Energy Act changes coming next year in Estonia

TALLINN - Changes in the law on energy and the general situation of the Estonian energy market were discussed at the Power Engineering 2000 forum in Tallinn on Nov. 9 and 10.

Mihkel Parnoja, minister of economic affairs, opened the forum and admitted that the issues of energy were a hot topic this summer.

According to Ell-Mari Koppel, head of the ministry's energy department, the current Estonian law on energy needs changes regarding control of energy producers on the open power engineering market and appropriate conditions for foreign investors.

"The project for changes is ready," said Koppel.

During the first quarter of 2001, there will be some slight changes to the law on energy. Major work - harmonizing Estonian energy law with EU legislation - will start in January 2002.

The smaller energy producers (with less than 50,000 megawatt hours per year) will be under the jurisdiction of local governments, which will set prices for electricity and issue necessary permits. Larger ones will remain under the authority of the Energy Market Inspectorate.

New energy producers now have to wait several months to get a permit from the inspectorate, hampering the development of the power market.

Regarding foreign investors and alternative sources of energy, Aarne Leisalu from Estivo Ltd. said long-term investors have little motivation to fund power production in Estonia because the current law on energy provides suitable conditions and state guarantees only until 2005.

The principal document regarding energy trends is the long term fuel and energy economics plan, which includes a detailed strategy until 2005 and considers basic trends till 2018.

Parnoja said one of the priorities set in the plan is improving the technology of oil shale burning in order to stop environmental deterioration.

Estonia's oil shale resources currently stand at 1.2 billion tons, which will last one more century if the pace of mining remains the same. About 99 percent of all electricity in Estonia is produced by oil shale burning.

Located in the northeastern region of the country, oil shale mines provide 13,000 jobs, according to Eesti Energia.

Parnoja said that in transition countries energy consumption is often higher per capita than in highly-developed economies. "In Estonia energy is often wasted," he said.

Alternative energy sources are not yet widely used in Estonia but will become more significant due to global trends. Today, wind energy is still more expensive here than energy from oil shale burning. But when the tax on carbon dioxide (a byproduct of oil shale burning) is implemented, wind energy might become more attractive, according to Eesti Energia.