducted in 2019 also showed that it would be reasonable to disconnect Elektrilevi from the Eesti Energia group to merge it with Elering instead. This would lead to 5,500 kW of the transmission network and more than 90 percent of the local distribution network to be handled by one company.

"Network companies now have their own management boards, their own customer service, control centers and so on," Vaks said. "And if we were to merge the network companies, these things can be done together, which would potentially save on costs."

In the 2019 analysis, it was estimated that savings could total more than €10 million a year. The analysis also reads that merging the network companies would help in planning the Estonian electricity network more optimally.

"If this process was to come true and we would be able to move forward with the merging, I would like to hope that consumers and producers would have an easier time joining the network," Vaks said.

He noted that a decision on merging Elektrilevi and Elering has not been made yet. The expert added that there are other options to disconnect the distribution network from Eesti Energia.

Still, the Ministry of Finance and the economic affairs ministry will commission a new analysis, which should provide clearer answers on how to proceed. The analysis should also answer how the merger would technically take place, which amendments in legislation would need to be made, how much it would cost and how much revenue would be generated. It should also show how disconnecting Elektrilevi would affect the Eesti Energia group.

In addition to Elering owning the transmission network, the company also manages it. Elering also handles for balanced production and consumption in the electricity system.

"At the initiative of the Ministry of Finance, there is also a desire to separately analyze how the system operator's functions are removed from the equation if the distribution network company and transmission network companies are merged," Vaks said. "We want to make it very clear what the pros and cons of such moves are and what effect would it have on the process as a whole."

He said creating a separate company for system management is not a goal. "It is good, however, that we have the effects available in a situation, in which there is a political desire to do it," Vaks said.

The energy network expert said Estonia is still in the process of desynchronizing from the Russian frequency band. "We would not like to take the system operator's attention away from the issue. This means that if it is at all possible, then this entire process we are currently describing will take place after 2025, once everything has gone well with us synchronizing with mainland Europe," Vaks said.


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Editor: Kristjan Kallaste

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