Energy experts: Cooperation with neighbors is needed to avoid price peaks

Taavi Veskimägi and Timo Tatar.
Taavi Veskimägi and Timo Tatar. Source: ERR

Estonia has enough production capacity to cover peak hours, but closer cooperation with neighboring countries is needed to ensure supply and bring prices down, experts agreed on Tuesday.

Speaking on the radio show "Reporteritund", Taavi Veskimägi, chairman of the board of electricity transmission system operator Elering, and Timo Tatar, undersecretary for energy at the Ministry of Economic Affairs, discussed this coming winter and problems with the energy sector.

Both said this coming winter is concerning.

"This winter, from Elering's point of view, is significantly more worrisome than many winters before it. This is based on the availability of gas and the bigger risk of an emergency separation of the Baltic states from the Russian electricity grid," said Veskimägi.

However, the main issue will be related to prices as there is no shortage of production capacities, he said. "We will still be able to keep the lights on and homes warm," he told "Reporteritund".

Discussions are also being had about bringing old power plants back online and to the marketplace. "But other restrictions — restrictions on fuels, cooling water, hydraulic reserves are today's bottlenecks," Veskimägi said.

Tatar said the price ceiling setting system is one area that needs to be reviewed and there is support for this in other areas of Europe. "I believe it is the first place that is going to be reviewed," he said.

The official said Estonia has enough production capacity to cover peak hours but working with close neighbors is the best way to secure supply and lower prices.

"As we know, these production capacities need repairs, they sometimes break down, sometimes neighbors have cheaper capacities that it makes more sense to use and so on," said Tatar. "But in any case, it is more useful and better that we are in contact with our neighbors to use these production capacities in the most sensible way. This already brings us better security of supply and better prices."

Veskimägi said, in order to avoid a repeat of August 17, when a a new record price of €4,000 per megawatt hour was set, better checks and coordination are needed between the Baltics.

He said there should be an overview of which power stations are on the market before day ahead prices are agreed upon. Additionally, there should be a right to suspend regular maintenance if it is known there will not be enough production capacity. This would stop prices from suddently spiking.

"In today's situation we have to plan together a little more with our neighbors to prevent a situation like the one on August 17, when we first get the €4,000 price, and then it starts to become clear that there are power plants that can come into operation," Veskimägi said.

Both officials doubted whether new shale oil plants should be built or invested in in the future. Tatar said wind power needs to be focused on as several wind farms are already being developed.


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Editor: Barbara Oja, Helen Wright

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