Estonia allows shale oil instead of gas for winter heating, but bills may not fall

Estonia's Environmental Board has granted temporary exemptions to two heat producers, Enefit Power in Narva and Utilitas in Tallinn. From 1 November this year to 30 April 2027, they may replace natural gas with shale oil if gas is scarce or too expensive. Shale oil is cheaper, but consumers will also bear the costs of procurement, transportation and handling, so major savings may not materialise.

Conditions of the permit

Enefit may burn 23,000 tons of shale oil over the winter, and Utilitas 20,000 tons. The permit does not necessarily mean the oil will be burned. Erik Kosenkranius, the board's deputy director general for environmental use, said the board assesses the technology while the Ministry of Climate assesses the gas market. Producers must monitor quantities and operating hours, notify the board when they start and stop, and carry out additional checks and sampling. Shale oil causes more air pollution than gas, so existing limit values for air quality outside the production site must be met.

Narva was last heated with shale oil four years ago, when gas prices were extremely high.

Prices and risks

In October the Competition Authority approved maximum district heating prices of €84 per MWh in Tallinn and €137.69 in Narva. Enefit board chairman Raine Pajo said its cogeneration plant offers heat at €74/MWh plus VAT and would be used when prices are higher. Utilitas board chairman Robert Kitt said gas prices have doubled in a year, creating both price and supply risk. Three of Utilitas's four Mustamäe boilers are covered by the permit, and two of them may not run at the same time.

The company VKG has proposed a permanent right to switch to shale oil when gas is expensive. Technical director Raivo Attikas said that currently five percent of its oil is sold domestically, while 95 percent is exported, mainly as marine fuel.