Government of the Republic of Estonia

01/13/2022 | Press release | Distributed by Public on 01/14/2022 07:10

The government discussed the current situation and future of the energy market and system

"Unfortunately, the situation in the world with energy prices has put our people and companies in a very difficult situation," said Prime Minister Kaja Kallas. "To alleviate the energy crisis, the government has decided to allocate more than 240 million euros to support people and businesses. Right now, however, it is very important that state aid reaches those in need as smoothly and quickly as possible through local governments. In Tartu, for example, people will receive the support to compensate for the energy price shock today. Before moving on to additional support, we need to map out the impact of current aid measures. I hope that as many local governments as possible will be able to introduce the system of paying support to people as soon as possible."

Speaking about the price crisis in the energy market, the prime minister said that it should become a turning point - the state should rethink the entire energy sector and switch to renewable energy at a much faster pace. "We must accelerate the energy reform without compromising the security of supply of Estonia. Electricity exchange prices show that electricity prices are low where renewable energy is mainly used. At the cabinet meeting today, we took a number of decisions to move forward with the development of renewable energy, in particular those concerning the faster pace of progress with the necessary legislation. The key issue now is to strike a balance between environmental protection and the construction of renewable energy facilities, but it is also very important for the state to offer local governments benefits that ensure that communities agree with the building of wind farms on their land. We must also be ready to initiate discussions on the introduction of nuclear energy in Estonia."

According to Taavi Aas, Minister of Economic Affairs and Infrastructure, in the current situation, the state must support consumers through temporary measures, but we must also work to remove obstacles that would enable faster development of energy projects. "The transition of Estonia to renewable energy can be accelerated and this requires the prioritisation of energy projects when it comes to different national interests. Projects need to move faster from the paperwork stage to the real economy, so that we could contribute to ensuring that we do not experience these price peaks in the future. In addition to creating the conditions for new production capacities to be set up quickly in Estonia, it is very important to strengthen electricity transmission capacities. Initially, they will benefit us because they ensure that all areas have access to cheaper electricity during peak consumption, but in the future, when new domestic power plants start producing, these capacities will be used to export our electricity to neighbouring countries," said Aas.

The cabinet mapped out the problems caused by the procedural processes, the rigidity of nature conservation restrictions, as well as the opposition of local communities, and set a timetable for resolving them. The intensification of electricity storage and the possibility of speeding up the completion of analyses to decide whether a nuclear power plant should be built in Estonia were also discussed.

According to Minister Aas, Estonia is constantly working to increase local renewable energy production and we will see the results in the coming years. For example, the problem of altitude restrictions has been solved, large-scale reverse auctions for renewable energy are being organised, the construction of an Estonian-Latvian offshore wind farm is being prepared, and a maritime spatial plan and a draft local benefit, as well as the national public green procurement, are being prepared.

The government has so far introduced more than 240 million euros in support measures to offset the surge in energy prices. From October to March, each consumer, both an individual and a company, will be reimbursed 50% of the electricity network fee; from December to March, the gas network fee will be reimbursed 100%. To alleviate the problems, the government has cancelled all the planned excise duty increases planned. A targeted measure has been developed for families with a per capita income below the median wage. These households will be reimbursed almost 80% of the increase in energy costs and this measure will cover electricity, gas, and district heating.

Read more about the reimbursement of energy costs here:

Prime Minister Kaja Kallas also met separately with major electricity sellers today. They discussed the problems caused by high energy prices and ways to alleviate the situation of people and companies both in the short and long term.