INTERVIEW: EstLink-2 outage likely to impact final Estonian consumers - Elering

The suspected sabotage of the 650-MW EstLink-2 power cable on Dec. 25 could lead to higher power prices for Estonian private power consumers, Erkki Sapp, who sits on the management board of the country's transmission system operator Elering, told S&P Global Energy.

This is based on the experience of a previous seven-month outage of the cable, which is the current expectation for the duration of the repairs, although the exact timeline is "not yet known," Sapp said.

"That time, the average price impact on the final price of electricity for private consumers was 10%. This is just a retrospective review, as repair costs are yet unknown, and discussions are still ongoing."

Sapp highlighted that restoring full trade possibilities with Finland remains pivotal, and that therefore fixing the subsea cable is crucial. Finland accounted for nearly 80% of Estonian power imports last year.

Sapp assured that there is no risk to power supplies at this point, and that Estonia's electricity infrastructure is under increased surveillance now to prevent further damage from potential sabotage.

Elering was part of the application submitted by its Finnish counterpart Fingrid to seize the Eagle S tanker earlier this month, identified as one of the principal suspects for the cable damage and accused of dragging its anchor in the Gulf of Finland on purpose.

NATO has pledged increased military presence in the region, including patrolling with frigates and aircraft, as well as the use of naval drones.

Meanwhile, the Baltic grid's disconnection from the Russian grid and subsequent synchronization with the Continental Europe frequency area, respectively expected to be carried out on Feb. 8 and 9, were mainly conceived as an energy security project, although they will also generate important economic benefits, according to Sapp.

"The sync will provide electricity producers and traders with a larger and more flexible market, allowing new types of energy market products and services to be offered. Such services include a reserve for maintaining frequency and a reserve for automatically restoring frequency," he said.

Feasible decarbonization

The country has ambitious plans to decarbonize its electricity mix, with more than a third of it constituted by oil shale capacity in 2024.

"Targets set by the Climate Ministry are feasible," said Sapp, in relation to Estonia's 3-GW onshore-wind capacity goal by 2035.

Auctions for up to 1.9 GW of offshore wind capacity will be offered this year, although Estonia only added 200 MW of wind capacity last year.

"Yearly demand will be fully covered with renewable electricity on a net basis by 2030, then we expect total imports to decrease in the coming years," Sapp said.

He believes that power prices are likely to be lower than last year due to the renewable expansion. The Estonian spot index has been averaging Eur85.90/MWh since Dec. 26, compared with an average of Eur86.58/MWh over Dec. 1-25.