Major pulp mill halts production due to record electricity price

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Estonian Cell.
Estonian Cell. Source: Rene Kundla/ERR

One of Estonia's most energy-intensive producers, Kunda-based aspen pulp mill AS Estonian Cell temporarily halted production last week due to soaring energy prices and is expecting the government to offer rapid solutions for restoring the competitive ability of Estonian companies.

Estonian Cell had to shut down it s pulp mill on December 8 due to extreme electricity prices as unexpected power and gas price hikes have impacted competitive ability. Despite partially fixed-price contracts, the company spent €1.5 million more than usual on power and gas in November. The company has paid an extra €5 million for energy in recent months.

This caused Estonian Cell to turn to Prime Minister Kaja Kallas (Reform) to ask for rapid solutions for restoring the competitive ability of energy-intensive businesses.

"Abnormally high electricity and gas prices have seriously impacted the competitiveness of energy-intensive industry on international markets since 2021. Dramatic escalation of electricity prices in December has, in addition to problems of competitiveness, raised the issue of the ability to function of energy-intensive industry," CEO of Estonian Cell Siiri Lahe wrote to the prime minister.

"It is impossible for us to have consumers on other continents pay for local input price hikes. That is why were are looking for solutions in what is (hopefully a temporary) crisis. The latter includes the request at hand for the particular nature of energy-intensive industry to be considered in the package aimed at alleviating the effects of the energy crisis," the address reads.

The company also proposes potential solutions. Lahe points out that the government measure of lowering the power transmission fee is one of three critical aspects affecting competitiveness of production costs both on global markets and in Europe. The other two are the excise duty on electricity and the renewable energy fee.

The European Commission proposed a package of measures for alleviating the effect of energy prices in the crisis on October 13. Among other vulnerable consumer groups, the Commission recommends concentrating on energy-intensive industry.

Lahe writes in her letter than unlike many other European Union member states, Estonia has not laid down a ceiling of 15 percent based on current and 25 percent based on incoming guidelines on the renewable energy fee.

The CEO asks the government to exempt all electricity consumers, including industrial consumers, from having to pay the renewable energy fee and if possible also the electricity and gas transmission fees retroactively from December 1 until the end of the energy price crisis.

If that is impossible, Lahe asks for a minimum 25 percent ceiling on the renewable energy fee for energy-intensive industry.

"In order not to saddle other consumers with the cost, we ask for necessary funds to be taken from emissions trading revenue," Lahe writes. "Based on European Commission recommendations, such immediate measures could be financed from higher than expected ETS revenue. We ask for the introduction of measures in line with EU guidelines the implementation of which is extremely important in the conditions of the energy crisis."

Lahe: Stopping and starting the plant not flipping a switch

Member of the board Siiri Lahe told ERR that the work of the factory has been restored by now. "The plant was idle on December 8 due to astronomical electricity prices. The plant is up and running again, even though the price remains painfully high. Stopping and starting the plant up again takes more than flipping a switch, with many processes sensitive to stoppages especially during cold periods. Our goal is to ensure long-term operation and sustainability," Lahe said.

AS Estonian Cell is a Kunda-based aspen pulp mill, which started production in April 2006. The volume of the investments made into constructing the brand new mill from scratch was €153 million, which is the second largest investment ever made into Estonian industry. The company is owned by the Austrian Heinzel Group.


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Editor: Marcus Turovski

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