The tender is for up to 500 megawatts (MW) of production and storage capacities from the market.

This, it is argued, is required as a result of decoupling from the Russian electricity system and joining the European grid, plus of the decline of oil shale-generated electricity in Estonia.

Speaking to "Aktuaalne kaamera" Tuesday, Erkki Sapp, a member of Elering's management board, said these things "Are somewhat related."

"Joining the continental European synchronous area would mean a new logic of electricity system management, in which we have a greater role in frequency control," Sapp continued.

"This is also linked to the need to ensure sufficient frequency reserves from next year and in the long term," he went on.

Sapp declined to predict how much the procurement might cost, saying: "The basis of the procurement is a contract based on difference, meaning Elering will enter into a contract with the winners of the tender in which we guarantee the difference between the price desired by the bidders, and the market price."

"The amount of payments to be made under the procurement will depend on the future market price," Sapp went on.

Elering needs to procure production and storage capacities to ensure sufficient dispatchable production capacities within the 2030 framework.

Since these dispatchable production capacities are leaving the market, however, they are required to ensure the functioning of the electricity system.

Again, this partly relates to the departure from the Russian electricity system and joining the European system.

Electricity market expert Marko Allikson, board member at Baltic Energy Partners, noted that the offer is essentially aimed at finding new gas-fired power stations.

"This essentially fills a gap in the market – we have a lot of new renewable solar and wind energy coming in. Solar and wind energy are inherently non-dispatchable, with capacities and production volumes that can change very quickly," Allikson said.

"Another type of production must replace them to keep the electricity system in balance. This procurement is essentially for new gas power plants, which can respond very quickly," he went on.

"An additional €5.31 per Mwh will be added to both production and consumption."

This amount is larger than the typical current market margin. From the moment we operate as an independent system, keeping our system balanced is more expensive, and this boosts the market margins for consumers," Allikson said.

In Finland, the tariff for balance service is €1.30, so the higher fee puts Estonian renewable electricity producers at a competitive disadvantage compared with their neighbors.

"Aktuaalne kaamera" was unable to get comment from Estonian electricity sellers Eesti Energia and Alexela on the topic.

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