The heads of coalition parties decided Monday that Estonia will hold reverse auctions for two terawatt-hours worth of onshore and two terawatt-hours of offshore wind power for a reduction from a year ago of two terawatt-hours, respectively, for both types.

Enefit Green CEO Juhan Aguraiuja told ERR that even though clarity in terms of volumes and timeline allows developers to launch preparations for participating in the reverse auctions, Estonia currently does not have a single wind farm awaiting construction and with all necessary permits ready to take part.

"All current projects are in the planning and environmental impact assessment phases, which constitutes a considerable risk in terms of bidding," he clarified.

Heads of the coalition Eesti 200 and Social Democrats, Kristina Kallas and Lauri Läänemets, also admitted Monday that plans to realize onshore wind farms by 2030 are the shakiest, considering planning delays and efforts to lobby against wind turbines.

However, Estonia desperately needs wind farms if it is to stick to its goal of covering consumption solely with renewable energy by 2030.

While Jaanus Uiga, deputy secretary general of the Ministry of Climate, recently told ERR that hitting the goal is possible if all sides work hard to make sure detailed plans and reverse auctions go ahead, Juhan Aguraiuja suggested that government-level promises to expedite renewables development have not materialized.

"The 2030 onshore wind plan is optimistic to say the least. /.../ We also see that none of the projects in the 780 gigawatt-hour auction declared in late 2023 and approved in January 2024 have entered the construction stage. While developers have been optimistic, processes move at their own speed."

The Enefit Green CEO added that while numerous plans have been initiated, not all of these will be approved. "We also see it in our own case, where project volumes shrink in the planning process due to various limitations and not all projects stay viable," he said.

Rene Tammist, CEO of Utilitas Wind, also said that while the 2030 renewables target is admirable, there remain considerable gaps between ambition and reality.

"Onshore wind development is up against long and fragmented proceedings, growing pushback [from communities] and funding and transmission network limitations," Tammist said, adding that Utilitas Wind also believes hitting 2030 volumes could be difficult considering opposition in many local governments.

"Irrespective of whether we plan to generate electricity onshore or at sea, it requires excellent cooperation between producers, the government, local governments, communities and both today's and tomorrow's industrial consumers. Without it, nothing will happen," he noted.

Enefit Green and Utilitas Wind undecided on whether to participate in auctions

Regarding offshore wind farms, Aguraiuja said that a three terawatt-hour reverse auction could have been considered there, following the example of Lithuania, as Estonia's marine areas hold a lot more potential than the two terawatt-hours approved by the government.

"The principle of economies of scale tells us that offshore wind farms should be done big. Developing more modest projects could mean a higher price," he said.

Asked whether Enefit Green plans to partake, Aguraiuja said that a decision will be made once the final conditions are set.

Rene Tammist also said that the planned reverse auctions are a step in the right direction, while Utilitas Wind's plans depend on the conditions. "We need more clarity there. Investments stretching over decades and into hundreds of millions or billions require certainty, irrespective of the type of energy involved."

Aguraiuja: Onshore wind limit might prove insufficient

At reverse auctions, both onshore and offshore wind developers can put forward a price cap for state support if the market price of electricity falls below a certain level. According to recent plans, the so-called price corridor for onshore wind farms will be €20 per megawatt-hour, while it will be €65/TWh for offshore wind farms. This is the maximum support paid to producers if the market price falls below the level in bids.

Juhan Aguraiuja said that these levels might not offer companies enough certainty for investment in the conditions of very low market prices.

"Renewables volume has grown. While new wind farms help bring down the cost of electricity for consumers and render electricity generation more environmentally friendly, they also impact the profitability of subsequent projects and investment capability," he remarked.

"The onshore wind support ceiling of €20 per megawatt-hour might prove too low, as project completion is affected by several factors, including demand for long-term electricity contracts and funding options. The CfD (contract for difference) mechanism alone might not ensure projects materialize," Aguraiuja added.

--

Follow ERR News on Facebook and Twitter and never miss an update!