Enefit Power to use shale oil to heat Narva from 1 November

Enefit Power, an Estonian energy company, will start using shale oil instead of natural gas as fuel at the gas-fired boiler house of the Balti power plant in Narva, eastern Estonia, from 1 November. The switch will apply when low electricity exchange prices make it unviable to run the plant's Unit 11, or when that unit is faulty. The aim is to keep district heating in Narva affordable for residents during the heating season.

Permit and rationale

Enefit Power management board chairman Raine Pajo informed the Environmental Board and the Ministry of Climate of the decision. The company had earlier received a temporary permit covering the coming heating season. Pajo said shale oil may be used as an alternative fuel in the gas boiler house for as long as there is a risk of gas supply interruptions or restrictions, or a risk that district heating becomes unavailable to Narva consumers because of excessively high prices.

Pajo said the current gas market situation, including price volatility, rising winter demand and the threat of new supply disruptions, endangers both the reliability of gas supplies and the affordability of district heating in Narva. In his view, heating could become economically out of reach even without an actual halt to gas deliveries. He added that local authorities in Narva share this opinion.

Prices and background

Pajo said the gas market is being aggravated by the crisis in the Middle East, which pushed gas prices in Europe in October to their highest level in four years.

Enefit Power earlier published calculations showing that at current gas prices heating in Narva would cost about 140 euros per megawatt-hour of thermal energy, while with shale oil it would cost about 90 euros. This week the Narva city government sent Enefit Power additional statistical data, on the basis of which the city named 80 euros per megawatt-hour, excluding turnover tax, as the maximum heating price acceptable to residents.