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Estonian Electricity and Gas Market Reports

Dear readers,

In the matter of developments in the European Union (EU) both the previous year and the first half of this year have been important. The new e electricity market formation package has got aproval and this gives us directions for the coming decade. The EU has set an ambitious goal to continue the electricity market liberalization and following the latest technological advancements to undertake a very clear direction towards carbon neutral energy.

It is good to realise that already today we are one of the most liberalised and well integrated regions in the EU. From 2013, when the market was opened to all consumers, Estonia has been regulating only the monopolies – electricity networks, where free competition is impossible. Contrary, the price of electricity has formed completely in free market conditions and no price regulation has been applied. While some ten years ago we could talk about Eesti Energia as the electricity production monopoly, today they are just an active player in the market. Herewith, an essential indicator is the merger of Eesti Energia and the largest Estonian renewable energy enterprise 4Energia that took place in 2018. It created a lot of discussions and naturally, the Competition Authority, as the authority to give permission to the merger, had to thoroughly weigh whether such a merger is allowable or not. In the defining of electricity market one cannot proceed merely from the Estonian geographic space. We are so strongly integrated with the neighbours that the market region has to be viewed significantly broader. A closer look at the merger decision and detailed figures can be taken on the Authority’s web site, but it can be shortly concluded that in the Finnish-Estonian market zone both undertakings had a 14% market share altogether. Looking at the region even broader, as the Nordic countries’ – Baltic common market, their market share is very small – only 2,5%.