Several of the Chamber’s proposals were included in the Energy Sector Development Plan
On 8 January, the government approved the Energy Sector Development Plan through 2035, whose aim is to ensure Estonia’s energy security, increase the country’s competitiveness, and support the transition to a clean-energy economy.
In the Chamber’s view, the approved development plan is significantly more realistic than the draft versions and focuses more on how to ensure electricity at a competitive end price for businesses.
Energy security
The development plan states that, up to 2035, Estonia must ensure both the construction of new dispatchable capacity in Estonia and the continued operation of oil-shale power plants.
By 2035, Elering must ensure the development of new dispatchable power plants of sufficient capacity for Estonia. While the current need for dispatchable capacity is 1,000 MW, after 2030 it is estimated to increase to 2,000 MW. The new dispatchable plants will run on natural gas and biogas.
Once the new plants are completed, it will be possible to gradually close the oldest oil-shale units.
Competitiveness and the end price of electricity
At the Chamber’s proposal, the plan clearly states as an objective that the energy sector must contribute to the growth of Estonia’s competitiveness. Earlier versions lacked such an objective.
At the Chamber’s proposal, the plan also уточified the indicator used to assess whether the end price of electricity is competitive. The new indicator takes into account not only household consumers’ electricity end prices, but also those of different consumer groups, including industry and other large consumers.
The new development plan aims to ensure that the end price of electricity for all consumer groups in Estonia remains below the average end price of electricity in the reference countries—Finland, Sweden, Denmark, Poland, Latvia, and Lithuania. In the 2024 comparison, Estonia’s end price of electricity is cheaper than the reference-country average for household consumers and business consumers with lower energy consumption, but higher for business consumers with higher energy consumption.
In addition, according to the plan, the idea of creating new electricity interconnections with Finland and Latvia is being considered in order to ensure a lower end price of electricity and increase security of supply. Investment decisions will be made in the coming years.
Market-based generation
The Chamber considers it positive that the development plan is moving toward market-based electricity generation. According to the plan, operating support is needed only if it actually reduces the end price of electricity. In 2026, an auction is planned to bring up to 2 TWh of additional renewable electricity to market.
For longer-lifetime infrastructure (offshore wind farms, a nuclear power plant, a pumped-hydro storage plant), long-term financing solutions will be created to provide investment certainty, enabling them to make investment decisions on a market basis.
Clean energy
Under the currently valid Energy Sector Organization Act, Estonia’s goal is to produce, in 2030, as much renewable electricity as we consume on an annual basis. However, the development plan states that, under today’s conditions, it is not possible or economically reasonable to achieve this goal by 2030. The ambition to produce 100% renewable electricity remains, but it will be achieved once technologies are competitive without operating support.