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Estonia supports allocation of EUR 4 mln to Elering

BC, Tallinn, 10.07.2020.Print version
The Estonian government at a meeting on Thursday approved the allocation of four million euros from the government reserve to transmission system operator (TSO) Elering for the payment of renewable energy subsidies, writes LETA/BNS.

Funds will be allocated from the government reserve to the Ministry of Economic Affairs and Communications for the payment of renewable energy subsidies by Elering AS as provided for in the Electricity Market Act. The balance of the government reserve is 140 million euros, including the supplementary budget 130.7 million euros.


The Ministry of Economic Affairs and Communications said that the allocation is an extraordinary contribution to cover the costs of the increasing renewable energy tariff as the rapid addition of renewable energy producers and good wind conditions increased renewable electricity production this year and, through that, the support paid to electricity producers.


Minister of Economic Affairs and Infrastructure Taavi Aas said that the country has reached a situation where in the first quarter of this year, electricity produced from renewable sources accounted for half of electricity production in Estonia.


"The higher the production volume of green electricity, the more subsidies have to be paid. However, as the renewable energy fee is reflected in the electricity bills of people and companies, the government decided to compensate for the difference," he added.


In the past, the government has also used the proceeds from transnational renewable energy statistics sales contracts to co-finance the local renewable energy support scheme.


Aas said that the renewable energy fee will start to fall in the coming years, as the old production facilities will soon no longer need support and new production units will already be found through lowest bid auctions for renewable energy.


"Last week, the government approved the results of Estonia's first lowest bid auction for renewable energy. While the consumer currently subsidizes renewable electricity at a price of 53.7 euros per megawatt-hour, then with new generation units, it will fall by about half, that is to 25 euros," he said.


As the prices of renewable energy technologies become more competitive and capacity increases, subsidies will decrease further in the future.


In the first five months of this year, the amount of renewable electricity supported reached 881 gigawatt-hours, compared to 759 gigawatt-hours last year.


As electricity consumption has decreased by 3.45 per cent in five months due to warmer weather and structural changes in consumption and production, the financing of renewable energy subsidies requires a higher contribution from electricity consumers through the renewable energy fee.


As of the end of May, 7.95 million euros more has been spent on renewable energy subsidies than consumers have paid in fees for the same period.


In order for producers to receive the statutory renewable energy subsidy, consumers would have had to pay a 1.46 cents renewable energy fee for each kilowatt-hour of electricity consumed starting from August. Currently, the charge is 1.13 cents per kilowatt-hour.


The volume of renewable energy subsidies is forecast to approach 100 million euros this year. In 2019, the same figure was 91.4 million euros. Between 2010 and 2019, Estonian electricity consumers have supported renewable energy producers with 691 million euros.






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