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Estonia

Estonia

Fragile framework and faltering progress -- Baltic states

Looking to nuclear for most new capacity while relying on fragile frameworks for encouraging wind development sums up the status of the three Baltic Sea countries of Latvia, Lithuania and Estonia. Progress on wind development is patchy and slow, but there are grounds for hope. Last year Lithuania took over Estonia's role as the most active market, installing 49 MW in two projects, nearly twice as much as the 26 MW achieved by its neighbour in 2005.

The Baltic countries share a legacy of inefficient energy use as well as sluggish bureaucracies left over from a Soviet-influenced past. But that is combined with a need for new energy to feed growing economies and meet EU goals for clean generation. Carbon dioxide emissions are rising: both Latvia and Lithuania have contested EU efforts for stricter caps on their emissions.

The three countries are looking to join forces with Poland for construction of a EUR 2 billion nuclear plant in Lithuania to replace the Ignalina facility, which must close in 2009. But negotiations between the four are already bogged down. Meantime, they all say they want wind power, with each adopting its own approach to devising a market attractive to investors.

Estonia

In Estonia, the largest of the three countries, no projects came online last year. That was not unexpected. Developers continue to wait for the economy ministry to formalise a contested 200 GWh cap on wind production. The ministry is also working on amendments to the Energy Act of 2001, such as a requirement that wind producers share system load balancing duties. The amendments have been dangling since 2005.

In January, a wild card was thrown into the picture when monopoly utility Eesti Energi issued a tender for 50 MW of new wind at the Tuulepark Balti site in Naerva. That, according to Jan Tepp, head of the Estonian Wind Association (EWA), puts a crimp on smaller developers. "With currently almost 35 MW installed, and 24 MW going online in a couple of months, that gives us about 75 MW to go before we meet the cap -- and Eesti is taking 50 MW of that," he says. "They are a monopoly, producing and buying electricity at the same time. They can move money from wherever they like to pay grid connection charges. That's not very transparent, and it kills other efforts."

This year, Vardar Eurus AB's 24 MW Viru-Nigula wind park will be first to the grid, with the 14 MW Vitsus II (operated by 4energia), the 6.9 MW Kunda (also 4energia) and 3.6 MW Aseri (lead owner Irbeni) plants to follow. Viru-Nigula has the distinction of being Estonia's first project partly funded under the Kyoto protocol's Joint Implementation program

With the 200 GWh cap looming and Estonia's current guaranteed purchase price of EUR 0.051/kWh -- and wind producers possibly shouldering system load balancing costs -- Tepp says he cannot see how Estonia will meet its pledge to boost renewable production to 5.1% by 2010. Today is stands at just over 3% and is increasing by about 0.25% a year.

EWA's goals are modest: a fixed time frame for ending the cap, dropping the load-balancing responsibility and pushing the purchase price to EUR 0.06/kWh. "We're all sitting on nails waiting for a decision [on the amendments], but if nothing is changed we won't meet the target," says Tepp.

Lithuania

Seemingly out of nowhere, Lithuania added 49 MW of new wind capacity in 2006, part of 132 MW granted contracts by monopoly utility Lietuvos Energija since 2005. The two big projects making up most of that total were 15 Enercon 2 MW turbines put up at Veju Spektras near the Estonian northeast coast in Klaipeda county, and 16 MW of Vestas turbines installed by Achema Hydrostotys UAB also in Klaipeda.

Looking to seven per cent

As part of Lithuaia's commitment to reaching 7% renewables electricity by 2010 from 3-4% today, the government declared support for 200 MW of new wind in 2004. Lietuvos then divided the country into six quadrants and divvied up the 200 MW based on how much the grid could handle.

Thus far Lietuvos has issued tenders and awarded contracts for five of the six regions, without giving details of who the contracts have gone to, saying only that the winners are generally those who offered to pay the highest fee (to Lietuvos) for grid connection.

Stasys Paulauskas of the Lithuanian Wind Energy Association says more detailed information on the exact size and estimated completion date for contracted projects is hard to come by. "There will be a few parks of 20-40 MW of capacity, but information about the projects is kept secret by developers," he says. Beyond the 200 MW it is hard to say if a bigger market in Lithuania can be achieved.

Latvia

Lying between Lithuania and Estonia, Latvia has a long coastline with moderate to good wind resources, but has been quiet since the installation of 33 turbines, 19.8 MW, in 2002 at the Veja Parks site to generate 0.7% of the country's electricity together with eight further single turbines scattered inland, making Latvia's total wind capacity just 27 MW. But, surprisingly, the government issued permits for more than 380 MW of new wind in 2006, according to Gunta Slita of Latvia's Institute of Physical Energetics. Latvia also stated last year that it wanted to achieve 100% energy independence by 2016.

To do that the country will have to wean itself from Russian gas imports and heavily bolster renewables generation, including installing at least 700 MW of wind. But even getting to its EU agreement to supply 49.3% of electricity from renewables generation by 2010 may prove hard. There is no wind tariff and bureaucratic and administrative barriers continue to slow or stymie developers, Slita says. The existence of the Latvenergo monopoly utility is not conducive to providing a transparent market for small and medium sized developers. Wind cannot compete with hydro and combined heat and power plants, says Slita. But, she adds, a strong tariff may change that in the near future.

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