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Estonian grid operator Elering plans €700-million investment over next 5 years

Power lines at Narva.
Power lines at Narva. Source: Rene Kundla/ERR

Electricity grid distributor Elering says it plans to invest €700 million into infrastructure through to 2028 after a security of supply report which found more substantial investments are needed to both ensure the synchronization of the national grid with that of the rest of continental Europe, and options for connecting to additional suppliers where needed.

Estonia's electricity system had been synchronized with the Russian BRELL grid, though work towards de-coupling from this and synchronizing with the EU system was given an added impetus by Russia's invasion of Ukraine, nearly in its 22nd month.

An additional €160 million is to be invested by Elering through to 2030, towards connections to renewable energy plants, in a separate but related project.

When asked whether the above investments will be passed on to consumers in the form of higher bills, Elering spokesperson Ain Köster said that Elering's main role lies in contributing to the fulfillment of renewable energy goals set by the Estonian state, namely for renewable energy to match domestic electricity consumption.

Köster said: "It may be that our task is to find the most affordable way to ensure security of supply in circumstances where the vast majority of energy gets produced from affordable renewable sources."

"The volume of these investments would be financed by electricity consumers, expected to be nearly €160 million in the years 2025-2030," he added, in respect of the planned renewables investment.

Köster told ERR that their newly approved investment budget for the period 2024-2028 comes to €700 million (see above), of which the network connection fee covers less than half.

The budget also does not include the costs of new solutions proposed for the

To keep the changes to deadline, Elering has proposed altering the network development principles to allow Elering to make production-enabling investments in advance, i.e. to develop the transmission grid network in advance. 

Treating security of supply investments as a separate entity does not provide an answer, from a customer's point of view, on whether electricity bills will rise or not.

Elering board chair Kalle Kilk had said last week that the affordability of electricity constitutes a part of security of supply, though Elering has not established a specific price level in relation to security of supply.

"A distinction must be made between the narrow evaluation of security of supply according to the norm of security of supply and the electricity economy in a broader, whole society, i.e. socio-economic view," Kilk had said.

Ain Köster meanwhile said: "If we assess the level of security of supply in accordance with the norm of security of supply approved by the government, this calculation or assessment does not include the (exchange) price of electricity, but the opportunity cost that consumers are willing to bear in order to avoid a shortage of electricity," said Köster.

Three components are considered in concert, when deciding on the activities and investments necessary to ensure security of supply, Köster said : the compliance of security of supply with the norm established by the government, the impact on the environment and the cost to society.

"Perhaps one must always look for a balance point between the level of security of supply, the costs to achieve it and the environmental impact," he added.

An agreement with Elering's counterparts in Latvia and Lithuania has been made, under which a common reserve capacity market will be set up, he said.

This would have the added advantage of meaning each of the three Baltic States not needing to maintain a full reserve at all time, but around a third of the total requirements for the three countries.

Both current Elering board chair Kalle Kilk and his predecessor Taavi Veskimägi have noted the importance of the socio-economic impact of the price of electricity, Köster added.

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Editor: Andrew Whyte, Karin Koppel

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