Incoming Eesti Energia chief: Energy sector changes cannot be made rapidly
The energy sector in Estonia is one whose decisions must be based on long-range planning, meaning any substantive change in direction will take at least five to ten years, Eesti Energia's board chair to be, Andrus Durejko, said in an interview with ERR's radio news, which follows in its entirety.
You have just spoken to Eesti Energia staff. What did you tell them?
I introduced myself to them. I spoke little about myself and what I have done, and a little about my plans. There were many questions.
What was the hardest question, the one to which you responded, 'sorry I can't answer that right now'?
There weren't really any such questions; there were a lot bout me as a person and what I plan to do. But since there is still plenty of time until the beginning of the post, I will start in April, I postponed the answers of many questions to the future.
Were there any questions if a critical nature?
Certainly. The question is how to interpret these. The of how critical something is, is up to that individual. But these questions were relevant. We are in a difficult situation in the energy sector today, and the questions were motivated by that fact.
Eesti Energia has made a lot of layoffs, but also recruited a lot, in recent years, in the face of great changes. When will there be many layoffs again?
External influences affect all companies, and companies react to it. The current plans at Eesti Energia are ambitious, and looking at today's growth strategies, I think that this should be the starting point. However, we cannot completely predict the effects of the external environment.
At some point, those [oil shale] miners who have been hired [following a rise in reliance on oil shale as a fuel source] will have to find another job again?
As of today, Eesti Energia has a very clear plan for the use of oil shale, and is moving according to that. This is not a short-term plan.
Does this plan include the way oil shale is being mined now, still being reasonable in five years' time? Hopefully electricity prices will have fallen during that time.
The oil shale strategy envisages the development of the oil shale chemicals sector, and the need for oil shale will remain regardless of electricity production.
I can imagine that the competitive process for the position of the head of Eesti Energia was largely a contest of visions and ideas. Would you agree with that?
There was a lot of that; questions, discussions, thoughts and views on the future. The energy sector has a long-range horizon, and one must try to look as far as possible and foresee different development scenarios.
What topic did you have to write the application thesis on?
There were multiple topics, not an essay, but rather visions, points, and their fulfillment. There really were a lot of these: How do we get to climate neutrality, CO2 neutrality, what will energy consumption look like. All issues relating to the future of energy were represented.
Were thoughts put on paper, as to how we reach climate neutrality?
We all have to get there together, in Europe. The technologies that are being developed in this crisis will accelerate even more, plus certainly the addition of green energy production capacities is a solution that is in hand today.
To what extent have you come into contact with politicians during your career before?
This has certainly happened. Ericsson is one of the largest exporters in Estonia, and interest in us has been constant. We have invited IT ministers, prime ministers, finance ministers and also presidents, to visit us.
Eesti Energia is the sort of company that is under constant political pressure, with politicians trying to direct it in one way or another, and not only in writing about [state] owner expectations as a rule, but by calling, writing, summonsing to meetings, giving out messages in the media. You've seen all that with Hando Sutter, who has been under a lot of pressure. Are you ready for that?
Time will tell. I think I am. I certainly think a consolidated ownership expectation is what we're working towards. Lobbying is not forbidden in the world, and it is a normal part of how society works.
Rumor has it that there was an energy firm manager in the South who didn't start up work at the natural gas-fired power station, because the minister said we were saving on gas , which had the result of hiking prices. How do you not balk at that?
I can't comment on the facts of that case, but there are separate procedures for it, and it's certainly not a minister's word which halts or starts work at a power station.
While Eesti Energia currently sells electricity 15 percent below the cost price, via the universal service, how long will this be the case?
I can't comment on this point in that respect. An agreement regarding the price must be reached between the company and the Competition Authority, but this situation could not continue for long, should this be the case.
What are the options then? I understand that these negotiations with the Competition Authority are still not moving forward.
The purpose of the universal service is to support consumers, and which consumption support mechanism is to be chosen by the state; is it a support measure? Let's start from that point.
What message or input from the owner (ie. the state - ed.) have you been given regarding Elektrilevi?
I can say today that that hasn't started yet, so I will be getting the owner's input from April, and the owner's input will be very clear. If there is an update to that, we will implement it.
When will a concrete message come that Elektrilevi must be separated from Eesti Energia?
This is the owner's expectation.
However, what is the real impact? You have looked at the company, studied the data. Elektrilevi offers stability – a stable cash flow, stable fixed assets, and guarantees Eesti Energia's credit capacity. What will happen if Elektrilevi is hived off from Eesti Energia?
Credit ratings change according to the situation as it arises. To what extent, we will have to see from the result of these assessments.
Going a step further, major investments, such as in wind farms, all tof this requires a huge borrowing capacity
This credit capacity needs to be guaranteed. Elektrilevi must ensure its own borrowing capacity, and the group must be able to handle its operations and borrowing.
I can see a major gap there somewhere - I wonder if you do too?
I Can't answer that at the moment. Let's look at the owner's expectation and what the strategy regarding Elektrilevi is, then we must act accordingly.
When might the first Eesti Energia offshore wind farm start operating?
A lot of work is being done towards this direction. The most ambitious goals are for 2028, and I would expect by the end of this decade.
Enterprise Minister Kristjan Järvan has stated that he does not believe that any of these will actually produce electricity within 10 years. What are the main obstacles which need to be broached, in order to have a functioning wind farm by 2028?
There are many obstacles. Much has been said today about administrative obstacles, plans and their implementation. At the same time, offshore wind farms require new skills, new competencies that are not currently available in Estonia. Enefit Green is very clearly dealing with creating these, today.
Is Eesti Energia capable of installing a large offshore wind farm without a state guarantee?
Let's look at it in terms of these goals.
So far, the message has sounded like that hasn't it?
I will not refute or change things now. Certainly, in the case of large investments, various guarantees are expected.
How long does Eesti Energia need to wait from the ownership, in order to maintain manageable production capacities? Should it take the view that two or three years, as is the case now, or would you need a 10-year perspective, in order to be able to manage well?
The energy sector is one big whole. A good, forward looking plan is always helpful with these activities. You can't make changes quickly. In the energy sector, five to ten 10 is a time frame within which directional changes can be made, and this would be the expectation for the entire energy policy of Estonia.
Are you also prepared for the fact that you will have to start designing the new Auvere plant, during your tenure?
This is a question of agreements.
Do you think this is likely? During the application process, you had also looked at the bigger picture of Estonia's energy economy, and security of energy supply. Is such a thing necessary?
With respect to the current energy deficit, it is necessary. If you look further, however, this may not be such a big need. It is still an agreement and rather political.
The Enefit oil-fired plant. Was this necessary, and was it a political wish? Would you have done it?
This decision was made as of today, and it is part of Eesti Energia's strategy. I think we have to move on with that.
Will you devise your own strategy at some point?
Yes, as soon as I get started, there will be some strategy changes.
From which 'page' will you start to ring the changes?
I don't know yet, it depends on the situation.
Should a national energy company be involved in developing a nuclear power plant?
I can't even tell if national or non-national. A big issue for Estonia is nuclear energy, the necessary competences and capabilities of nuclear energy and the management of this entire field. I think today we are very, very early stage.
The year 2035 does not sound a realistic one for Estonian nuclear energy [becoming a reality]
Most likely not.
What is your salary set at?
Right now, Ericsson Eesti is paying my wage, and we will deal with this issue in the spring.
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Editor: Andrew Whyte, Barbara Oja