Alexela executive: Gas power plant key to balancing energy system

Alexela terminal in Paldiski.
Alexela terminal in Paldiski. Source: Siim Lõvi /ERR

Heiti Hääl, majority stakeholder of energy company Alexela, said that he cannot see any way to balance the Estonian energy system without the construction of a new gas power plant. While Alexela would be interested in building one, Hääl sees no reason to start before Estonia has laid down concrete plans after learning a valuable lesson in the Paldiski LNG terminal saga.

The Estonian Gas Association said Friday that Estonia should have a power plant that could generate electricity when there is no wind or sunshine to cover peak demand. Finland, Latvia and Lithuania all operate gas-fired power plants.

Alexela majority owner Heiti Hääl told ERR that Alexela has given a gas power plant a lot of thought and believes Estonia cannot do without.

"I will be frank, we at Alexela see no other way of achieving balance in our energy system," the businessman said.

Hääl said that it would take two years to build a gas power plant provided an environmental impact assessment and a detailed plan would precede it. However, how long these things take tends to be quite indefinable in Estonia. The investment volume depends on the size of the plant.

"A million euros per megawatt of output, broadly speaking," the Alexela owner said.

The plant should ideally be built somewhere where excess heat can be utilized. That said, Hääl suggested the plant could not serve as the main heating solution for another industry as it would be idle during periods of enough wind and sunshine. It would be a plant mainly to cover peak electricity demand.

The businessman said that a gas-fired power plant is more environmentally friendly than oil shale alternatives and can be fired up in minutes.

Despite its interest and conviction that a gas power plant is needed, Alexela has not taken any steps in its direction, nor is it planning to before the government's intention becomes clear. Hääl pointed to ongoing misunderstandings with the Paldiski LNG terminal where TSO Elering and Alexela cannot agree who should procure the marine loading arm necessary to facilitate an FSRU at the terminal.

"We moved forward with LNG capacity this year because we thought we knew what the government wanted. It later turned out that we knew nothing, which is why we want a government document to clearly say it (gas power plant – ed.) is necessary. "The government should have a plan, a list of priorities for our energy system. That is when we can take steps. There is no such plan today."

Association: high time to build dispatched generation capacity

Estonia's transmission system operator Elering published the country's electricity supply security report this week where it concludes that Estonia needs several oil shale blocks worth of on-demand electricity generation capacity. The TSO proposes the creation of a strategic reserve to make sure Estonia has enough power generation to cover demand even if it is not economically feasible.

Timo Tatar, undersecretary of the Ministry of Economic Affairs and Communications, said after the presentation that this begs the question of whether conditions have been created for a gas-fired power plant in Estonia.

The Estonian Gas Association said that after spending a decade developing gas transport links, it would be time to graduate to dispatched production capacity.

"The TSO estimates that oil shale power plants will leave the market ca five years from now, while a nuclear power plant would require at least 12 years. We could survive the interim period with our own gas plant, which could support green and nuclear in the future," said Heiko Heitur, executive manager of the association.

He added that Estonia needs dispatchable or on-demand generation both in the short and longer term. The price of gas will fall as new supply routes from the west are established, and a gas plant is both environmentally and municipally friendly. He added that a gas plant would help diversify the Estonian energy portfolio and deliver a positive impact for development of hydrogen technologies.

It would also create another way to utilize local green gas made from biological waste. Using technologies of carbon collection and liquification could even yield carbon neutral generation, Heitur said.

The gas association's data suggests Estonia has 100,000 households or around a quarter of a million people who use natural gas. Half of Estonian industries also rely on gas, with the food and heavy industry most reliant on the energy source and the timber industry the least.

Estonia has a gas-fired power plant in Kiisa which is used only in emergencies.


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Editor: Marcus Turovski

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