Estonia Assesses Electricity Cost Implications After Joining Continental Grid

Estonia, alongside Latvia and Lithuania, officially integrated into the continental European electricity grid in February. As a result, consumers can expect to see new charges on their electricity bills starting this summer, though the details surrounding the implementation of these charges remain unresolved.

Prior to joining the continental network, Estonia was unaware of the potential costs associated with maintaining frequency stability within the grid. However, initial data from February has begun to shed light on these expenses.
Elering, the Estonian transmission system operator, reported that the costs incurred in February were approximately €5.31 per megawatt-hour. This figure is set to appear on consumer electricity bills in the near future. Despite concerns that February’s typically cold and windy conditions would lead to higher costs due to the first instance of purchasing frequency reserves, the financial impact was less severe than anticipated.
Erkki Sapp, a board member at Elering, noted that the frequency reserve market has functioned largely as expected. While last month’s charge for frequency reservation fell within projected estimates, it remains unclear whether the annual fees will be more favorable than earlier forecasts, as costs tend to vary throughout the year.
“Based on our previous estimates, we projected future frequency management costs to be around €60 million annually, which could lead to an increase in electricity bills for end consumers by several percentage points,” Sapp explained.
Currently, there is uncertainty regarding who will be responsible for collecting the frequency reservation fee starting in July and how it will be implemented. “Discussions are ongoing. Elering is currently analyzing the methodology for calculating the frequency reserve fee, with findings expected by mid-April,” Sapp added.
Additionally, the Ministry of Climate has indicated that there are ongoing discussions about whether to present the frequency reserve fee as a separate line item on consumers’ electricity bills or to allow suppliers the discretion to include it within their overall charges.