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March 1 to be set as line between old, new renewable producers in Estonia

Estonian news - eteap February 1, 2013

Baltic News Service, 01.02.2013

The economic affairs committee of the Estonian parliament has decided to change the electricity market bill currently handled by the Riisgikogu in such way that the dividing line between old and new renewable producers determining the right to renewable generating subsidy would be set on March 1 this year.

The original watershed date in the bill is July 15, 2012.

The chairperson of the standing committee explained to BNS that the line cannot be set in accordance with the date when the law comes into effect because its coming into effect is linked to the European Commission’s state aid permission.

“We will send the bill to the plenary in second reading and make a proposal to suspend the reading,” Kallas said. After that the Ministry of Economy and Communications will be able, on the basis of the text of the bill for the second reading, to ask the Commission for a final permission to give state aid. When that has happened the second and third reading would take place, she explained.

If the expenses incurred by the producers to link up to the transmission network were included in the sums eligible to support, the cost for the consumer would rise by 227 million euros. “Nobody would swallow that,” Kallas said.

“The producers that mostly have problems are producers of wind energy,” Kallas said. The provision that the amount of wind energy to be supported will be capped at 600 gigawatt hours a year was left in the bill. “Now the producers definitely will protest,” Kallas said.

“From the consumer’s point of view the sum will be the same, for the producers it will be a thinner stew.”

Compared with the terms of the memorandum signed between the Ministry of Economy and Communications and producers of renewable energy last year the support will decline, Kallas added.

At the ministry’s proposal, the economic affairs committee tried to word the provision concerning producers of renewable energy is such manner that support on wind energy will be paid within the limits of the cap, but it will not have to meet the four criteria that the rest of renewable energy producers must meet to qualify for support. Under the bill, the producer either must have a functioning generating asset, a building permit to set up an installation, a thermal energy supply agreement, or a positive decision as regards support from the Environmental Investment Center.

To balance off that, the possibility is foreseen now for producers of renewable energy to seek higher support from the national competition authority in case their rate of return remains low. The competition authority would be entitled to decide in favor of higher support, which however must not exceed 53.7 euros per MWh.

For how long the support would be applied remained open at Thursday’s meeting of the parliamentary committee. “There’s no wording on that,” said Kallas. Under one proposal the subsidy scheme would be applied until 2019, but the ministry still needs to come up with its stance on that.

Besides an amendment would be made to the bill entitling to the subsidy also those producers which produce renewable energy for their own needs, such as wood pellet makers or the greenhouse farming company Grune Fee, Kallas said. It will not matter whether or not the producer gives any of its output into the public electricity network.

The committee did not make any changes to the bill as far as the requirement concerning high-efficiency cogeneration is concerned. It also found that the costs related to the origin certificates issued by the electricity transmission system operator should be borne by the generating companies as before. “It’s right to ask money for this from those who get the certificate, it shouldn’t be a cost for the consumer,” said Kallas.


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