The government's penny-pinching tells us that renewable electricity and the green transition are far more important rhetorically than actually, as well as that we do not have an activity plan. The government also lacks a power usage crisis plan to rely on during extraordinary periods, Erki Tammiksaar writes.
In 1925, the Tallinn Power Plant started using oil shale in place of wood and peat. Hard work of many Estonian and foreign engineers has since then seen the material serve the interests of electricity consumers well. Prices per kilowatt-hour have been low as prioritized by governments both during the Soviet period and following restoration of independence.
The oil shale dust-fired boilers of the Baltic Thermal Power Plant (1,624 MW) and the Estonia Thermal Power Plant (1,610 MW), constructed in the late 1950s, early 60s to supply the Baltics and northwestern Russia with power (the plants generated 19.2 terawatt-hours of power in 1979), had an efficiency rating of 90 percent (30 percent according to the Carnot cycle), and planned downtime for maintenance was expensive.
Estonia was hardly wealthy in the 1990s, which is why insufficient investment went toward the maintenance of the boilers built to last 40 years. Additionally, consumption fell drastically, maintenance was not necessary and state-owned Eesti Energia's ability to maintain generation on par with the final years of the Soviet period started falling.
This was not a problem for domestic consumption as excess capacity compensated for wear and tear of the boilers and was initially enough also for export to Latvia that helped fill the state's coffers.
The effect of EU environmental policy on the Estonian power system
Joining the EU required far greener energy generation and for the electricity market to be opened.
One block (two boilers, turbine and a generator with a total output of 200 MW) each at the Baltic and Estonia TPPs were switched to the more efficient fluidized bed technology (efficiency of 33-35 percent) in 2001-2005.
To reduce their ecological footprint, the remaining Baltic (type TP-67) and Estonia TPP boilers were equipped with dust filters and sulfur traps. Eesti Energia's annual report from the time reveals that 2,380 MW of the total installed capacity of the two major oil shale plants remained by late 2005, when the CO2 quota system was adopted in the EU. However, energy consumption was going up again.
Just like their colleagues in the EU, Estonian experts and politicians saw Russian natural gas as a cheap and environmentally friendly alternative to oil shale until 2015 in the 2005 energy economy development plan (link in Estonian). For example, Narva heating fell to a reserve gas boiler plant (260 MW) attached to the Baltic TPP that required constant repairs in 2005. The Iru and Sillamäe power plants had received gas boiler plants in 2003 to develop district heating (so-called cogeneration stations).
Estonia builds new oil shale power plant
Upon joining the EU, Estonia promised to open its electricity market by 2013 at the latest and assumed the obligation, based on the 2005 development plan, to "shut down most of its existing generation capacity [over noncompliance with environmental requirements] and, in the conditions of the opening market, build new capacity based on diversified sources of energy only to satisfy domestic demand.
While the ESTLINK 1 cable between Estonia and Finland (350 MW), completed in 2006, did help open the electricity market, replacing the oil shale power plants was an astronomically expensive promise.
In light of the Russia-Georgia war in 2008 and the continued rapid depreciation of the old TPP boilers, the Estonian government in 2009 decided to construct a new power plant to use domestic lumber and oil shale (ca 300 MW) despite vocal opposition from the public and even Eesti Energia itself. The Auvere Power Plant came online in 2015.
The EU's 2009 designation of timber as a renewable energy source supported the government's decision and fostered switching Estonian cogeneration plants from gas to wood chips either partially or in full, sparking controversial reactions in society to this day.
The government had managed to ensure energy security and Estonia did not have to start importing power that would have hurt the foreign trade balance. Estonia, participating in the Nord Pool exchange since 2013, was capable of using its controllable power plants (ca 1,000 MW) to cover peak consumption (1,500 MW). Latvia, Lithuania and Finland had to import power from Russia and Belarus to cover deficit.
Why is renewable energy not reaching the grid?
The aforementioned measures seemed to have ensured sufficient power supply, while Estonia still needed to aim for greater environmental friendliness in light of running oil shale power plants.
The 2007 decision to pay renewable energy producers direct support of €53.7/MWh for a total of 600 MW of wind energy capacity started a wind farm boom. But the producer-consumer distribution network was not ready for it and required massive investment that had been insufficient going back to Soviet times. The 2005 energy development plan reads:
"Wind generation is held back by the scope of the power grid and the structure of the system. The inherent inconsistency of wind power generation requires reserve power plants that hikes the price of electricity. The system can currently facilitate 90-100 MW of wind turbines without a notable loss in quality."
Oil shale plants helped stabilize the system. New reserve plants that would have used gas were not built, nor was there any great need, as wind farm developments were slow due to opposition from local communities and some ministries (such as the Ministry of Defense). No kind of toleration fee was offered.
