Estonia (2012)

Degree of reliance on imported energy: 

<p>
In relation to the generation of electricity from domestic resources, the energy independency rate in Estonia is high. With regard to the production of electricity per capita, Estonia is one of the leading countries among the EU Member States. 90% of electricity is produced from local oil shale . Estonia is a small importer of energy in the EU context (27.5% in 2005, 28.5% in 2004; only the UK, Poland and Czech Republic import less; Denmark is the only net exporter). Estonia imports oil products and natural gas, but because of local oil shale, their importance in consumption is relatively small.<br />
<br />
Domestic energy production in Estonia accounted for 78% of total energy supply in 2008. Imported fuels (natural gas, fuel oils, coal, motor fuels, Russian oil shale, liquid gas and electricity) made up 22% of the Total Primary Energy Supply in 2008.<br />
<br />
Estonia has no natural gas reserves and imports all of its natural gas for domestic consumption from Russia, with Norway as a potential supplier.<br />
<br />
In 2008, the imports/exports balance by energy source was as follows (all units ktoe, source: IEA):<br />
Coal and Peat: 86.0 / 62.0<br />
Crude Oil: 0.0 / 273.0<br />
Oil Products: 1,133.0 / 0.0<br />
Natural Gas: 770.0 / 0.0<br />
Electricity: 118.0 / 199.0<br />
Combustible Renewables and Waste: 0.0 / 184.0<br />
&nbsp;</p>

Main sources of Energy: 

<p>
Total installed electricity capacity (2010, source: Estonian Ministry of Economy): 2,258 MW<br />
- Thermal (Oil Shale): ~95%- Renewables (Hydroelectric, Wind): ~5%<br />
<br />
Share of Total Primary Energy Supply* (2009, IEA): 5Mtoe&nbsp;</p>
<ul>
<li>
Oil: 10.6%</li>
<li>
Natural Gas: 11.1%</li>
<li>
Hydro: 0.1%</li>
<li>
Biofuels and Waste: 14.7%</li>
<li>
Geothermal/ solar/ wind: 0.4%</li>
<li>
Coal/ peat: 63.2%</li>
</ul>
<p>
<br />
*Share of TPES excludes electricity trade<br />
<br />
Estonia accounts for 70% of the world&rsquo;s oil shale production. Estonia also has large areas of peat land and 46% of the country is covered by forest.<br />
<br />
The electricity production by fuel source type in 2009 was as follows (source: Enerdata):<br />
Ex-Coal (Oil Shales): 97.5%<br />
Natural Gas: 5.0%<br />
Wind: 2.2%<br />
Oil and Products: 0.34%<br />
Biomass: 0.46%<br />
Hydroelectric: 0.23%<br />
&nbsp;</p>

Country: 

Estonia

Extent of the network: 

<p>
National electrification rate (2000):&nbsp; 99%<br />
&nbsp;<br />
The national transmission network of Elering, a former subsidiary of Eesti Energia consists of approximately 5,000 km of high-voltage (330, 220, 110 kV) lines, and roughly 59,000 km of distribution lines operating at 35 kV. Estonia has interconnection capabilities with three countries, Russia, Latvia and Finland. Under the framework of the Baltic Energy Market Interconnection Plan, a new Estonia-Latvia interconnection is under consideration.<br />
&nbsp;</p>

Capacity concerns: 

<p>
The issues of securing sustainable energy and the development of renewable energy are becoming increasingly pressing in Estonia in light of the high reliance on fossil fuels, the high energy intensity and the closure of Ignalina nuclear power plant in Lithuania at the end of 2009.&nbsp;&nbsp;<br />
<br />
Estonia is a net importer of energy. The vast majority of power generation in the country is fossil fuel based, with oil shale being the country&#39;s main mineral deposit and fuel source. Serious environmental concerns are still present in the oil shale trade, and efforts to mitigate these are ongoing.<br />
<br />
Transmission and distribution losses are above the EU average in Estonia. 10.14% of electricity production was lost in 2009.<br />
&nbsp;</p>

Potential for Renewable Energy: 

