Estonia to replace feed-in premium scheme for renewables and solar with auction mechanism

Estonia’s government is planning to change the law regulating electricity markets, replacing the current feed-in premium scheme for renewable energies with an auction mechanism.

According to Andres Meesak, CEO of the Estonian PV Association, changes in regulation are currently being discussed in Parliament, and details of the new auction scheme will most likely be made public within the next two months.

The association has proposed an extension of the current FIP scheme for installations below 200 kW for a further three years, although the government is considering an extension only for PV systems smaller than 15 kW.

The new regulation is intended to make installation of renewable energy power systems on most new buildings mandatory from 2021 onwards. This measure, according to Meesak, will be particularly favorable to solar, due to the fact that the cheapest way to achieve the zero-energy building (NZB) class is through the installation of a PV system. Meesak claims that from 2021 onwards there will be added PV capacity on new and renovated buildings of up to 25 MW per year.

Under the current regulations, there is a technology neutral feed-in-premium for all renewables, which amounts to €53.7 ($57.1)/MWh, paid in addition to the wholesale electricity price. The FIP is paid only for the electricity injected into the grid, and not on self-consumption.

“Investment support is granted by different governmental agencies from time to time, for the diversification of business in agricultural enterprises, for renovation of apartment blocks, energy efficiency support for schools and other municipal buildings,” Meesak told pv magazine. These measures are not permanent and are announced once or twice a year, depending on the funds available. The investment support usually covers about 30% of CAPEX.”

Estonia’s cumulative PV capacity reached 10 MW at the end of 2016. New additions for 2016 totaled 3 MW, up from 2 MW a year earlier. Meesak forecasts that a further 5 MW of new PV systems could be connected to the local grid in 2017.

Estonia has already reached its target of 25% of renewable energy in gross final energy consumption set by the National Renewable Energy Action Plan. According to a recent report from Eurostat, the country was able to cover 28% of its energy demand with renewable energies in 2015. Most of the country’s renewable energy generation capacity comes from biomass, wind and hydroelectric power stations.