Prime minister: Ask the climate ministry about electricity calculations

Prime Minister Kristen Michal (Reform) said calculations about the final price of electricity agreed upon this week should be requested from the Ministry of Climate. He said as circumstances change, so may the price.
Michal announced on Monday the coalition had reached an agreement on energy and support for future production. It is partly based on a plan he proposed in his previous role as climate minister.
Yesterday ERR reported that a Ministry of Climate forecast predicts the end price of electricity in Estonia in 2035 will be 14.9 cents per kilowatt-hour (KWh). The calculations involved, however, assume that network service fees will remain unchanged.
ERR asked Michal about energy production and the price calculations at the government's weekly press conference on Thursday.
ERR: According to a forecast prepared by the Ministry of Climate, the final electricity price in 2035 is expected to be 14.9 cents per kilowatt-hour. This calculation assumes that network fees will remain at the same level. Are these calculations final, and can it be said with certainty that network fees will stay at the same level until 2035, as outlined in the forecast?
Prime Minister Kristen Michal: The Ministry of Climate can explain its calculations itself. All calculations in the energy sector are based on certain assumptions — such as the volume of investments, the timeframe in which they are made, changes in the economy, and shifts in consumer demand. Based on these factors, they can make an estimate.
Over time, network needs may also change. If new production facilities or consumers emerge in certain areas, the situation could change as well. So, the forecast will certainly become more precise over time, but the Ministry of Climate will provide further explanations.
According to the head of Elektrilevi, €1.6 billion needs to be invested over 10 years to make the electricity grid more weather-resistant. If network fees do not increase, where will the money for these investments come from?
I would say that the extent and pace at which Elektrilevi can invest is actually determined by the Competition Authority, which assesses the necessity of these investments and the possibilities of passing the costs on to consumers. Different parts of the grid have different funding mechanisms — Elering uses congestion charges for this purpose, for example, while Elektrilevi can indeed use fees collected from consumers. As far as I have seen from the Ministry of Climate's explanations, some increase in network fees has been factored into the calculations.
But once again — the Ministry of Climate can explain this themselves. You are asking me about the ministry's calculations. I do not need to redo them.
I will also ask about wind farms. What is the basis for the calculation that two terawatt-hours of onshore wind power, with support, will bring an additional two terawatt-hours of onshore wind power to the market?
A number of projects have already entered the market independently. These calculations are based — at least according to the information provided to the government — on the actual market situation and discussions with market participants. Specific projects were even presented on-screen in the government cabinet. So, the Ministry of Climate can provide a more precise explanation.
Once again, you are asking me questions that should be directed to the Ministry of Climate.
The coalition politicians have reached an agreement on the construction of the Paldiski pumped hydro storage plant. If, according to one company, a long-term guarantee is not necessary, why do you believe that such a guarantee from the state is needed for energy storage projects?
The basis of all energy decisions is to have a balanced energy system with different components. We need renewable energy to lower the average price. Storage is needed to similarly benefit consumers, and a nuclear power plant is one option for producing a stable base load in the future — whether in 10, 15, or 20 years. Controllable capacities ensure that when renewables are not producing — when there is no wind or sunlight — the system remains balanced.
So, all these components have their place. The purpose of large-scale energy storage in the system is to stabilize demand and reduce costs for consumers. This should ultimately be a consumer-beneficial decision, meaning a lower price for consumers. That is the purpose of supporting the development of energy storage.
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Editor: Helen Wright