Energy sector in Estonia

Estonia's energy sector is undergoing a significant transformation as the country reduces its dependence on oil shale and embraces renewable energy sources. Estonia is making substantial investments in wind, solar, and energy storage technologies, with a goal of achieving carbon neutrality by 2050. To support this transition, Estonia is modernizing its grid and diversifying its energy mix.

As part of its commitment to reach net zero emissions by 2050 and enhance energy security, Estonia is also considering the launch of a nuclear power program, focusing on small modular reactors.

Key opportunities for Canadian energy companies in Estonia

  • Renewable Energy Development: Estonia's commitment to expanding its onshore and offshore wind, solar, biomethane, and hydrogen capacity offers diverse opportunities for Canadian companies specializing in renewable energy technologies and infrastructure development.
  • Nuclear Development: In June 2024, the Estonian Parliament made a pivotal decision to consider nuclear energy production as part of its future energy strategy. It is currently drafting the Nuclear Energy and Safety Act. According to the Resolution, the National Energy Development Plan for 2035 must address the inclusion nuclear energy to ensure a secure energy supply during the transition to climate-neutral energy production. The Resolution highlights potential advantages of nuclear energy, including providing a continuous generation capacity that would help balance fluctuations in renewable energy, contributing to the country's climate neutrality goals, ensuring long-term stable and affordable electricity prices, fostering research and development, and generating economic benefits. However, the Resolution does not grant permission to build a nuclear power plant in Estonia. Licensing for such projects will be initiated by the private sector.
  • Energy Storage Solutions: As Estonia integrates more renewable energy, there is a growing demand for energy storage systems, a sector where Canadian companies can bring their expertise.
  • Grid Modernization and Smart Technologies: Estonia's efforts to update its energy grid and integrate smart technologies offers opportunities for companies providing advanced grid solutions and smart metering systems.

Industry highlights

3.7%

Electricity, gas, steam and air conditioning supply sectors contribution to Estonia's GDP in 2023.

29.1%

Electricity generated from renewable energy sources.

58%

Of Estonia's electricity generation from domestic oil shale, with a target of net-zero by 2050.

€3.1 billion

Output of goods and services in the energy efficiency and renewable energy.

84.4%

Greenhouse gases caused by the energy sector emissions.

481.3 GWh

Expected production of electricity in 2024.

Notable challenges for Canadian Energy companies in Estonia

  • Regulatory Compliance: Navigating EU energy regulations, such as carbon emission limits and renewable energy mandates, can be challenging for companies unfamiliar with the regulatory landscape.
  • Dependence on EU Funding: Many energy projects rely on EU grants and incentives, which often prioritize EU suppliers, potentially limiting opportunities for Canadian companies.
  • Market Structure: Estonia's energy sector is comprised of a few key players in generation and infrastructure, with state monopolies dominating the market.

Estonia's business landscape

Estonia's energy sector is supported by government policies focused on reducing carbon emissions and increasing the share of renewables in the energy mix. With a goal of achieving carbon neutrality by 2050, the country has established specific targets to promote the use of renewable sources such as wind and solar, alongside the development of its nuclear program, while decreasing reliance on domestic oil shale. Active projects include the development of offshore and onshore wind farms, solar parks, and the modernization of the national grid to support smart technologies. The Estonian government provides incentives and support for companies investing in these areas, especially those that align with its long-term sustainability and energy independence goals.

Summary

Estonia is an attractive market for energy companies, especially those specializing in renewable energy, energy storage solutions, and grid modernization. With the development of its nuclear program, it will create opportunities for the small modular reactor (SMR) supply-chain to engage with the emerging nuclear ecosystem. Given its ambitious climate targets, supportive policies, and EU-backed incentives, Estonia's energy sector may offer opportunities for Canadian companies looking to expand their presence in the European energy market.

For more information on energy opportunities in the Estonian market, please contact Annika Jars (annika.jars@international.gc.ca).

Additional Information

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