<p>
Renewable energy in Estonia is mainly produced by smaller hydroelectric power plants (85 GWh in 2006) and wind farms (61 GWh) on the western cost. The share of renewable electricity sources amounts to 12% of primary energy generation (2007).<br />
<br />
The goal of the Estonian government is to increase the use of renewable energy by 67% by the year 2010 at least to meet up with EU energy regulations. Bio-fuels and wind energy are the highest potential renewable energy sources in Estonia.&nbsp;<br />
<br />
<u>Biomass energy</u><br />
Estonia&rsquo;s forests cover around half of its entire territory.&nbsp; The country has a high potential for energy production from wood-based fuels. Solid biomass use is most common in the heating sector currently, with roughly one fifth of the country&rsquo;s boilers suitable for fuel wood use. The estimated potential of biomass energy exceeds 20 TWh/year, with the theoretical potential of non-conventional biomass sources exceeding 45 PJ.<br />
<br />
<u>Wind energy</u><br />
Wind based power generation potential in the coastal zone of Estonia is higher than that in other Baltic countries.&nbsp; The largest wind park of the Baltic region is to be built near Aulepa, with 13 turbines at a rated capacity of 39 MW. In 2010, wind power generation capacity was 149 MW in Estonia, with 276 GWh of electricity produced that year from wind sources. A wind atlas has been compiled for the country, which identifies several areas with an average wind speeds of 7-8 m/s at 10m height, corresponding to a wind speed of over 10m/s at 50m height. The country plans to reach a wind capacity of approximately 600 MW by 2020.<br />
<br />
<u>Hydropower</u><br />
Estonia has modest hydropower potential and no opportunities for establishing large hydroelectric plants. Numerous mini and micro hydroelectric power plants exist with a total generating capacity of slightly over 1 MWe. Some studies have shown that Estonia is only exploiting about 1-2% of its overall hydroelectric potential.<br />
<br />
<u>Solar energy</u><br />
Solar energy potential in Estonia is small, due to the low average levels of insulation in the country (2.7kWh/m2 average). The seasonal use of solar heating plants and photovoltaic plants is possible.<br />
<br />
<u>Geothermal energy</u><br />
The potential for geothermal energy in Estonia is poor, as the country has no thermal waters.<br />
&nbsp;</p>

Potential for Energy Efficiency: 

<p>
Energy efficiency is not yet fully compliant with all EU energy regulations (mainly due to the need for improvements to the power supply system).<br />
<br />
Estonia aims to diversity its energy balance by 2020, setting targets for the share of renewable electricity production at 4.9% by 2020, with renewable energy accounting for approximately 25% of final energy consumption.<br />
<br />
Energy intensity in Estonia is roughly twice as high as the EU average, mainly due to the dependence on oil shale for power generation, as well as low-efficiency thermal plants. Improvements in power generation efficiency, as well as investment in renewable energy sources, would decrease this markedly.&nbsp; Estonia&rsquo;s energy consumption is also greater than the EU average, equalling approximately 3.5 toe/capita in 2009.<br />
&nbsp;</p>

Ownership: 

<p>
Since its inclusion to EU in 2004, Estonia has been granted a transitional period until December 31, 2012 for opening its electricity market. The measures necessary to ensure the opening of the Estonian electricity market will be carried out gradually over the reference period, with the aim of complete opening of the market by January 1, 2013. On January 1, 2009, the opening of the market had to represent at least 35 per cent of consumption.<br />
<br />
The Estonian electricity market has long been dominated by a 100% state-owned vertically integrated public limited company, Eesti Energia AS, which is engaged in power production, transmission, distribution and sales, as well as other power-related services. It is formed by one power plant and a smaller enterprise. Since 1999, Eesti Energia AS has unbundled some parts of its account and management, creating separate business units/subsidiaries for generation, transmission and distribution.<br />
<br />
Numerous companies are engaged in small-scale power production in the country, particularly for wind power generation. Examples include Tuuleenergia O&Uuml;; Tuulepargid AS; SeeBA Energiesysteme GmbH and Ostwind Verwaltunggsgesellschaft mbH.<br />
<br />
<u>Natural gas </u><br />
AS Eesti Gaas, (TPA) is a vertically integrated privately-owned company transformed into a group with three other companies (one for the maintenance, development and renovation, another for the construction of gas pipelines and the last one provides administration and maintenance service to the owners) in 2005.<br />
&nbsp;</p>

