The price of electricity was on everyone's mind this Wednesday. Everyone was proposing all manner of solutions, looking for culprits at worst and curbing their consumption in the evening at best. But it was just a warmup session for what is to come this winter.
Many got a better idea of how the price forms and voices surfaced demanding reorganization of how the exchange functions. While it possible to render the exchange more transparent, only two things can help bring down the price of electricity. First of all, we need to generate enough of it to cover domestic consumption. Estonia can currently general between half and three-quarters of the energy it needs. Secondly, it is necessary to dial back consumption.
No matter how we spin it, the price of electricity is a balance point between supply and demand. Even through the pinkest of glasses, a neighboring country's energy producer will not make it a matter of the heart to offer Estonia a favorable price.
Electricity producers are businesses the goal of which is to generate profit. No one is obligated to provide our small country with energy for anything less than what the market allows for. At the end of the day, countries need to take care of their own needs, and finding solutions to the energy crisis is up to us.
Where is this untapped capacity in Estonia? In oil shale, solar, wind, gas, heat-and-power stations or nuclear? The correct answer is probably a combination of all these things. We need all of it. We need to generate more than we consume.
The first offshore wind farms are scheduled to be completed in 2028, with just the first two able to cover Estonia's energy needs. That will be the magical moment when we can render our economy climate neutral, or become a country where everyone feels good, at favorable prices. Leaving aside various circumstances that could foil offshore wind farm developments, 2028 is a realistic goal.
That said, we will have to cope over at leas six years that still separate us from that point. Turning oil shale into electricity is expensive both in terms of money and environmental impact, while we continue to have that capacity as a backup option. Oil shale will also run out one day, and even though it will not happen immediately, we cannot saddle future generations with the oil shale exit.
Right now, biomass makes up a considerable part of our renewables production, followed by wind and increasingly also solar. We must maintain and boost, if possible, all of them over the next six years. Biomass or combined heat and power generation will not see major growth in the next six years as Estonia will not see many new district heating zones. The price of biomass that will not be unaffected by the general energy crisis is another question.
Solar is a good solution in sparsely populated areas and can give households operating panels an added layer of security. Unfortunately our climate offers relatively little in the way of sunlight and the solar panels boom has made it very difficult to secure a grid connection. We also still lack long-term energy storage solutions that would allow us to balance production and consumption. The sun is good and solar necessary, while it cannot cover our energy needs in the foreseeable future.
Nuclear energy could play a part in our energy portfolio, but we cannot construct a nuclear plant in the next six years even in our wildest dreams. Estonia's first offshore wind farm development was launched 16 years ago, while the potential environmental impact of an offshore wind farm and that of a nuclear plant cannot really be compared.
While offshore wind power will be available in 2028, terrestrial wind farms are set to be completed next year. Enefit Green's Purtse wind and solar plant will be completed in 2023 and is estimated to add 78 gigawatt-hours to the market, enough to cover the annual consumption of 24,000 average households. 2023 will also see the completion of Utilitas Wind's Saarde wind farm that will generate 135 GWh and cover the demand of over 40,000 households.
Enefit Green's Tootsi and Sopi wind farms, to be completed in 2024, will generate around 700 GWh of electricity annually, enough to power over 200,000 households.
Therefore, we can expect domestic power generation to start growing next year and the year after and gradually bring us out of our current slump.
However, none of it can solve the perceived energy crisis and the winter to come. The only way to cope with that is to reduce consumption. There are plenty of places where we cannot just switch off the power, while electricity use can be dialed back in others. Falling consumption will translate into lower demand that will help those who cannot curb their consumption to survive.
We are in a crisis and looking at a very difficult winter in terms of energy. Estonia's power generation must exceed its consumption and be a combination of various energy sources that complement one another instead of competing. Until we can generate more, we will have to consume less.
The short perspective is harsh but clear. The longer term will give us more production than there is demand. To quote the classics: "We will cross that bridge when we come to it."
Editor: Marcus Turovski