Eesti Energia to establish a renewable energy company
Eesti Energia will merge all renewable energy production within the Group into one company. The company, under the name Enefit Taastuvenergia, will begin to operate all of the Group’s renewable energy production units, and will be one of the biggest renewable energy producers in the Baltic States. The change is part of Eesti Energia’s strategic action plan for the next five years.
Eesti Energia’s strategic action plan for the next five years foresees the use of alternative, including renewable, energy sources nearly doubling. “Whereas today we are producing over 700 gigawatt hours of electricity a year from renewable energy sources, domestic waste and oil shale gas, the objective we have set ourselves for 2020 is to more than double this number. This is nearly a quarter of the electricity consumption in Estonia,” said Hando Sutter, Chairman of the Management Board of Eesti Energia. “To implement our plans, we will merge the fragmented renewable energy production units within the Group under common management,” Sutter added.
To grow its renewable energy production, Eesti Energia is preparing the construction of new wind energy production capacities. Eesti Energia will likely be ready to make its first investment decision in 2017. The company will enter the market with a full-service solution based on solar panels.
The merging of the Group’s renewable energy units is part of Eesti Energia’s strategic action plan for the next five years, which also aims to grow the Group’s sales revenue and profitability under circumstances where energy prices are not improving significantly. “Compared to a few years ago, the current state of and prospects for energy markets have changed dramatically. Electricity and oil prices have hit their lowest levels in the past 12 years. In our strategic action plan, we are focusing on activities that we ourselves can accomplish in order to grow Eesti Energia’s competitiveness and meet its shareholder’s expectations,” Hando Sutter noted.
To achieve its strategic objectives, Eesti Energia is growing the efficiency of its existing oil shale assets through continued technology development; increasing the use of alternative energy sources like wind, biomass, oil shale gas and solar energy in the production of energy; and finding new markets and consumers for its products and services.
For instance, Eesti Energia is preparing the production of shale gasoline from oil shale gas, since its market price is significantly higher than that of the other liquid fuels of the Group, and this makes it possible to increase the volume of shale gasoline produced by Eesti Energia. Furthermore, Eesti Energia has set the objective of connecting large-scale energy consumers with its electricity production assets. For energy consumers, this is an attractive opportunity to lower their energy costs by nearly a third; for Eesti Energia, however, such consumers provide long-term stable demand for electricity.
Since Estonia has met all of its renewable energy objectives, the opportunity will arise to sell renewable energy to countries in the EU not meeting those objectives. Eesti Energia is planning to carry out its first export transactions with renewable energy on the statistics trade market of the European Union in 2017, after amendments to the Electricity Market Act will have entered into force.
In order to achieve higher efficiencies and greater synergies, Eesti Energia’s biggest energy production units, Oil Industry and Narva Power Plants, are going to be merged into a single company. The name of the company is going to be Enefit Energiatootmine.
Furthermore, Eesti Energia is analysing opportunities for expansion both on the Baltic gas market and on new markets for electricity sales in the Baltic region.
The network company Elektrilevi, part of the Eesti Energia Group, on the other hand, will begin providing various free market services related to network management on an increasingly larger scale.
Eesti Energia reviews its strategic activity plan annually. The purpose of the process is to assess the prospects for energy markets and to bring the Group’s activities in its operating environment, including in technology development, into conformity with the changes that have occurred in market organisation and in the environmental requirements. Furthermore, the Group’s ability to meet its shareholder’s expectations needs to be analysed in the light of the updated data.