Ecology, Energy, Estonia, Legislation

The economy ministry wants the subsidies to the green electricity produced of renewable sources to depend on bourse price – the higher the bourse price, the smaller the support to producers that is financed with renewable energy tax that electricity consumers pay.

The minister tried to get approval to the proposal before the previous parliamentary elections but government partner Reform Party did not agree to that. There is a provision now in the coalition agreement that renewable energy subsidies will be reduced but only in regard to new projects. According to the bill that the ministry made public yesterday, that would be done retroactively.

While companies that receive the subsidy claim that if the state has once promised subsidies, it has to pay, the ministry has a Competition Board analysis that shows that power stations that use hacked timber could cope without the subsidies and wind energy would require a much lower subsidy level than it has now. However some smaller green energy producers have made such a high investment that the current subsidy rate even doesn’t help. The new bill replaces one subsidy rate with a complicated system that takes into consideration the capacity of the power station as well as its energy source.

Supporters of reduction of the subsidy say that the subsidy has done its job well – the share of renewable energy in Estonia's electricity consumption reached nearly 13% last year, more than the set aims. By 2020 20% of consumed electricity should come from "green" sources.