Structure / extent of competition: 

<p>
<u>Electricity</u><br />
Eesti Energia acts as the primary generator and transmission company, with 40 distribution companies operating in the predominantly private distribution network. Of these, three companies account for approximately 95% of the market share; OU Jaotusv&ouml;rk, a subsidiary of Eesti Energia, with over 88% of the market share, and VKG Elektrivorgud and Fortum Elektra, which hold approximately 4% and 3% of the market shares respectively. There is third party regulated access, as well as regulation of power balancing.<br />
<br />
The electricity market for companies that consume over 40 GWh has been open since 2003. Further liberalisation was achieved at the end of 2009 when 35 per cent of the market was opened, with a view to full opening by 2013.<br />
<br />
<u>Natural gas</u><br />
The main player is he Eesti Gaas Group, which consists of one Eesti generation company and three transmission distribution companies. Residential end-user prices are regulated. Gas transmission and distribution tariffs approved by the Energy Market Inspectorate.<br />
<br />
<u>Oil and Products</u><br />
Four main operators are involved in the supply, trading and logistics of oil: Alexla AS (http://www.alexelaterminal.ee), EOS Vopak (http://www.vopakeos.com), Scantrans (Ireland) and Eurodek (Denmark).<br />
<br />
Eesti Statoil (http://www.statoil.ee/) is the country&#39;s main distributor with one-third of the market. Neste Oil (Finland, http://www.nesteoil.com/) is the sector&#39;s second largest player.<br />
&nbsp;</p>

Existence of an energy framework and programmes to promote sustainable energy: 

<p>
The key legislative provisions regarding electricity in general and electricity production from renewable energy sources (RES) in Estonia are set out in the Electricity Market Act as amended (EMA) and in the Grid Code (GC). On February 15, 2007 the Parliament adopted a set of amendments to the EMA which, inter alia, significantly alter the support system for RES.<br />
<br />
Most of these amendments entered into force on May 1, 2007. The perspectives and goals of the Estonian energy and electricity sector are set forth by the Long-term Public Fuel and Energy Sector Development Plan until 2015 (adopted by the Parliament) and the Development Plan for the Electricity Sector 2005&ndash;2015 (adopted by the Government).<br />
<br />
The main programmes to promote sustainable energy are:<br />
<br />
Development plan to promote Bioenergy (2007-2013)<br />
The government of the Republic drew up the Development plan to promote the use of biomass and bio energy 2007-2013. The main objective of this plan is to create suitable conditions for the development of domestic biofuel and bio energy production, reduce Estonia&#39;s dependence on imported resources and fossil fuel.&nbsp;<br />
<br />
National Energy Conservation Programme and Action plan for energy conservation.<br />
Some of the targets of the programme include the reduction of environmental impacts of the fuel and energy sectors such as ensuring that CO2 emissions are lower than the limits set by the Kyoto Protocol.&nbsp;<br />
<br />
The Implementation Plan for the Energy Conservation Target Programme (IPECTP) in 2002 is a provision ensuring the decrease of the CO2 emission by 8% by increasing efficiency of energy production, using environmentally friendly fuels, and reducing consumption in all sectors.<br />
<br />
The National Environment Strategy sets a goal to re-orient the energy policy of the country towards the use of RE sources, and reduction in the use of greenhouse gases, and internalisation of external costs of the energy production and consumption in the price of energy.<br />
<br />
The present Estonian National Energy Efficiency Action Plan for 2009-2013 gives an overview of previous and current policy measures to promote energy efficiency among small-scale energy users. The Plan focuses on four main policy areas: increasing access to information, improving skill transfers in the market, promoting investment in EE projects through obligations to energy suppliers, direct grants etc., and fulfilling the obligations to the EU, i.e. transposing EU directives on EE into the national policy.<br />
<br />
Feed-in tariff<br />
The Feed-In Tariffs are regulated by the Electricity Market Act which entered into force on July 1st, 2003. The Electricity Market Act was last amended in 2007. The version of the Act applying until 30 April 2007, required network operators to purchase in a trading period (at a price of EEK 0.81/kWh) all the electricity generated by a producer of renewable energy to the extent of the operator&rsquo;s network losses. Since 2010, additional renewable sources have been added to the feed-in tariff scheme, valid for 12 years at 0.54 Euro cents/kWh, as well as support for RES-Heat through CHP installations.<br />
<br />
To further promote use of renewable energy systems, tax relief is available for individuals who wish to use wood fuel or peat for heating, with a 13% reduction on V.A.T applied.<br />
Furthermore, no CO2 pollution charge is imposed on power generation enterprises using biofuels, peat, or waste products.<br />
&nbsp;</p>

