TALLINN - Eesti Energia officials have refuted rumors that the state-owned utility has dropped plans to construct new, state-of-the-art generation plants fueled by oil shale in Narva. Company spokeswoman Helen Sabrak stressed that the company was proceeding to draw up a detailed plan for the new plants and conduct an environmental impact evaluation, both of which are part of the embryonic phase of the project.
She admitted, however, that no decision about funding construction of the new generating units has been made.
According to previous information, the tender for construction of the new plants should begin in the second quarter of 2007, and the new units should be ready by 2012.
Einari Kisel, head of the energy department at the Ministry of Economy, also said that reports about the cancellation of the new plants, which appeared in the Postimees daily, were inaccurate.
He said that neither the new generating capacities planned in Estonia nor the projects launched in neighboring countries could satisfy the Baltic state's needs. "We are not going to rely on imported electricity," he said.
Estonia possesses sufficient oil shale to provide for the bulk of its domestic electricity needs for nearly two generations. The problem is one of technology since oil shale, as a fossil fuel, contributes to greenhouse emissions.
But Estonian officials are sanguine that technological innovations such as carbon capture will help reduce harmful emissions.
Several years ago Narva Elektrijaamad (Narva Power Plants) finished the reconstruction of two generating units, which now fully comply with the EU's large combustion plants directive.
The old units must be closed by 2016.
Officials warn that if no new units are built, or if none of the older units are reconstructed, Eesti Energia's electricity output by 2012 would drop to 60 percent of current domestic demand.
At least two new units must be operational by 2012 if output is to be maintained at the present level.
In the meantime, there are competition factors to consider. Pursuant to an EU directive, Estonia must open up one-third of its energy market to competition by 2009. The energy monopoly will disappear by 2013, and gradually the market will be deregulated and competition will appear, particularly from Latvia's hydroelectric dams and Scandinavian nuclear power plants. Russia could also ostensibly compete.
Jaanus Arukaevu, Eesti Energia's director of energy trade, was quoted by the Postimees as saying that opportunities on the open, competitive market were immense. Estonia could import electricity cheaper than the kilowatts produced at home from oil shale.
Arukaevu, as well as Eesti Energia board member Tiit Nigol, believe that the state-owned utility may have to give up plans to build more modern oil shale fueled generating units solely based on competition rationale.
"In any case the new generating units must be competitive and able to cope in the conditions of a much larger market," Nigul said.
Such a development would signal a sea-change in Estonia's energy policy, which calls for complete self-reliance.
Kisel of the Ministry of Economy suggested that the principle of self-sufficiency could be abandoned if very definite options existed to get electricity from elsewhere. "But right now we have no such options," he said.
Juhan Parts, the newly appointed minister of economy, said last week that security of supply would remain the key goal in the Baltic state's energy policy, and the government intends to go on with the modernization of the Narva Power Plants.
"Even though the deregulation of the energy market would open up significantly wider opportunities for businesses, ensuring the security of supplies will remain the basis of the national energy policy," Parts said April 25 in a speech at an annual industry conference.
"In a situation where Estonia right now has the cheapest electricity in the European Union, and investments need to be made in the production of elecricity, it is clear that the price of electricity will start to rise, but that price must adequately reflect the market price," Parts said.
Speaking about the need to update the country's energy policy, the former prime minister added that several new directions needed to be explored. The new development plan should be ready by the end of 2008.
