The Riigikogu State Budget Control Select Committee discussed Estonia's long-term energy policy again on Monday.

According to Urmas Reinsalu (Isamaa), chairman of the select committee, there is confusion regarding long-term objectives, as the new Energy Sector Development Plan for 2035 is still being drafted. Meanwhile, the state continues to make individual energy-related decisions, one of which is the postponement of the offshore wind farm auction due to the European Clean Industry Deal.

"In reality, the offshore wind farms project is moving forward. The government is just waiting for new EU state aid framework rules. The key issue here is to account for the cost of living indexation, providing additional financial security for these companies. It's one thing to have €2.6 billion in support, but another to factor in inflation when determining the subsidized price set through the auction," Reinsalu explained.

The Ministry of Climate explained during the committee meeting that the request for indexation came from offshore wind farm developers.

"We actually want to give wind farm developers even more. All this talk about indexation that came to light today — of course, the total sum would increase in proportion to the depreciation of money. From the developer-producer's perspective, it is entirely understandable to request such a condition. However, I cannot agree with it in any way," said Arvi Hamburg, head of the Energy Commission at the Estonian Academy of Sciences.

Deputy Secretary General of the Ministry of Climate Jaanus Uiga confirmed that the ministry is indeed consulting the European Commission about new state aid conditions for next year while also continuing discussions with offshore wind farm developers regarding auction terms.

Under the ministry's proposal, the total amount of support would remain unchanged, but the auction price would be subject to indexation.

"The maximum amount of support would stay the same, but it would improve financing conditions from the developers' perspective. If the support amount were to be indexed, the renewable energy fee component on consumers' bills could increase. The key question then becomes what level of electricity price reduction could offset this. Our goal is to develop a solution that benefits consumers," Uiga explained.

Background

In January, following lengthy debates, heads of the three coalition parties (Reform, SDE and Eesti 200) decided to support a renewable energy development scheme to subsidize 2 TWh of onshore and 2TWh of offshore wind power. The latter is 10 times more costly to develop.

According to the coalition's agreement, Estonia is willing to pay offshore wind developers a total of €2.6 billion in subsidies whenever the market price of electricity falls below €65/MWh.

The particular scheme was scrapped in late February, following widespread dissatisfaction in society after the Ministry of Climate had consistently failed to produce any convincing data to show its benefits or how and based on what the price of electricity was forecast to come down in the future.

--

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