Current energy debates or legislation: 

<p>
The government has initiated broad-based discussions on energy in connection with the drafting of national energy and electricity development plans. These plans set the crucial long-term development goals for energy and cover several issues, including support for renewable energy, energy saving, opening up the electricity market and support for new connections . In May 2011, numerous companies and organisations within the renewable energy sector held a seminar in Tallinn, envisaging a longer-term strategy for Estonian energy security, aiming for a 100% renewables-powered Estonia by 2050. The seminar is available online at www.4energia.ee/wp-content/uploads/2011/05/EY-seminar-050511-v7-2.pdf.</p>

Major energy studies: 

<p>
<u>Energy in Estonia &ndash; May 2002</u>. A study prepared by the International Business Strategies in the United States of America.<br />
<br />
<u>Good Practice Case Study: the Rouge Energy Park for renewable energy sources</u> &ndash; Estonia; Optimizing local action to drive sustainable energy and transport in the Europe of 25.<br />
<br />
<u>Estonian Energy Efficiency Report 2009 (ABB Group, Enerdata)</u>:&nbsp; www05.abb.com/global/scot/scot316.nsf/veritydisplay/0fb7b8f1625a2b8ac12578b100236669/$file/estonia.pdf<br />
&nbsp;</p>

Role of government: 

<p>
The Ministry of Economic Affairs and Communications deals with energy related issues and tasks. It elaborates and implements the state&rsquo;s economic policy and economic development plans in the fields of industry, trade, energy, housing, building, transport and further sectors.&nbsp; The Ministry of Economic Affairs and Communications is participant in the Baltic Sea Region Energy Cooperation (BASREC), promoting renewable energy and energy efficiency in the region, as well as improved regional co-operation in energy to develop energy security.<br />
<br />
The Ministry of Environment promotes a clean environment and the sustainable use of natural resources through the Estonian National Strategy on Sustainable Development. It also deals with renewable energy-related tasks through the Forestry and Waste Departments.&nbsp;<br />
&nbsp;</p>

Government agencies in sustainable energy: 

<p>
The Estonian Biomass Association was founded in 1998 as a non-profit organization. The main activities are biofuels research, resources estimation, and development of the use of RE sources.<br />
<br />
The EWPA (Estonian Wind Power Association) was founded in September 2001. Its mission is to advance the wind energy application in Estonia as well as contributing to the main objectives of energy policy in Estonia and Europe.&nbsp;<br />
&nbsp;</p>

Energy planning procedures: 

