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The Estonian Competition Authority recommends phasing out support for renewable energy

Autor: Johannes Arro
Autor: Johannes Arro

The Competition Authority analysed the support schemes for renewable energy implemented in Estonia as well as their economic impact and recommends transitioning to a market-based solution and phasing out the support for renewable energy.

In 2007, the Electricity Market Act set the period for receiving renewable energy support at 12 years. This means that a producer who launched production in 2007 received support until 2019. Although the full transition to an auction-based system took place in the field of renewable energy in 2021, the producer is still entitled to support for 12 years. The producer building a plant this year will therefore be able to receive support until 2033.

The experience of other countries shows that renewable energy plants can also be built with minimal renewable energy support. Based on the European Union’s Clean Energy package, renewable energy targets should be achieved with the least possible support and under free competition. In time, the costs associated with the production of renewable energy will also decrease and it can therefore be assumed that in the future, most plants can be built without support.

According to Märt Ots, the Director General of the Competition Authority, there is a great potential for renewable energy in offshore wind farms. ‘In some ways, offshore wind farms could be compared to the oil and gas reservoirs discovered decades ago in the North Sea, which have brought considerable wealth to some countries. It is important to put such a resource to use in a transparent way, because that would benefit the state and – via as cheap as possible electricity price – the consumer as well,’ said Märt Ots.

The current support scheme also imposes an unjustifiably large tax burden on consumers, continuing for decades to come. While Estonia has fulfilled its renewable energy commitments, they have not been cheap for consumers: in 2007–2020, the consumers’ tax burden totalled 829 million euros. According to projections, the support paid by the consumers will reach 1.5 billion euros by 2030 and the support is expected to be paid until 2045.

Supporting documents in Estonian:

Veel uudiseid samal teemal

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