Energy, Energy Market, Estonia

Renewable energy subsidies are forecast to total 90.1 mln euros in 2021, and support for electricity produced in efficient co-generation mode 3.9 mln euros. The volume of electricity to be produced from renewable energy is estimates to total 1,677 gigawatt-hours (GWh) and electricity produced in cogeneration 122 GWh, according to Estonian transmission system operator (TSO) Elering.

Nearly half, or 47% of renewable energy subsidies will be paid out to biomass fueled cogeneration plants. Renewable electricity produced from wind energy will get 32% of the support and solar electricity 18%. The remaining support will be distributed between biogas and hydro power plants.

The volumes of subsidized renewable energy and cogeneration grew 10.9% during the past 12 months, and support was paid out for 1,927 GWh of energy. 

The support paid out to renewable energy producers totaled 103.5 mln euros, of which 88.9% was covered by consumers. The state contributed 12 mln euros in 2020 to the subsidy program, which enables to maintain the renewable energy charge payable by consumers at the same level in 2021 despite somewhat increased renewable energy production volumes and slightly decreased consumption.

The charge is estimated to start decreasing over the next few years as several major producers' 12-year subsidization period is drawing to a close. 

"Elering's vision would see the electricity market operate largely without support, and we a pleased that renewable energy is increasingly competitive on a market basis; within the coming five years, over 60 % of the production capacity will exit the support scheme," Elering CEO Taavi Veskimagi said, adding that as a result, the renewable energy charge should decrease in the coming years.

Renewable energy production was boosted in addition to new production capacities also by excellent wind conditions. 

The renewable energy charge is a cost for financing subsidies for electricity produced from renewable sources or through efficient combined heat and power (CHP) mode and distributed to the grid, the rates for which are set out in the Electricity Market Act.

Under the Electricity Market Act, the authority responsible for calculating the renewable energy charge is Elering, which publishes its assessment of the amounts needed to finance the subsidies on its website by Dec. 1 of each year, based on forecasts submitted by network operators, line possessors, electricity producers using renewable energy and CHP sources, and consumers connected to the Elering electricity network.