Estonia allocating EUR 15.7 mln for climate-proofing distribution networks

TALLINN - At the proposal of the minister of finance, 15.7 million euros will be directed into Estonia's electricity infrastructure as additional resources this year and the next in order to expedite the climate-proofing of distribution networks.

As part of the process, options for small producers of renewable energy to connect to the networks can also be created, according to the Ministry of Finance.

"At the government's sitting today [Thursday], no one was surprised that there is a clear need to find additional options for expediting investments in the power network," Minister of Finance Annely Akkermann said.

"In the previous months, we have repeatedly experienced power outages of varying duration and impact in different regions of Estonia due to weather and the condition of the power grid. The risk and effects of outages of this scale should be kept to a minimum in the 21st century," the minister said.

Final decisions about directing funds will be made by the companies managing power distribution networks. Akkermann said that every year network companies invest a large amount of funds from the network service fee in improving the quality of the distribution network, and as a result, the number of failures in the network has significantly decreased.

"At the same time, increasing the weather resistance of the entire Estonian network would require more than two billion euros, including the lines between larger settlements needing approximately one billion euros," she added.

Minister of Economic Affairs and Infrastructure Riina Sikkut pointed out that even though investments are first and foremost made from network fees, changes in weather conditions have made the need to weather-proof the power grid more urgent.

"At a recent meeting with Elektrilevi OU and the Saaremaa rural municipality, we arrived at a conclusion that increasing network investments is particularly important on the islands. We also reached an agreement with regard to compensation for last December's storm damage, and the expenses will be covered by Elektrilevi," Sikkut said.

The Ministry of Economic Affairs and Communications, in cooperation with Elektrilevi, is also revising the regulation on quality requirements for network services. The principles of declaring a network emergency, the duration of permitted interruptions and the amount of compensation are being analyzed.

Elektrilevi with its larger than 90-percent share is the biggest distribution network company in Estonia. Elektrilevi CEO Mihkel Harm said that a large share of the additional resources allocated by the government have gone towards strengthening the power grid on Estonia's large western islands.

"We're boosting investments across Estonia; however, weather conditions are more difficult in western Estonia and the islands compared with the rest of the country, which is why we're directing additional funds there. With regard to specific objects, there's the Hiiumaa-Saaremaa sea cable and also investments in strengthening the power networks in Kihelkonna, Jarise and Mustjala," Harm said.

Investments in the power grid would also enable to resolve bottlenecks regarding connecting microproducers of energy to the network.

"As the need for funding is urgent everywhere and the volume of the state budget is limited, we're trying to kill several birds with one stone by weather-proofing networks as well as creating better options for small producers of renewables to connect to the network," Akkermann added.

In order to increase the ability to integrate renewable energy production with the electricity grid, Estonia has already decided previously to channel a total of 74.2 million euros of public sector support through the recovery plan, which allows investments to be made in both the main electricity and distribution networks without increasing consumers' network fees.

The matter of investments in the electricity network was raised in the government by the finance minister last week.