According to the memorandum, which is to be submitted to the cabinet of government ministers for consultation, the proposed amendments to the Electricity Market Act and Regulation will be finalized this spring. These will allow new entrants to the electricity grid to recover half the costs of reinforcing the grid on the consumer side of the substation on the basis of a fixed tariff.

This will help develop the network in advance and thereby speed up the process of completing connections.

To comply with the Estonian Energy Sector Organization Act, the government plans to launch one large-scale tender with two wind technology packages: four terawatt-hours for onshore wind, which should provide around 1,400 MW of generation capacity, and four terawatt-hours for offshore wind, with an expected generation capacity of around 1,050 MW.

This capacity can be increased by up to a quarter, from a total of eight terawatt-hours to ten terawatt-hours. A small tendering process will take place next year.

Based on generation profiles, price forecasts, and a national consumption of ten TWh in 2030, the average annual price of electricity from the exchange should be €66 per MWh by that point. High prices occur when wind and solar resources are not available and fuel-burning and fossil-driven capacities such as gas, diesel or solid fuel are required to contribute to total generation capacity.

According to the memo, in the event that both four terawatt-hour capacities are put out to tender at the same time, in order to avoid paying a price premium to the state for a two-way tender, onshore wind developers would adjust their bids to be closer to the cost of offshore wind – around €110 per MWh – than to the prices offered under the current tenders – €20-40 per MWh.

In the case of an annual consumption of around ten terawatt-hours, the annual renewable energy premium for onshore wind projects would be 0.03 cents per kilowatt-hour (kWh) For consumption of 13 terawatt-hours, the renewable energy fee would be 0.05 cents per kWh, and for 15 terawatt-hours it would be 0.06 cents per kWh. These charges would apply for a period of 12 years.

For offshore wind projects, the additional renewable energy charge would be 1.2 cents per kWh for 10 terawatt-hours of consumption. If 13 terawatt-hours are consumed, the charge would be one cent per kilowatt-hour, and if 15 terawatt-hours are consumed, the charge would be 0.95 cents per kilowatt-hour.

The aim, according to the memo, is to subsidize only wind-generated electricity. However, this would not prevent hybrid farms from being established.

Once onshore and offshore wind farms have been completed on the scale envisaged, the renewable energy fee in 2035 would be 1.3 cents per kWh. The offer can be indexed to commodity prices during the construction period.

As for the projected timeframe, the document states that a state permit will be applied for this year, and a call for tenders launched next spring. The deadline for bids on those tenders should be the end of 2025. However, that may change as the aim is to achieve the highest level of competition possible between onshore and offshore wind projects.

Onshore wind farms ought to begin production by the end of 2029 at the latest and offshore wind farms by the end of 2033.

This year, the renewable energy tariff is 1.05 euro cents per kWh, or 1.28 cents per kWh inclusive of VAT.

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