Kiisa reserve power plant cost Estonia €1.8 million to maintain last year
Estonian grid operator Elering paid €1.8 million in fixed costs for the Kiisa emergency power plant last year, with the same projected for this year. The operator is preparing to lease out both gas-fired plants.
Estonia's transmission system operator Elering spent €1.8 million last year on the fixed costs of the Kiisa emergency power plant. The same amount is projected for this year, Elering communications specialist Kätlin Klemmer told ERR. The plant also currently takes part in the frequency reserve market under a special permit.
Last week, Elering announced it was starting preparations to lease out the two gas-fired Kiisa plants. The move follows a directive from the current Minister of Energy and the Environment, Erkki Keldo. Last April, the government had backed then-minister Andres Sutt's proposal to begin preparing the plant's sale.
EU exemption expires in 2028
The plant's value to the state and Elering will decline in a few years. A European Union exemption that lets it enter the Baltic frequency reserve market when needed expires in 2028. After that, it may be used only for its original purpose: running during grid disruptions or when generating capacity is insufficient. The two plants have a combined capacity of 250 megawatts.
Elering pays the fixed costs from revenue from its regulated activities. Klemmer stressed that participation in the reserve market is not meant to cover maintenance costs. She said the main benefit is lower costs for consumers: Elering has had to buy less reserve capacity on the market, reducing the balancing capacity cost on electricity bills.
Market participants have criticised the arrangement, saying Elering is effectively buying a service from itself. This year a balancing capacity fee of €3.73 per megawatt-hour was added to bills, costing an average household using 250 kilowatt-hours a month an extra €1.20.
Lease and support
The exact lease terms have not yet been set, so any change in maintenance costs will depend on them. Kiisa-related costs included in Elering's network tariffs would fall by the amount of rental income received. A lessee would not automatically qualify for the support currently tied to keeping the plants in reserve.
Kiisa's costs are small compared with those of Eesti Energia's oil shale-fired plants, which run to tens of millions of euros. Consumers now bear those costs through a security of supply fee, set at €7.58 per megawatt-hour this year excluding VAT. Under an agreement signed last year, maintaining 1,036 megawatts of capacity costs at most €59.5 million a year.
