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There may not always be enough cheap Nordic power for Estonia

Cross section of the type of undersea cable used by Estlink 2.
Cross section of the type of undersea cable used by Estlink 2. Source: Elering

While Norway's rainy summer has been having a favorable effect on electricity prices, this might not always be the case as growing consumption in Scandinavian countries is eating away at export capacity.

Norway's hydropower stations are working at full capacity following a summer when the country saw double the average rainfall on some days.

Hannes Agabus, energy expert at TalTech, said that Scandinavian power exports to countries south of the region are considerable right now.

How much hydropower is generated in the Nordics has a direct effect on electricity prices in Estonia.

"The bottleneck is created at the Estlink power cables bringing this power to Estonia. There have been plenty of times when demand has far outstripped the cables' throughput capacity," Rein Vaks, head of the energy department of the Ministry of Climate, said.

Countries generating cheaper energy also look to their own needs first, and the latter might grow by leaps and bounds in the coming years.

"Norway and Sweden have an ambitious energy plan in which demand is forecast to grow by hundreds of terawatt-hours. Ours comes to just 8-9 TWh," said Marko Viiding, member of the board of renewable power company Vindr Baltic.

Vaks also admitted that there may not be enough Norwegian hydropower for Estonia in the future.

"Norway will quite likely become a power importer inside five or six years, simply because they are not building enough wind turbines."

We can add to the mix the fact that the U.K. is also importing a lot of power from Norway, Viiding said, adding that the NO2 zone from which cables run to the U.K. and the Netherlands has higher prices than the NO1 zone that's closer to Sweden.

The Viking Link cable between Denmark and the U.K. should be completed next year. While Agabus and Vaks emphasized that better links benefit the European electricity market as a whole, Viiding pointed out that countries are competing for the same resources in the end.

"I asked colleagues in Scandinavia – the mood in Norway and Sweden is rather that new cables will not be constructed in zones where the prices are constantly high, such as the U.K. They only take without giving anything back, which will eventually drive up local prices."

Rather, links to areas where the price of electricity tends to fluctuate are preferred. For example, the Nordics can both sell to and buy from Germany during different periods. In other words, Estonia should not count on cheap Scandinavian energy imports alone.

"Our country should also set loftier goals so that consumption could grow, so we would see more energy-intensive industry of the future. On the other hand, it would also be good if the export-import potential was reversed at times."

"We need more flexible mechanisms for when there is no wind or sunshine, such as gas-powered plants, biomass cogeneration plans and nuclear plants where possible."

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Editor: Urmet Kook, Marcus Turovski

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