Estonian oil shale and biomass electricity plant operational by 2016

26 February 2014 13:33 Source:ICIS
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Estonian utility Eesti Energia said on Tuesday that its 300MW oil-shale and biomass-fired power plant under construction in Auvere near Narva will be finished in 2016, a year later than initially planned.

“Our goal is to maintain current power production capacity. If and what units will be closed in 2016 [when the Auvere project opens] is not clear yet,” said an Eesti Energia spokeswoman.

Eesti Energia supplied 72% of Estonia’s electricity consumption in 2013, according to national transmission system operator Elering.

In a strategic move to decrease the use of oil shale for electricity production, the company said late last week that it declined the option for a second 300MW oil-shale and biomass-fired unit, which had been included in a contract with engineering company Alstom.

“I would not say we are favouring [shale] oil production but the source of power production will be different. In power production the fuels will be more diversified in the future,” said the spokeswoman.

“Eesti Energia recently renewed its strategy and the main focus is on the co-production of shale oil and power. For that we have to expand our shale oil capacity,” she said.

While Eesti Energi intends to expand its shale oil capacity, no new investment decisions have been made so far.

“As shale oil capacity grows, the amount of retort gas and semi-coke that comes from the process will also grow and these side-products will be used for power production,” she said.

Through the co-production of shale oil and power, more energy is extracted out of oil shale, making it very reasonable from an economic perspective, the spokeswoman added.

In its Q3 ‘13 presentation Eesti Energia cited a clean oil-shale spread of €28.50/MWh, up €7.40/MWh year on year, due to an increase in electricity prices, lower CO2 prices and the cost of oil shale.

Emissions-heavy

The Auvere plant will be less emissions-intensive than existing plants and can complement power generation with up to 50% from biomass ( see EDEM 15 May 2012 ).

In 2012, close to 70% of Estonia’s primary energy supply was derived from oil shale, while close to 80% of greenhouse gas emissions came from oil shale combustion at Eesti Energia’s power plants in Narva, according to the IEA.

The European Commission in February approved a free EU allowance allocation request from Estonia, which is one of eight countries that have been granted the right to apply for a derogation to help modernise its electricity sector.

However, according to Eesti Energia, the company has not been allocated any free emissions except for those that were decided on in 2012 by the Commission for the purpose of building the first Auvere unit, which amounted to 18m tonnes of free emission allowances for 2013-2020 as an investment subsidy.

“I’d hope this [free emission allowances] would have a minor role [in Estonian power sector decision-making],” said Estonian Development Fund director Peer Siitam.

A discussion of the Estonian long-term energy development plan for 2030 by the Estonian Development Fund outlined five different electricity generation scenarios in which Estonia’s carbon emissions can vary between 0.1-11m tonnes CO2 equivalent by 2020. Sonja Caymaz

By Sonja Caymaz