Elering opts not to raise renewable energy charge for 2021

The renewable energy charge collected from consumers for paying the renewable electricity subsidies as set forth in the Electricity Market Act will remain at the same level in 2021 – 1.13 cents per kilowatt-hour, not including VAT.

Renewable energy subsidies are forecasted to cost a total of 90.1 million euros in 2021, while subsidies for electricity generated in efficient cogeneration mode will be 3.9 million euros. An estimated 1677 gigawatt-hours of renewable energy is expected to be generated, and 122 gigawatt-hours of electricity will be generated in efficient co-generation mode.

According to the forecast, nearly half of the renewable energy subsidies – 47 per cent – will go to biomass-powered CHP plants. Wind-sourced renewable electricity will receive 32 per cent of the subsidies and solar power producers will get 18 per cent. The remainder of the subsidies will be distributed between biogas and hydroelectric plants.

The volumes of renewable energy and efficient co-generation for the last 12 months grew by 10.9 per cent and a total of 1927 gigawatt-hours of output was subsidized.  A total of 103.5 million euros in subsidies was paid, of which consumers covered 88.9 million euros. The state contributed 12 million euros into the renewable energy subsidies system in 2020, which will make it possible to leave the charge at current levels given increased renewable energy generation volumes and slightly diminished demand. It is expected that the renewable energy charge will begin decreasing in the years ahead, as the 12-year subsidy period is about to end for a number of large producers.

Elering management board chairman Taavi Veskimägi says Elering is glad the Estonian cabinet found it possible, in spite of the economic situation, to be forthcoming to Elering’s request and cover part of the renewable energy producers’ subsidies from the state budget. “In today’s economic situation, asking consumers to pick up the tab for paying out additional subsidies would be wrong and that would reduce the competitiveness of Estonian exporters. Elering’s vision is that the electricity market should operate largely without subsidies and we are pleased that renewable energy is increasingly competitive on the market, and that over the next five years over 60% of the generating capacity in the current subsidy scheme will ‘graduate’ from the scheme. Thus, the support period for old renewable energy capacities will end and new ones are not expected to join in the same monetary volume. That should lead to a reduction in the renewable energy charge in the years ahead,” said Veskimägi.

In addition to the addition of new generating capacities, the very favourable wind conditions in the year ending also contributed to the increase in renewable energy output. As subsidies are paid out for a maximum of 600 gigawatt-hours of wind output per year, that level will probably be reached in December and wind energy producers will not get further subsidies at the very end of the year. The corresponding level was also exceeded in 2015 when support was not paid out for wind energy in the last week of that year.

The renewable energy charge is the expense on financing electricity subsidies paid for electricity generated from renewable sources or in coefficient co-generation mode and fed into the grid. The levels of the charge are set forth in the Electricity Market Act. On the basis of the Electricity Market Act in force, the charge is calculated by Elering, which prepares and publishes on its website by 1 December of each year an estimate based on forecasts submitted by network operators, direct line possessors, producers of electricity from renewable energy and in efficient co-generation mode and consumers connected to the grid.