Presentation at Aalto University Solar conference Feb. 2016.

1. SOLAR PV
EXPERIENCE,
CHALLENGES AND
OPPORTUNITIES IN
ESTONIA
Andres MeesakAndres MeesakAndres MeesakAndres Meesak
Estonian PV Energy AssociationEstonian PV Energy AssociationEstonian PV Energy AssociationEstonian PV Energy Association
@AndresMeesak@AndresMeesak@AndresMeesak@AndresMeesak

2. Topics:
■ Background / statistics
■ Estonian electricity market
■ Estonian PV sector
■ Challenges and opportunities
■ Conclusions

3. • 9 kW peak power
• Comissioned August 2012
• Generated > 35 000 kWh electricity
Estonian Development Fund – Coop energy mentor
Research topic:
Small scale RE feasibility and economics

4. Statistics...

5. Generation of hazardousGeneration of hazardousGeneration of hazardousGeneration of hazardous
waste per capita in EUwaste per capita in EUwaste per capita in EUwaste per capita in EU
>90% of hazardous waste>90% of hazardous waste>90% of hazardous waste>90% of hazardous waste
generated in Estonia originatesgenerated in Estonia originatesgenerated in Estonia originatesgenerated in Estonia originates
from oilfrom oilfrom oilfrom oil----shale industry (energyshale industry (energyshale industry (energyshale industry (energy
industry)industry)industry)industry)
Statistics...

6. Statistics...

7. Statistics...

8. ■ Fully liberalized market since Jan. 1st 2013
■ Grid regulated, „natural“ monopoly
– TSO – Elering
– DSO – Elektrilevi (87,5% of dist. grid); Imatra, VKG
■ NordPoolSpot area
■ AC frequency controlled from Russia („BRELL area“)
■ AC links to Latvia and Russia
■ 1000 MW HVDC links to Finland (average consumption 1000 -1200 MW, peak 1600MW)
■ RE generation has Feed-In-Premium (FIP) in amount of 53,753,753,753,7 €€€€/MWh/MWh/MWh/MWh (12 years12 years12 years12 years)
■ Average cost of electricity:
– HouseholdHouseholdHouseholdHousehold ((((municipalitymunicipalitymunicipalitymunicipality)))) 125-130 €/MWh incl all taxes and fees (VAT non-deductable)
– SmallSmallSmallSmall////mediummediummediummedium commercialcommercialcommercialcommercial 100-105 €/MWh (low voltage customers, VAT deductable)
– LargeLargeLargeLarge industrialindustrialindustrialindustrial 80-90 €/MWh (medium voltage customers, VAT deductable)
Electricity market setup

9. Electricity spot price and price for household
2012201220122012 2013201320132013 2014201420142014 2015201520152015
MarketMarketMarketMarket liberalisationliberalisationliberalisationliberalisation
in Estoniain Estoniain Estoniain Estonia
600MW EstLink2600MW EstLink2600MW EstLink2600MW EstLink2
HVDCHVDCHVDCHVDC cablecablecablecable launchlaunchlaunchlaunch
Market liberalisation
01.01.2013.
EstLink2
launch
Household consumer price per kWh:

10. Solar PV sector in Estonia
■ Total installed capacity ~ 6MW
■ First grid-connected installations 2012 summer
– 1 M€ kick-off investment subsidy for households
– No regulation for pro-sumer
■ Grid regulation
■ Tax regulation
■ Households with PV installation ~ 500
■ Average power of household installation ~ 7,5kW
■ Annual revenue of the PV sector ~ 4,5 M€ (2015 estimate)
■ Largest installations 300 – 400 kW
■ Several MW-scale projects in pipeline
■ 2015201520152015 –––– historically significant yearhistorically significant yearhistorically significant yearhistorically significant year –––– only capacities comissioned in Estoniaonly capacities comissioned in Estoniaonly capacities comissioned in Estoniaonly capacities comissioned in Estonia
was solar PVwas solar PVwas solar PVwas solar PV

11. - Regulative
- Informational
- Financial
Main barriers for implementing PV
Regulative
Informational
Financial

12. 0
500000
1000000
1500000
2000000
2500000
Co1 Co2 Co3 Co4 Co5 Co6 Co7 Co8
Revenue €
2013 2014
€ 2,6 M
€ 3,7 M
Market size
Market size €
2013 2014
Solar PV market in Estonia

13. Challenges and opportunities:
Regulation...Regulation...Regulation...Regulation...
■ FeedFeedFeedFeed----in Premium (FIP) 53,7in Premium (FIP) 53,7in Premium (FIP) 53,7in Premium (FIP) 53,7 €€€€/MWh/MWh/MWh/MWh
■ Simplified connection to grid up to 11kW
■ Grid fee only on consumption
■ Microgrids not allowed
■ Strict direct line regulations
■ Administrative barriers > 100kW
– Operating licence
– Minimum equity requirement (33k€)
– Limited company requirement
CURRENT regulation:CURRENT regulation:CURRENT regulation:CURRENT regulation: Governing Acts:Governing Acts:Governing Acts:Governing Acts:
• Electricity Market Act
• Grid Regulation
• Alcohol, Tobacco, Fuel and Electricity Excise Duty Act
• State Duty Act
• Construction Act
Regulator: CompetitionRegulator: CompetitionRegulator: CompetitionRegulator: Competition AuthorityAuthorityAuthorityAuthority

