The legislative amendment needed would, if it passes, affect close to 6,600 people, and could be installed before the dissolution of the XIV Riigikogu, which will happen due to the general election next spring.

Private producers often generate their electricity via solar panels or small wind turbines, installed on their property.

Minister of Finance Annely Akkermann (Reform) told ERR that private electricity producers using equipment with a rating of up to 15KW, so-called micro-producers, would be eligible for the income tax exemption arising.

Grid distributor Elektrilevi says Estonia has around 7,200 private electricity producers, of whom 6,600 are micro-producers,

The total electricity generated by private producers ending up supplying the national grid has grown in the past year.

In 2021, private producers generated 32GW – micro-producers accounting for 22GW of this total.

From January to November this year, this figure had grown to 51GW and 37GW respectively, with one month left to go in 2022.

The finance minister says an income tax exemption for micro-producers is justifiable since the latter have a larger tax burden than commercial producers, as they cannot deduct costs from their taxable income in the same way.

The move would also encourage micro-producers to limit their own electricity consumption to a greater extent than before – in other words making a greater amount of supply available to the grid, Akkermann said.

The income tax exemption, if it is adopted, would be applied retroactively to this year's income.

The relevant legislation amendment is planned for the new year, the minister said, and will be inserted in the currently under-process bill number 696, which will amend the Electricity Market Act and other acts.

This would permit the amendment to be enacted ahead of the March 2023 general election.

The Riigikogu is on Christmas recess and is due back at work on January 9.

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