Erratic electricity prices in Estonia may persist through fall
Electricity prices in Estonia tend to fluctuate between €100-200 per megawatt-hour (MWh) by morning, costing next to nothing by midday before peaking again come evening. This is the kind of daily fluctuation that electricity consumers will have to keep in mind this summer, and according to Eesti Energia's Armen Kasparov, behind it are solar, natural gas and Estlink 2, the undersea power link between Estonia and Finland.
"Peak morning and evening hours are covered by the production of gas-fired power plants which reaches us from Latvia and Lithuania, and their cost price never drops below €100," explained Kasparov, head of energy trading at the Estonian state-owned energy group.
"We know that the Estlink 2 cable is out of service until September, and with that, affordable electricity from the Nordic countries, which today comes primarily from nuclear energy, isn't reaching us," he continued. "Midday is peak solar production, and that drives down prices significantly because there's not that much demand to meet. All three of these factors are closely linked."
Kasparov acknowledged that very cheap solar energy should please consumers, but most people are at work during the day. In the short term, household consumers are protected from fluctuations in market prices by fixed-price plans. In the future, large and high-capacity energy storage facilities would help as well.
"Solar energy isn't bad, it just needs cheaper production capacities on the market, or storage options that could distribute this cheap electricity at later hours too," he said. "But if these capabilities do emerge, it will mean that daytime prices will go up a bit as well, because then that cheap electricity won't be put into the grid; it will be stored for the evening hours."
Eesti Energia's thermal power plants, meanwhile, cannot even enter the market with such price fluctuations. The group's energy trading chief pointed out that firing up the thermal power plant at Auvere is a very lengthy process.
"Just to produce [electricity] only in the morning and evening, that means that all those daytime deficits, where the price is near zero, need to be factored in," he explained. "This makes oil shale-fired power plants very uncompetitive against gas-fired plants, which are very fast. Consumers aren't willing to pay a daily average price of €150 per MWh right now. That is what Auvere would actually need."
Oil shale-fired power plants may not return to the market until fall, when there will be less sunlight, electricity consumption will go up and Estlink 2 will be up and running again, which would help avoid more significant price fluctuations.
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Editor: Mirjam Mäekivi, Aili Vahtla
