Eesti Energia board member: Estlink 3 could connect Estonia to Sweden, instead of Finland

The Estlink 3 undersea electricity connection would more rationally link Estonia to Sweden, rather than to Finland as planned, since it would bring cheaper electricity to consumers on the Estonian side, Eesti Energia board member Einari Kisel told ERR.
However, national grid distributor Elering says there are no plans to connect to Sweden, adding that, over time, the price differential will equalize.
Additionally, the Swedes are currently not interested in any new connections with the Baltic states, Elering says.
In an opinion piece published by online business daily Äripäev (link in Estonian), Kisel suggested an undersea cable covering the much greater distance between Sweden and Estonia might be of interest to both countries and their private sector firms, and would probably be the cheapest way to supply electricity to Estonia.
The existing Estlink 1 and Estlink 2 cables connect Estonia to the Finnish grid with a total connection capacity of about 1,000MW. Elering is currently planning a third connection with Finland (ie. Estlink 3) which would have a further 700MW capacity, but this is not forecast to go online until around 2035.
Kisel told ERR that cheaper electricity on its own should be enough to redirect thoughts in Estonia from a northerly direction to a westerly one.
"If you consider the fact that electricity prices in Sweden are even lower than they are in Finland, this is the only way to bring low electricity prices to Estonia whatsoever. Most Swedish-generated power in any case reaches us via Finland. After all, Sweden itself is constantly selling electricity to the Finns," he said.
Swedish electricity prices last year averaged around €40 per MWh, while in Finland it stood at €57. In 2023 the price of electricity in Estonia was €90 per Mwh as an average for the whole year.
"Given the cold January this year, this picture seemed even more drastic," Kisel noted.
"While the average price of electricity in Estonia then was around €126 per MWh; in Finland €106 per MWh, then with the Swedish region, which is the cheapest for us, the price was €54 per MWh as a monthly average. In other words, our prices were over twice as much."

Sweden currently operates an electricity connection with Lithuania and Poland, but, according to Kisel, this connection is with southern Sweden, the fourth price region, where electricity is usually the most expensive in that country. "It's the same price level as in Finland, or a little bit higher," he said.
Elering: Swedes have not expressed interest in new connections
Elering's marine network development manager Priit Heinla told ERR that Kisel's cheaper price argument is not future-focused.
Heinla said: "In the future, there will also be significantly more producers of renewable electricity in Estonia, and significantly higher consumption in the north of Sweden. This means the price differential will tend to fall over time."
According to Kisel himself, the main counter-argument to the Swedish connection idea has been the view that the existing power line between Sweden and Lithuania is sufficient for all three Baltic states.
"However, if we talk about a connection with Estonia, it has not practically been on the table as yet. But it is definitely worth analyzing how profitable a project like that could be for Estonia, plus also talk to the Swedes about what other things they might do with it," Kisel went on.
Heinla meanwhile said the Swedes have not expressed an interest in connections so far, as they have enough to be getting on with in the establishment of domestic electricity connections.
He said: "The connection with Sweden has been the subject of debate, but without coming to fruition. In particular, Latvia has been interested in a connection to the Baltic states, but whose project the Swedish side did not support, a couple of years back. Strong technical and political support is required from both parties in order to establish connections like these for the first time. Inside Sweden, there are large price differentials between the different price regions, while Sweden's interest is primarily to ease restrictions within its own network. Furthermore, due to the lower energy prices seen there, a large number of high-consumption industries are currently being planned for northern Sweden."
Sweden's connections with the Baltic states have also been discussed in the pan-European electricity network development plan, but it is clear that the Swedes' attention is currently on domestic connections.
Also, Heinla said, and as Kisel also pointed out, Swedish electricity is in any case reaching Estonia.
Heinla said: "Sweden's challenges regarding the development of its internal network are clear, meaning also the difficulties of creating connections at considerable capacity with the Baltic states are also there. No specific negotiations have been held on this, through northern Sweden is due to be connected to northern Finland with additional overhead lines and submarine cables. Following this, cheaper prices will also reach Estonia via Finland, yet without a major investment from Estonia."
Kisel: Swedes may be interested in our wind and solar energy
Kisel's proposal also gives rise to the question why Swedes should be interested in a connection whose opposite (ie. Estonian) end would mostly offer costlier electricity, which may, in turn, raise their own prices.
According to Kisel, Estonian electricity does not currently exert a major impact on prices in Sweden; indeed, offshore wind farms in Estonia could offer them cheaper electricity in the future, he said.
"The same goes for solar energy; it could actually reduce their price further still. This is one aspect that could be of interest to the Swedes. And another is that, until now, Swedish electricity retailers sell electricity to Finland, but they get less revenue there than they could get, for example, if they sold that electricity to Estonia," Kisel said.
Heinla said altering the decision in Sweden's favor would mean the construction of a third undersea connection being postponed for many more years.
"Estlink 3 was incorporated into the European electricity grid development plan four years ago. It was also included on the list of European projects of common interest, a memorandum of cooperation was signed with [Finnish grid distributor] Fingrid, and political support for the connection was obtained.
"When you start to alter the project to such a significant extent, the impact can be measured in terms of years, plus it would no longer be the same project," he added.
Estlink 2 was established under free market conditions, as an additional connection with Finland was required. It is a similar story with Estlink 3, Heinla noted.
Elering: Laying the cable alone would be multiple times more expensive
According to Kisel, the significantly cheaper electricity seen at the moment in Sweden would mean that even if the construction of the Swedish connection were to prove more expensive compared to the connection to Finland, the former connection would still prove profitable.
Kisel said: "If you consider that all international submarine cables are largely financed by EU funds, up to 80 percent, the price differential that arises is not actually very large. Figuratively speaking, if as a result two or three euros per megawatt hour are added to the price but at a time where you get electricity overall €20-30 more cheaply per megawatt hour, then economically speaking, this is very clearly a win," he said.
Heinla did not want to speculate how much the total cost of the connection between Finland and Sweden would differ, but according to him, the lengths of sea cables can be compared: laying a cable costs two million euros per kilometer.
The length of the Finnish-Estonian cable is about 100 kilometers, or it would cost €200 million; The Sweden-Estonia cable would be 700 kilometers long and thus cost €1.4 billion.
"Therefore, the price divergence is evident. Even if the EU were to provide major support to the project, the possible impact on tariffs could affect the total price of electricity in such a way that makes it hard to assess, without conducting a serious analysis, whether this would be reasonable for society at all," said Heinla.
On being asked what the transmission capacity of the posited Swedish connection might be, Kisel put the figure at about 500MW.
"Much hinges on what its economic profitability might be, and, on the other hand, what the potential of Estonian offshore wind farms is, for instance. We can speculate, say with a cable with a capacity of 500MW, but it is definitely not a calculated option," he said.
The capacity of Estlink 3 is planned to be 700MW. This is a limitation resulting from the specific nature of the electricity system in the Baltic states, Heinla noted.
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Editor: Andrew Whyte