New plan could alter renewables reverse auctions in Estonia

A wind turbine.
A wind turbine. Source: Merilin Pärli/ERR

The Ministry of Climate is mulling a renewable energy reverse auction for 6 terawatt-hours of generation with a 2030 deadline to replace smaller reverse auctions of the coming years. Enefit Green and Utilitas find that the new scheme might not be a good fit for offshore wind farms.

The Ministry of Climate last week showcased a plan for reaching 120 percent of Estonia's recent renewable power target by 2030. It is aimed at wind and hybrid parks and seeks generation of up to 6,000 gigawatt-hours.

Timo Tatar, the ministry's undersecretary, told ERR that while the current aim is to generate Estonia's annual consumption using only renewable energy by 2030, the alternative being considered would hike the target to 120 percent.

"We want a reverse auction with room for both terrestrial and offshore wind farms. Its volume would be roughly six terawatt-hours."

While market participants have been told there should be a 500-gigawatt-hour renewable energy reverse auction next year and another one in 2025, Tatar said that it would make sense to cancel these and cover the capacity in the new auction. But he emphasized that nothing has been decided at this point.

Asked whether this would exclude offshore wind farms, the undersecretary said that it's too soon to say, while the total auction volume should be enough to facilitate them alongside terrestrial farms. Tatar also said it is too soon to talk about whether the scheme would have a mutual price guarantee, price corridors because the details would be hammered out later.

"Our interest and what we need to take advantage of in Estonia first is terrestrial wind and solar or so-called hybrid parks, while we also need to give offshore wind power a chance. Those are our two focuses for more wind power, either terrestrially or at sea."

Tatar also said that the ministry does not want to lay down quotas for how much wind power should be terrestrial and how much from offshore capacity.

Renewing Estonia's state aid permits, a process which could take up to two years, would be required for the new scheme.

Plan might not be a good fit for offshore power

Lauri Ulm, head of wind energy development at Enefit Green, said that while the scheme prefers wind and hybrid parks, participating in the auction as early as 2026 and being ready to generate power by 2030 is not a good fit for offshore farms.

"We need to consider that it takes a little longer to construct offshore capacity. We have two developments in the works and we're keeping an eye on developments. But locking down support in 2026 will not allow us to have the farms up and running by 2030," he said.

Rene Tammist, member of the board of Utilitas Wind, agrees. He said that developers would need to have certainty of subsidy schemes by next year at the latest as resources need to be booked three or fours years in advance.

"I believe that we should start by realistically estimating 2030 consumption. Our neighbors believe demand will grow by 40-100 percent, while Estonia still looks at its consumption as constant. That is why it is important for us to specify realistic volumes," Tammist remarked.

Lauri Ulm said that while terrestrial solutions exist and Estonia has done a good job in that area, a clear plan is now needed for offshore wind power.


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Editor: Toomas Pott, Karin Koppel, Marcus Turovski

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