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Climate ministry: Estonian needs electricity storage facilities

Solar panels.
Solar panels. Source: Ken Mürk/ERR

The Estonian Ministry of Climate says it is encouraging the creation of energy storage options in Estonia, on the rationale that this would help with boosting the share of renewable energy and would also help smooth out peaks in electricity prices for consumers.

Estonia has set the goal of 100 percent renewable energy sources for electricity generation by 2030. However, renewable energy generation can be unpredictable, particularly at 59 degrees North. Electricity storage facilities would be needed, to ensure the stability of supply and of prices, the ministry says.

Rein Vaks, head of the climate ministry's energy department, said: "A suitable example is from the year before last, when the price of electricity stood at €4,000 per Megawatt-hour (for one hour of one day – ed.). The 'magic' of storage derives from the fact that at times when there is plenty of wind and sun and electricity market prices are thus favorable, electricity can be stored in your 'pocket,' and taken out of that pocket at times when there is no sun or wind (ie. in the winter – ed.). In other words, when the prices rise to higher levels."

The ministry of climate has brought together renewable energy developers, financiers and academic experts, to discuss how to encourage the creation of energy storage opportunities in Estonia.

"This is an extremely expensive investment, which is also a reason why we don't have very many storage projects on the market right now," Vaks added.

In searching for suitable solutions in Estonia, the experience of other countries has also been drawn on. Rein Vaks said that, for example, in some locations a network fee is applied only to that proportion of electrical energy that remains in the storage.

"The current regulation [in Estonia] is that the network connection fee must be paid in full for all stored electricity, even though more than 90 percent of this stored energy is likely to be returned to the grid," he said.

Of real projects for the future, private energy association Energiasalv is going to construct hydro-pump electricity storage facility in Paldiski. Mario Vee, head of business development at Energiasalv, said that revenue security is needed in order to to implement the project, since it is currently unknown what the energy market will look like in 2030, by which time the station should be completed.

Vee said: "One option is that we bring the leaders in renewable energy and of storage together and perhaps also agree with some consumers on how to ensure revenue security, so that, on the one hand, the consumer would have renewable electricity available at a stable, affordable price, and on the other, developers, too, could get revenue security."

However, he said, unfortunately, there are not many large enough consumers in Estonia, making such an option somewhat unlikely under Estonian conditions.

"Still another option is to go the way that Italy and France have recently done on this, whereby the state guarantees a certain level of revenue to the storage firms, on the expectation that those firms will guarantee lower electricity prices to the consumer, and will also contribute to ensuring security of supply," Vee went on.

The need is now to figure out which option is suitable for Estonia, he added.

A financial guarantee in the form of a fixed fee is one of several options, Vee said.

"For example, the model in England involves a power station agreeing on how much revenue it has to earn. If it earns below that level, the state covers the missing component, and, conversely, if the plant earns more, the owner of the storage facility returns the residual amount to the state. There are various methods to ensure this income guarantee."

Decisions have to be made this year, Vee added, in order for both the Paldiski facility and other storage facilities to be ready by 2030.

Rein Vaks concurred, stressing that the decision is urgent.

"Wind energy is currently developing at a very rapid pace; solar energy has also taken off very strongly. At present, we can already cover summer price peaks and consumption peaks with solar power, while on some particularly sunny days, or weeks, we can even cover all of our consumption from solar energy. The more we can save during this time, the more affordable and the more reasonable things will be for the end user. The sooner storage facilities come to the market, the better," Vaks said.

While it may seem counter-intuitive, Estonia is suitable for solar energy due to the long summers as are, indeed, locations far to the North, such as Norway's Svalbard archipelago.


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Editor: Andrew Whyte, Urmet Kook

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