District heating to cost more this winter in Estonia than last year
District heating tariffs across Estonia will rise this coming winter compared with last year, largely due to more expensive wood chips, the main heating fuel in most district heating areas. Exact new prices will become clear in the coming months.
Estonia's Competition Authority expects district heating tariffs to increase this winter compared with last year, with one key driver being the rising cost of wood chips, the primary fuel used in the vast majority of the country's district heating areas.
Kertu Saul, head of the Authority's price regulation service, said heat suppliers sign wood chip supply contracts for the heating season roughly between June and September, so not all pricing information has reached the regulator yet. The exact tariff increase will depend on each specific area and its existing contracts, and the Authority stressed that higher fuel costs do not automatically translate into an identical price rise everywhere.
Example from Adven Eesti
One concrete example came from Raivo Melsas, commercial director of Adven Eesti, one of Estonia's largest energy and heating companies, operating in 14 areas. He said Adven's average price increase from September will be around 7%, or an average of €5.8 per megawatt-hour across all regions combined. Adven's tariffs will rise by 3-10% depending on the area.
An exception is Kostivere, where the price will actually drop by 30%. This was achieved through cooperation with the local municipality, which allowed the company to merge the Kostivere area with the Loo district heating area. Prices in Loo will also not rise as a result, since the company reached an agreement there with the municipality on lower lease rates.
Melsas noted that the main reason behind the price increases is the rising cost of wood chips, which itself stems from higher fuel prices needed for transporting chips, hauling them from forests, and logging operations.
Natural gas also a factor
Besides wood chips, the cost of winter district heating could also be affected by rising natural gas prices, which Adven uses alongside wood chips during peak winter load periods. The company says gas prices have recently increased, which could start affecting heating costs as early as October. However, the Competition Authority believes natural gas prices will have a smaller overall effect on Estonia's district heating tariffs, since gas is used in only about 20% of district heating areas, mostly as a backup fuel.
