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TSO: Current oil shale power capacity not enough to ensure supply security by 2030

Power lines at the Narva power plant.
Power lines at the Narva power plant. Source: Rene Kundla/ERR

Estonia's power transmission system operator Elering does not perceive power shortages this winter, while its recent security of supply report suggests Estonia will need new managed energy capacity after 2030.

Elering's electricity supply security report highlights that the upcoming winter's supply security is significantly better than last winter, as several risks have been successfully mitigated.

"This year, Europe's gas storage facilities are nearly full before winter, including the Incukalns facility in our region. Although the Balticconnector pipeline fault has reduced the number of supply channels, it still allows covering consumption in the Baltic states and Finland. Nuclear power plants across Europe are in better condition than last year," the report lists.

It is also highlighted that the new Olkiluoto 3 nuclear power plant in Finland, a very important element for our region, is operational. Compared to the drought last year, the filling of hydro reservoirs before this winter is better, with levels in the Nordic countries about 10 percent higher, which exceeds Estonia's annual consumption.

As the overall reserve situation for supply security is better, Estonia's Elering is more prepared for various potential events that could damage energy infrastructure.

Electrification across different sectors is leading to an increase in electricity consumption in Estonia and across Europe. According to the report, Estonia's annual electricity consumption will increase by nearly two terawatt-hours over the next ten years, and peak consumption will grow by about 450 megawatts.

In the medium term, capacity mechanisms may need to be created to ensure system capability in the region. Elering considers the period 2027-2030 as particularly critical for the region, with rapidly increasing consumption and reserve demand, while old power stations are leaving the market.

Estonia's supply security standard is guaranteed until 2027 with the help of 1,000-megawatt oil shale blocks in Narva. However, Elering's long-term electricity system adequacy analyses indicate a risk from 2027 that Estonia may not meet the supply security standard.

"This means that after the end of the owner's expectation in 2026, additional closure of Narva's oil shale blocks may lead to a shortage in production capacities or frequency reserves. To mitigate this risk, it is necessary to complete the creation of Estonia's strategic reserve, which began last year based on the report," Elering points out.

Analyses suggest that economically, it is sustainable to keep four oil shale blocks on the market for 2027-2030. However, by 2030, these four blocks will no longer be sufficient, and an additional capacity mechanism in the form of a strategic reserve will be needed.

"Even in 2030, the current market-based resources will exceed Estonia's supply security standard, necessitating a strategic reserve. Looking beyond 2030, when the technical lifespan of Narva's oil shale blocks ends, it is crucial to add additional reliable production capacities capable of offering quick regulation reserves," the report states. "Despite the opening of trade at the Lithuania and Poland border in 2032, Estonia's system capacity level will remain below the norm.'

If such capacities are not added market-based, Elering believes it is necessary to support the creation of new capacities through state aid measures. In such a case, it is important to ensure the future-proofing of capacities, meaning reliable capacities must be ready to use climate-neutral fuels."


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Editor: Karin Koppel, Marcus Turovski

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