1 Märt Ots Energy Market Inspectorate 4 th Baltic Electricity Market Mini-Forum Riga Latest developments in Estonia

2 Amendments in Electricity Market Act Valid from New financing scheme of renewables and co-generation. Tendering for new capacity. EMI-s responsibility to prepare the national report on electricity and gas markets and security of supply.

3 Renewables and co-generation The existing support scheme Renewables only. Power purchase obligation for renewables with fixed price, included to the network tariffs. Fixed price 5,17 eurocent/kWh. Reference price (Narva Power Plants) 2,62 cent/kWh.

4 Renewables and co-generation (cont.) The new support scheme Renewables, peat, small-size co-generation, waste. Increased support. Power purchase with fixed price or direct support with fixed price. Costs separated from network tariff. The customer will receive bill: electricity+network+renewables & co- generation

5 Renewables and co-generation (cont.) New support scheme Fixed price Renewables 7,35 cent/kWh Co-generation, etc. 5,18 cent/MWh Direct support Renewables 5,37 cent/MWh Co-generation, etc. 3,20 €/MWh Reference price (Narva Power Plants) 2,62 cent/kWh. The estimated consumers tariff increase in 4- 5 years perspective +5,50 cent/kWh (+10%).

6 Tendering of new capacity. The regulator may obligate the TSO to start the tendering procedures for construction of new capacities.

7 Electricity market One big player Eesti Energia AS ( 100 % owned by the government) More than 95% market share in generation 93,4% of generation on oil-shale. 85% market share in distribution 99% market share in wholesale Owner of TSO

8 Electricity generation in Estonia

9 Estonia, estimate of demand

10 Security of supply issues Installed capacity at the moment 2450 MW MW of oil-shale capacity at Narva Power Station needs to be replaced by Options: new oil-shale operated capacity, nuclear power station in Lithuania, natural gas?

11 New regulatory period for network tariffs The first 3-years RPI-x regulatory period Bases on calculation of x-factor Annual demand growth 3% (½ of GDP growth) Cost savings 1,5-2,5 % per annum Power loss reduction in distribution network 0,5 % per annum The second 3-years regulatory period

12 Tariffs in EU

13 Tariffs in EU

14 Tariffs in EU The tariffs in Baltics are still on the lowest level in EU For how long?