Energy producers in Estonia to face tax for underused power generation capacity
The state-owned electricity distribution network operator in Estonia, Elektrilevi, has announced a new fee for unused production capacity for electricity producers, effective from 2026. This fee is designed to regulate and incentivize efficient use of installed production capacity, with the aim to address potential energy shortages and promote better capacity utilization.
Details of the Fee
The fee targets unused installed production capacity of electricity producers, applying a cost to capacity that remains idle or unutilized. The total impact of the measure is significant, with an estimated cost implication of around €1 billion expected to become operative in 2026.
The fee effectively functions as a penalty or charge for producers who do not utilize their declared capacity, encouraging either active participation in electricity generation or capacity release to the market. While the search results do not provide precise details such as the calculation method, exact fee rate, or penalties, they clearly highlight that the fee is connected to the value of unused installed capacity.
Monitoring Periods and Contractual Obligations
The fee applies to all electricity producers, with different monitoring periods based on the completion date of the generating installation. For producers completed before March 2023, the monitoring period covers 2024 and 2025, and the fee will be issued at the beginning of 2026 for both years at once. For producers completed after March 2023, there is an initial period of one year for commissioning the solar park, followed by a two-year monitoring period.
The Electricity Market Act, amended in 2023 and specified in 2025, requires electricity producers to use at least 95 percent of the production capacity agreed in their contract to be supplied to the network. If the actual maximum capacity supplied to the network is less than the contractual capacity, the unused production capacity is calculated and a fee is applied.
Exemptions and Notifications
Certain relief regarding the application of the fee for micro-producers with a capacity below 15 kilowatts is planned to be implemented at the beginning of 2026. This development is currently being worked on at the Estonian Ministry of Climate. Affected customers will be notified by letter and provided with a detailed overview of the topic along with necessary instructions.
Benefits and Long-Term Implications
Making the most efficient use of the network helps to keep the network tariff lower for customers in the long term and to avoid unnecessary network investments. The fee will be issued after the end of the monitoring period. If the full capacity agreed in the contract is not planned to be used, it can be reduced, but the application to reduce the agreed capacity must be submitted no later than Jan. 31, 2026.
The aim of the fee is to optimize the use of the electricity network and free up unused network capacity for new electricity producers. Efficient use of network resources is particularly important in the current situation, where interest in renewable energy production has grown significantly and there are many new applicants wishing to connect to the grid. Ardi Ratassepp, head of infrastructure solutions and customer experience at Elektrilevi, explained that the amendment aims to ensure that electricity producers do not reserve network capacity they do not actually use.
In conclusion, the new fee for unused electricity production capacity is a significant step towards ensuring efficient use of resources in Estonia's electricity market. By encouraging producers to utilize their capacity and freeing up network space for new entrants, the policy aims to contribute to a more sustainable and efficient energy market in the long term.
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