14. Challenges and opportunities:
Ever Changing Regulation...Ever Changing Regulation...Ever Changing Regulation...Ever Changing Regulation...
Challenges:Challenges:Challenges:Challenges:
■ Technology neutralityTechnology neutralityTechnology neutralityTechnology neutrality
■ Introduction of auction system for FIPIntroduction of auction system for FIPIntroduction of auction system for FIPIntroduction of auction system for FIP
■ NPS + FIP capped at 93 €/MWh
Opportunities:Opportunities:Opportunities:Opportunities:
■ Capacities < 200 kW exempt from FIP auctionCapacities < 200 kW exempt from FIP auctionCapacities < 200 kW exempt from FIP auctionCapacities < 200 kW exempt from FIP auction
■ Simplified connection to grid < 200 kW
■ No capping
■ Non-discriminative grid fee system
■ Possibility to run microgrids
■ Lifting administrative barriers
– Operation licence > 100kW
– Minimum equity requirement (33k€)
– Type of legal entity (coop)

15. The cost of equitycost of equitycost of equitycost of equity for onshore wind
projects ranged between 6% (Germany)
and more than 15% in Estoniamore than 15% in Estoniamore than 15% in Estoniamore than 15% in Estonia, Greece,
Latvia, Lithuania, Romania and Slovenia
in 2014.
Across all EU Member States, the risksAcross all EU Member States, the risksAcross all EU Member States, the risksAcross all EU Member States, the risks
induced by policy designs is perceived asinduced by policy designs is perceived asinduced by policy designs is perceived asinduced by policy designs is perceived as
most pressing.most pressing.most pressing.most pressing.
Source: The impact of risks in renewable
energy investments and the role of smart
policies. Final Report
More challenges...More challenges...More challenges...More challenges...

16. Source: The impact of risks in renewable energy investments and the role of smart policies. Final Report

17. Energy supply mix with rooftop PV for
household
Electricity from grid
Energy generated
Feed to grid 60-80% Own consumption 20-40%
ValueValueValueValue ofofofof energyenergyenergyenergy fedfedfedfed totototo gridgridgridgrid::::
SpotSpotSpotSpot pricepricepriceprice + FIP (12+ FIP (12+ FIP (12+ FIP (12 yearsyearsyearsyears))))
ValueValueValueValue ofofofof energyenergyenergyenergy consumedconsumedconsumedconsumed onononon sitesitesitesite::::
EnergyEnergyEnergyEnergy gridgridgridgrid pricepricepriceprice forforforfor householdhouseholdhouseholdhousehold inclinclinclincl allallallall
taxestaxestaxestaxes and feesand feesand feesand fees

18. Solar investment and IRR
Household
< 10 (11) kW
Appartment
house
SME
10 - 99 kW
Industrial
Commercial
101 – 500 kW
Utility scale
0,5 - ... MW
DimensioningDimensioningDimensioningDimensioning accordingaccordingaccordingaccording totototo
consumptionconsumptionconsumptionconsumption
IRR: 4,5 ... 8%IRR: 4,5 ... 8%IRR: 4,5 ... 8%IRR: 4,5 ... 8%
NPS MarketNPS MarketNPS MarketNPS Market
pricepricepriceprice (+FIP)(+FIP)(+FIP)(+FIP)
IRR: 3 ... 5%IRR: 3 ... 5%IRR: 3 ... 5%IRR: 3 ... 5%
1,3 – 2 €/W 1,1 – 1,5 €/W 0,9 – 1,1 €/W

19. RooftopRooftopRooftopRooftop PVPVPVPV perspectiveperspectiveperspectiveperspective forforforfor EEEEstoniastoniastoniastonia
Directive of energy efficiency in buildings
(2010/31/EL2010/31/EL2010/31/EL2010/31/EL):
01.01.201901.01.201901.01.201901.01.2019 all state-owned new buildings
01.01.202101.01.202101.01.202101.01.2021 ALL new buildings
NearNearNearNear----zero or net zerozero or net zerozero or net zerozero or net zero----energy buildingsenergy buildingsenergy buildingsenergy buildings
Issued annually in Estonia
1300 - 1500 residential building permits
2300 - 2400 non-residential building permits
3000 buildings X 10 kW = 30 MW peak power = ~ 30 GWh produced electricity per annum
2015 in Estonia ~ 4 MW
PV installed capacity
FromFromFromFrom 2021202120212021 onwards added ~onwards added ~onwards added ~onwards added ~ 30MW30MW30MW30MW PV capacity in form of newPV capacity in form of newPV capacity in form of newPV capacity in form of new
buildings, generating ~buildings, generating ~buildings, generating ~buildings, generating ~ 30 GWh30 GWh30 GWh30 GWh electricity per annumelectricity per annumelectricity per annumelectricity per annum

20. Utility scale PV opportunities
■ Continued focus on own consumption
■ Environmental projects (closed landfill PV parks – 2 X 5MW in development)
■ Combined on-shore wind + PV (pilot Aburi 0,7MW in 2016?, Saaremaa)
– Supplemental resources
– Maximum utilisation of available grid connection capacities

21. Conclusion
■ Policy consistency needed
– Main barrier for investment uncertainty
■ Fossile divestment plan not existing
■ Rather modest growth till early 2020-s
■ Energy efficiency targets are important trigger
■ DSR and storage technologies will also bring boost
– Yet, we need storage 6 months, not 6 hours...

22. Estonian PV EnergyEstonian PV EnergyEstonian PV EnergyEstonian PV Energy AssociationAssociationAssociationAssociation

23. “I’d put my money on the sun and solar energy.
What a source of power! I hope we don’t have to
wait until oil and coal run out before we tackle
that.”
Thomas A. Edison, 1931
TÄNAN!TÄNAN!TÄNAN!TÄNAN!
andres.meesak@gmail.com
Ph: +3725014711