After emergency stock of shale oil runs out, district heaters switch to gas

Boiler plant chimney in Tallinn.
Boiler plant chimney in Tallinn. Source: Siim Lõvi /ERR

Previously permitted to burn shale oil rather than natural gas, district heating companies will soon be required to make the switch. Utilitas, the company responsible for heating the city of Tallinn, reports that it will first use up the liquid fuels it has already purchased.

District heating companies were anxiously awaiting winter last summer, when natural gas prices were at record highs and everyone was still discussing where and how to dock an LNG floating terminal.

There were worries that there would not be enough gas to keep the rooms warm. Municipalities insisted on declaring emergencies because they thought doing so would enable boilers to burn fuels other than gas.

Although Katri Raik, the mayor of Narva, declared a municipal state of emergency, a less complicated solution was ultimately found.

Many district heating companies invested in a series of projects that enabled them to burn diesel or shale oil without emitting excessive ash.

Enefit Power and Utilitas Tallinn were granted in total four exemptions for their heating plants. This means that emissions in Narva and three boiler plants in Tallinn could temporarily exceed the standards.

Erik Kosenkranius, the deputy director general of the Environmental Board, said that such a permit can be granted if district heating's survival is threatened. However, the derogation, which was granted only until the end of the heating season, also came with additional conditions.

"The company is obliged to return to natural gas consumption within a reasonable period of time, to carry out a procurement procedure for this purpose and to notify the Environment Board of the receipt of the natural gas supply contracts or, if the procurement procedure is unsuccessful, of the non-receipt,"  Kosenkranius explained.

"Once they have tendered and been awarded a supply contract, they will be required to switch to gas within ten days," he added.

In January, Enefit Power submitted a bid for the purchase of gas.
Utilitas has not done so yet. "The company's basic responsibility of care is to determine, if the market is changing then to purchase gas and stop the derogation measure," Kosenkranius said.

Shale oil is already in stock

Robert Kitt, chair of the board at OÜ Utilitas Tallinn, said the market has changed and prices are now lower than they were in the summer. He did, however, add that the actual gas purchase price could be higher than the €59 per megawatt currently available on the global market.

Also, if the company decides to switch to gas, it has to decide what to do with the liquid fuels it has already purchased.

"These fuels have been stockpiled for this season and of course they have to be used up," Kitt said.

Rein Vaks the head of the energy department at the Ministry of Economic Affairs said that the market is better than it was in the summer. Winter is coming to an end in most of Europe, and 82 percent of the European Union's gas storage facilities are full. In Estonia, however, the winter is still not over, and preparations for the next winter are just starting up.

However, Vaks said that eliminating the exemption for businesses is not reasonable. The situation on the European gas market had been brought under control in large part due to a fifth reduction in consumption. "And if we return to consuming as much gas as we want, our gas markets will be unable to cope," Vaks explained.

There will be no exceptions next winter

Erik Kosenkranius said that the Environmental Board can operate based on the law and business permission criteria. "If there is still gas on the market, it is the company's job to submit a bid, purchase the gas and continue to use it to fuel their boilers," Kosenkranius explained.

Robert Kitt said that the company would be willing to participate if the Environmental Board wants to discuss the revocation of the exemption. According to him, the exception is still valid until the end of the heating season.

"Whether this agreed-upon exemption can be removed or eliminated in this way depends on a number of difficulties. I cannot fully predict how that might work out," Kitt said.

Erik Kosenkranius, said that the agency was hopeful that companies would be mindful of the environment. However, he added that the Board is also equipped to deal with cases of noncompliance with the environmental list's rules.

"Then we must take the next step, which is to revoke the exceptions.'

If it continues in this way, it is essentially already in violation of the Atmospheric Air Protection Act. There will then be separate procedures and a completely different set of environmental charges to pay," Kosenkranius explained.

The Environmental Board's deputy director-general also explained that businesses should not expect a similar exemption when planning for next winter.

"It's now a business risk assessment that if we see the market remaining unstable, we might make these investments in such a way that we can switch to other fuels and start using them," he said.

Kosenkranius emphasized that many businesses were already doing this last summer.

Robert Kitt confirmed that this exception for Utilitas was temporary. "The use of shale oil is still several steps back where we need to be."


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Editor: Kristina Kersa

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