Estonian companies look to private power

TALLINN - Several companies, from metal processors to cucumber growers, have cut ties with state-owned electricity supplier Eesti Energia and built their own power plants, and several others are currently considering the move.

"Electricity prices are increasing constantly and it is becoming more reasonable to open local power plants," said Urmas Tooming, a spokesman for Baltic Ship Repair, which plans to put power plants online this fall for several of its operations.

The company will open two gas-fired plants in Tallinn's Kopli shipyard, one in the Tallinna Meretehas shipyard and two in Klaipeda's Western Ship Repair Yard.

Each plant will have a capacity of 1.1 megawatts and the Klaipeda generators will also produce heat, Tooming said.

Baltic Ship Repair also plans to supply nearby businesses with power.

Several florists, which need electricity and constant heat year round, are also considering buying their own generators.

Cucumber grower Grune Fee has already made the switch.

The company invested 15 million kroons ($882,000) in a power station in 1997, when it was still a bold concept.

The trend is growing, but Grune Fee manager Raivo Kulasepp says Eesti Energia doesn't have to worry too much yet.

"I don't expect a big increase in the (private) production of electricity until the prices have gone a little higher," said Kulasepp.

He recommends private power if companies intend only to consume electricity and heat they produce themselves.

"It becomes unprofitable when they start distributing it," he said. "Eesti Energia is doing everything in its power to keep the market closed."

Although he sells power generators, Ardo Kuusk recommends that companies think hard before supplying their own power.

"Companies that consume energy less than a megawatt or two and need thermal energy for heating houses in winter time should not bother with it," said Kuusk, director of the diesel generator retailer Baltic Marine Group.Kuusk says he has talked to several florists that are currently considering switching.

But it's not just small companies looking to save a few dollars on power costs that are turning to private power.

Narva textile producer Kreenholmi Valduse, the country's fifth largest electricity consumer, is considering investing 170 million to 220 million kroons in a power plant. Company Director Meelis Virkebau says the investment would pay for itself in six to eight years.

Virkebau said 10 percent of Kreenholmi's annual budget is spent on electricity.

One of Estonia's largest self-sufficient operations is metal producer Silmet, which has had its own power station since it opened in the 1940s.

When the company was privatized in 1997 the new owners doubled the station's capacity and refitted it to produce the factory's heat as well.

"Our power plant enables us to produce less expensive electricity primarily because the final price does not include distribution costs," said Mehis Pilv, the company's development director. "Distribution costs make up roughly half of the consumer price."

Silmet's power station is oil-shale fired and has a capacity of 200 megawatts. It also sells some electricity to neighboring companies.

Silmet's plant produces 200 megawatts of thermal energy that helps supply heating to its home town of Sillamae.

"Today companies are dreaming of establishing their own power plants but in a few years there will be only a few (energy-intensive) companies that haven't considered it at all," said Pilv.