<p>
The &ldquo;long-term national development plan for the fuel and energy sector until the year 2015&rdquo; was adopted in 2004. The objectives of this plan include the continued security and quality of energy supply at optimal prices, as well as increasing the generation capacity of combined heat and power systems to 20% by 2020. Also included are numerous schemes to increase efficiency at a local and industrial level.<br />
<br />
The Estonian national emissions allowance allocation plan.<br />
<br />
Estonian electricity sector development plan for 2005&ndash;2015.<br />
<br />
Estonia&rsquo;s recent entry into the European Union is influencing its priorities concerning RE. Previous goals to increase the use of renewable energies by 67% by the year 2010 have been met, with renewables accounting for approximately 5% of total energy use in that year.<br />
<br />
Estonia&rsquo;s National Renewable Energy Action Plan was published in 2010, via the Ministry of Economic Affairs. A target of 25% of gross final energy consumption from renewable energy sources was set, as well as proposals for a number of incentive schemes to promote new RES capacity, including investment support schemes for wind and biomass power, as well as increased investment in offshore wind, and changes in the tax system on fuels to promote renewable heat. The plan also details measures for improving transport efficiency, including the mandated blending of all fuels sold in the country with biofuels by 2012, as well as the introduction of a<br />
&nbsp;</p>

Energy regulator Date of creation: 

<p>
The Energy Regulatory Division of the Estonian Competition Authority is the regulatory agency for the electricity sector.<br />
<br />
Since 1 January 2008 the Competition Board, the Energy Market Inspectorate and the area specific regulatory services of the National Communication Board are merged constituting the Estonian Competition Authority, hereinafter the CA.<br />
&nbsp;</p>

Degree of independence: 

<p>
The Competition Authority comprises three divisions, each managed by a head of division. The heads of divisions are at the same time also deputies to Director General. Tasks of the Competition Division are determined by the Competition Act. These are identical to the functions of the former Competition Board. In brief these are: control of mergers, revealing of prohibited agreements and proceedings in connection with abuse of market dominant position. The latter particularly relates to the energy sector, in which a large number of undertakings have dominant position on market.<br />
<br />
The CA&rsquo;s decisions are independent both politically and from energy undertakings, guided exclusively by stipulations of law. The CA&rsquo;s decision cannot be changed or invalidated neither by the Minister nor by the Government.<br />
&nbsp;</p>

Regulatory framework for sustainable energy: 

<p>
Functions and activities of the CA are stipulated by the Government of the Republic Act, by special laws that regulate communications, the postal service, the railways and the energy sector, as well as by the Statutes of the Authority.</p>

Regulatory roles: 

<p>
In compliance with the establishing legal acts, the CA carries out its energy sector market regulatory tasks as follows:</p>
<ul>
<li>
approves prices for electricity and gas network services prior to entry into force (so-called ex-ante price regulation),</li>
<li>
approves methodologies for connecting with electricity and gas networks prior to entry into force,</li>
<li>
approves weighted average prices for electricity sold to non-eligible customers and the price of gas sold to household customers,</li>
<li>
approves district heat prices in case the undertaking&rsquo;s annual consolidated sales are over 50,000 MWh (for undertakings with sales volume of below 50,000 MWh the price is approved by local municipal authorities),</li>
<li>
approves the price for heat produced in the process of heat and power cogeneration,</li>
<li>
settles disputes between local municipal authorities and undertakings supplying district heat on the pricing of heat,</li>
<li>
approves standard terms and conditions of contracts for electricity network services, electricity supply for non-eligible customers and gas supply for household customers,</li>
<li>
issues and revokes activity licences for undertakings providing network services, for producing and sale of electricity, providing of gas network services and sale of gas, producing and sale of district heat; determines the conditions of the issued activity licences and monitors fulfilment of the conditions.<br />
&nbsp;</li>
</ul>

Role of government department in energy regulation: 

<p>
The Ministry of Economic Affairs and Communication deals with energy related issues and tasks. It elaborates and implements the state&rsquo;s economic policy and economic development plans in the fields of industry, trade, energy, housing, building, transport and further sectors.<br />
<br />
The Ministry of Environment has very little influence on energy regulation. The task of the Ministry of the Environment is to organise and coordinate environmental policy.<br />
&nbsp;</p>

Regulatory barriers: 

