Baltic Energy Market Interconnection Plan GRIP 2017

3.2 Estonia

3.2.1 ENERGY POLICY

The current version of Estonian Energy Strategy was adopted in 2009. Since then, there have been a number of changes and trend shifts in the energy sector and a new strategy is being developed. The new strategy is presently in a draft status and is expected to be adopted during 2017. The main objective of the new Estonian En- ergy Strategy is to guarantee availability of affordable and environmentally sustaina- ble fuels and energy. The objective is to be achieved by efficiently working fuel and power markets. The strategy foresees 45% of energy demand satisfied by renewa- ble energy and 70% reduction in CO ² emissions by 2030. In gas sector by 2030, the largest supply source shall not have over 70% market share, largest supply compa- ny shall not have over 32% market share and the gas market concentration shall be lower than 2000 measured in HHI  1) . In gas sector, the security of supply, supply source diversification and affordable prices are expected to be delivered by open and competitive regional gas market. For this reason Estonia is abandoning the derogation granted in Directive 2009/73/ EU and is opening the gas market. Abandoning the derogation is in final steps and Estonia has already gone through TSO unbundling from the vertically integrated gas supplier in 2015. The gas market opening has already shown results, as the num- ber of gas suppliers has increased promptly and gas is entering Estonia from new sources. Although gas presently plays a minor role (about 7% of gross energy demand) in the Estonian energy mix, a role for gas is nonetheless foreseen in the future. An increase in gas demand is expected from the transport sector, due to competitive fuel prices, maritime fuel requirements and EU renewable energy goals. In order to meet the tougher emission requirements in maritime transport, LNG will likely increase its share as a fuel. To meet the EU goal of 10% renewable fuels in transport, biometh- ane is expected to play an important role for Estonia. Decrease of natural gas demand in previous years has been caused by national focus on renewable energy and energy efficiency. With funding from national support mechanisms, many district heating networks have switched fuels from gas to biofuels. The national support is given in the form of feed-in premiums for renewable electricity production from CHPs and in the form of investment grants for biofuel boilers. Further, constant efforts on increasing energy efficiency have reduced the total district heating demand.

 1) HHI – Herfindahl-Hirschman index

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BEMIP Gas Regional Investment Plan 2017