Estonia's solar power boom comes to an end

Lääneranna Municipal Council has ended the detailed planning process for the Alaküla Lodu solar power plant after three separate auctions for building rights on municipal land failed to attract a single bidder.

Deputy Mayor Henrik Raave said the lack of interest reflects a wider trend: demand for new solar parks is falling, while developers are increasingly drawn to data centers, battery storage facilities and wind energy. He noted the municipality has already received inquiries about building a data center in the Lihula area, citing strong grid connections, the planned Estonia-Latvia power line running through the area, and existing solar and wind parks nearby.

The municipality now intends to split the property, excluding protected green land near Matsalu National Park, and launch a new detailed plan for the section bordering the highway. Raave said this area could instead host a data center or a similar industrial facility.

Market saturation

River Tomera, head of renewable energy development at transmission system operator Elering, said the cooling interest in solar parks has been apparent for several years. Estonia's installed solar capacity is now nearly one and a half times the country's summer electricity consumption, he said, which is weighing on electricity prices and cutting into producers' returns.

According to Tomera, the market likely no longer needs additional standalone solar parks, though such projects continue to be built as hybrid facilities combined with energy storage technology, or alongside wind parks where pairing technologies can still make them profitable. He said the sector's growth pace has clearly slowed, and solar parks have not received subsidies for six years.

Looking forward, Tomera said it makes more sense to build solar parks in locations where a nearby consumer can use the electricity generated on site.