<p>
As yet the regulatory framework for sustainable energy is still in its infancy in Estonia. While feed-in tariffs for renewable energy schemes are available, there is no dedicated regulatory body, nor are there standardised procedures for the creation or operation of a renewable energy scheme.<br />
<br />
Estonia relies significantly on oil shale (more than 90%) for its energy supply. The availability of production capacity using fossil fuels is thus very high. This unilateral position and the use of cheap indigenous fuel help the country to supply energy at a lower price, which is more affordable by the society at large. Reduction in oil shale consumption, as proposed within the country&rsquo;s long-term energy strategies, is vital in fostering an environment for increased renewable energy use.<br />
<br />
The low potential for solar and large-scale hydro-electric power generation may also be a factor in the slow development of Estonian sustainable energy regulation, despite the country&rsquo;s excellent wind resource.<br />
&nbsp;</p>

References: 

IEA Energy Statistics (2010). Available at: <a href="http://www.iea.org/countries/non-membercountries/estonia/">http://www.ie... [Accessed 15th September 2013]<br />
<br />
Austrian Energy Agency Country Profile - Estonia. Available at: <a href="http://www.enercee.net/countries/country-selection/estonia.html">http://... 15th September 2013]<br />
<br />
ABB (2009) Estonia Energy Efficiency Report. Available at:&nbsp;<a href="http://www05.abb.com/global/scot/scot316.nsf/veritydisplay/0fb7b8f1625a2...$file/estonia.pdf">http://www05.abb.com/global/scot/scot316.nsf/veritydisplay/0fb7b8f1625a2...$file/estonia.pdf</a> [Accessed 15th September 2013]<br />
<br />
Eesti Energia website. The Eesti Energia Group. Available at:&nbsp;<a href="https://www.energia.ee/en/organisatsioon">https://www.energia.ee/en/orga... 15th September 2013]<br />
<br />
Baltic Sea Regional Energy Cooperation.&nbsp;<a href="http://basrec.net/">http://basrec.net/</a> [Accessed 15th September 2013]<br />
<br />
4Energia (2011) Full Transition into Renewable Energy for Estonia by 2050, Ernst &amp; Young 14th Baltic Utilities Seminar, Tallinn, Estonia, 13th May 2011. Available at:&nbsp;<a href="http://www.4energia.ee/wp-content/uploads/2011/05/EY-seminar-050511-v7-2... 15th September 2013]<br />
<br />
Laaniste, M., Ministry of Economic Affairs and Communications (2010) National Renewable Energy Action Plan - Estonia. Available at: <a href="http://www.lsta.lt/files/seminarai/101125_LEI_tarpt_konf/1%20dienos%20pr... 15th September 2013]<br />
<br />
US Department of Energy. An Energy Overview of the Republic of Estonia. Available at: <a href="http://www.geni.org/globalenergy/library/national_energy_grid/estonia/En... 15th September 2013]<br />
<br />
EBRD. Renewable Development Initiative. Estonia Country Profile. Available at:&nbsp;<a href="http://ebrdrenewables.com/sites/renew/countries/estonia/profile.aspx">ht... 15th September 2013]<br />
<br />
EBRD. Strategy for Estonia. September 2009. Updated October 2012 Available at: <a href="http://www.ebrd.com/downloads/country/strategy/estonia.pdf">http://www.e... 15th September 2013]<br />
<br />
European Commission. The Employment Impact of the Opening of Electricity and Gas Markets. Estonia. 2007.&nbsp;Available at:&nbsp;<a href="http://www.epsu.org/a/2939">http://www.epsu.org/a/2939</a> [Accessed 15th September 2013]<br />
<br />
European Commission. 2008 Environmental Policy Review. Estonia.&nbsp;Available at:&nbsp;<a href="http://ec.europa.eu/environment/pdf/policy/epr_2008.pdf">http://ec.europ... [Accessed 15th September 2013]<br />
<br />
European Renewable Energy Council (EREC) Renewable Energy Policy Review Estonia.. 2009. &nbsp;Available at: <a href="http://www.erec.org/fileadmin/erec_docs/Projcet_Documents/RES2020/ESTONI... [Accessed 15th September 2013]<br />
<br />
Energy Market Inspectorate. Estonian Electricity and Gas Market Report. Available at: <a href="http://www.konkurentsiamet.ee/file.php?14653">www.konkurentsiamet.ee/fil... [Accessed 15th September 2013]