Many European countries did build gas power plants and in doing so created much improved capacity to connect renewables to the grid. Nevertheless, the head of grid operator Elektrilevi tells us that improved energy links with Finland and Latvia, as well as the Auvere Power Plant have made it possible to join 450 MWh of solar and 320 MWh of wind energy to the grid.
Many other producers are waiting to be connected. But because the network has been developed based on centers of production and consumption, reconstruction requires major investment that can only happen over a long period of time and at the expense of growing transmission fees.
The government recently allocated Elektrilevi €8 million for connecting micro-producers to the grid, while the company asked for €55 million... Making sure every household in Estonia could send energy to the grid would, according to Elektrilevi, require a whopping €300 million.
It is all the more peculiar to hear the government boasting of renewables auctions bringing 540 GWh of renewable power to the market in just a few years. How could that be possible without additional investment in the distribution network when we were just told that "[financial] possibilities for grid development to include greater preparedness for connecting new capacity are being sought"?
The government's penny-pinching tells us that renewable electricity and the green transition are far more important rhetorically than actually, as well as that we do not have an activity plan. What is more, the Russia-Ukraine war has done away with Russian electricity on the Baltic and Finnish markets (ca 2,000 MW) that cannot be quickly replaced with green energy without investing heavily in the distribution grid.
One rapid solution in a society that has only prioritized economic growth is to try and save energy, for example, through better insulation of buildings. But this constitutes another expensive and long-term project for which there are few state support measures. The government also lacks a power usage crisis plan that society could lean on during extraordinary time periods.
The Achilles' heel of the Estonian power system
The biggest problem for the Estonian, Latvian and Lithuanian power systems for the next thee years is ensuring frequency that is currently done by Russia. After the latter occupied Crimea, it was decided in 2018 to push ahead with the plan of decoupling Estonia, Latvia and Lithuania from the Russian energy system in order to avoid political manipulations. A plan that had been discussed since 1988.
The goal was set for connecting to the European energy system through Poland by 2026. Hundreds of millions of euros, partly supplied by the EU, have been spent on preparations, but we are still not ready. The synchronous condensers required to maintain and stabilize changes to the frequency are still being installed.
Considering the three Baltic countries' complete dedication to Ukraine, to which we can add Lithuania's decision to limit the transport of goods to Kaliningrad (retracted for now) and the desire to block Russian citizens from entering the EU, the Russian leadership might deem it appropriate, from an economic policy point of view, to punish us by decoupling us on their end. Russia would suffer no economic damage, while we would see plenty.
To avoid the collapse of our power system in such a situation two emergency reserve plants, first mentioned in the 2005 development plan and built in Kiisa in 2013 and 2014 (110 and 140 MW respectively) that cannot participate in the electricity exchange under normal circumstances, would need to be fired up. The only problem is that they run on either natural gas or diesel fuel...
We have secured an EU exception to ignore the voluntary requirement to limit the use of gas to 15 percent of the portfolio should Russia switch us off. The price of the decoupling would stretch into hundreds of millions of euros, considering the current price of gas and gas futures.
At worst, if there is not enough gas, our electricity system would collapse. Such a scenario could have been behind the record €4,000/MWh hourly electricity price: valuable gas was simply held back to avoid the worst-case scenario in Latvian or Lithuanian gas plants as producers are under no obligation to offer their capacity to the market. Baltic energy coordination is necessary to avoid such situations in the future.
We are left with the realization that our seeming dependence on gas is not as trifling as the prime minister and government love to tell us. The entire Baltic energy security in crises is built on gas the availability of which is uncertain and price astronomical, whether we are talking about pipeline gas or LNG today.
Looking at the considerable deficit in production capacity in Estonia and neighboring countries, we would do well to admit, as the Finns have, that power outages this winter and during the coming years rather will happen.
We will need to sacrifice some of our well-being and considerably dial back energy consumption in cities, households and companies in the short and medium perspective.
Considering the long run, Estonia definitely needs another controllable power plant. While new carbon-capturing oil shale and gas plants remain problematic in terms of the environment and nuclear comes with its own set of risks, we need to make a decision as it is impossible to live without energy.
The energy efficiency of new wind (0.26) and solar (0.11) farms (calm, overcast skies) and battery capacity remain modest and sport a serious ecological footprint (expensive disposal), to which we can add political risks (need for rare earth metals from undemocratic states).
Nevertheless, planning and construction of the grid's accumulation capacity (for example, planned hydroaccumulation in Paldiski and Eesti Energia mining tunnels) must not be delayed (in light of state budget deliberations). Every additional euro allocated to Elektrilevi and invested in the distribution network allows us to boost local power generation no matter how negative the government might find this in the context of broader fiscal balance.
The author would like to thank Arvi Hamburg, Alar Konist and Jaak Leimann for constructive cricism of the article.
Editor: Marcus Turovski