The City of Narva is expected to declare a state of emergency Friday after a natural gas procurement organized by Enefit Power, which provides heat to Estonia's third-largest city, failed due to a lack of bidders. A state of emergency will allow the city to request authorization from the Environmental Board to switch to other energy sources.
Narva Mayor Katri Raik (SDE) confirmed on Thursday that the city's crisis committee has discussed the situation and acknowledged that the threat of an emergency exists.
"As Enefit Power's natural gas procurement failed as of yesterday, since there weren't any bidders, we now don't have gas for the winter, and we'll be declaring a state of emergency," Raik told ERR.
As a result, she hopes, Enefit Power will be authorized by the Environmental Board to heat the city using shale oil, which is cheaper and more stable.
She admitted that this certainly isn't an argument for providing such authorization, but noted that it has to be taken into consideration that significant increases in heating costs — even if it is possible to procure natural gas — will pose a significant social problem for Narva.
"I'd go so far as to call a major spike in heating costs a downright social disaster," Raik continued. "Because if we compare the incomes of people in Narva and Tallinn, for example, Tallinn residents' average [monthly] wage is €1,700, and here it's €1,050."
On top of that, one in four residents of Narva is a pensioner as well, she added.
While nobody knows yet how much heating bills may end up costing this upcoming winter, Enefit Power had submitted an application months ago already indicating that heating prices in Narva should increase 78 percent.
The city currently has among the cheapest heating in the country, but such a sharp increase would nonetheless constitute a social disaster, the mayor stressed.
Enefit Power CEO: New permit needed ASAP
In order for Enefit Power to conserve natural gas for winter and use shale oil to produce heat, preparations need to get underway now, and that requires a new environmental permit from the Environmental Board as soon as possible, Enefit Power CEO Andres Vainola told ERR on Thursday afternoon.
"By law, the Environmental Board has up to six months to process our request, but I think that, in the current situation, it will be done much faster," Vainola said.
In an ideal situation, he explained, they'd start saving natural gas in July already, as the company was planning on launching month-long renovations of the 11th block at Balti Power Plant around July 20.
"It would be reasonable to replace natural gas with shale oil then, in order to conserve gas, as all signs indicate that we'll be facing a gas shortage this winter," he added.
According to Vainola, the application for a new environmental permit will be submitted as soon as the City of Narva has declared a state of emergency.
Under its current permit, Enefit Power is authorized to use shale oil as a reserve fuel on up to ten calendar days a year.
"That clearly isn't enough," he said. "Clearly on colder days, even when our power plant is operating in cogeneration mode, we have to cover peak consumption using our gas boiler."
Using shale oil, Enefit Power is capable of producing sufficient heat on even the coldest of days, the CEO said. "We have prepared for this; we just need to stock up shale oil for it. We do have that capability, but we should start preparing for it now already."
According to Vainola, using shale oil to produce heat is half the cost of natural gas.
"We're buying natural gas from the open market right now," he explained. "Heat produced from natural gas currently costs €160-170 per megawatt-hour; the cost price of heat produced from oil shale is somewhere around €60 megawatt-hours."
The CEO did add that Narva residents don't have to worry about being left in the cold. "Heat will be guaranteed in any event, regardless of the type of fuel used to produce it," Vainola said. "We possess all capabilities for utilizing both emergency and primary fuel."
Board: Polluting only permissible once gas has run out
Eesti Energia CEO Hando Sutter told ERR on Tuesday that a national state of emergency should be declared as soon as possible in connection with the country's natural gas supply so that district heating providers and industrial consumers could start applying for temporary and extraordinary changes to their integrated environmental permits with the Environmental Board.
Integrated environmental permits require changes in order to use shale oil or another, more polluting alternative fuel instead of natural gas to heat.
According to Sutter, exceptions are also needed to bypass strict environmental requirements, which would mean heating providers would not have to buy expensive filters that would filter out fuel oil residues.
The Environmental Board, however, has responded that bigger district heating boilers may only be permitted to pollute the air with shale oil if there is no natural gas to be had whatsoever; high gas prices are irrelevant.
Editor: Aili Vahtla