Estonia Energy efficiency report

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1 Estonia Energy efficiency report Objectives: 2.1 TWh of end-user energy savings by % share of renewables in final energy consumption by % share of renewables in electricity production by 2020 Overview - (% / year) Primary intensity (EU=100) % ++ CO 2 intensity (EU=100) % ++ CO 2 emissions per capita (in tco 2 / cap) % - Power generation - (% / year) Efficiency of thermal power plants (in %) % ++ Rate of electricity T&D losses (in %) % ++ CO 2 emissions per kwh generated (in gco 2 / kwh) % - Industry - (% / year) Energy intensity (EU=100) % ++ Share of industrial CHP in industry consumption (in %) % Among best countries + Better than the EU average - Below the EU average -- Among countries with lowest performances Latest update: January The European Union, as the best-performing region, is used as the benchmark. 1 Estonia Country reports

2 1. Overview 1.1. Policies: 2.1 TWh of energy savings by 2016 Estonia s National Energy Efficiency Action Plan only covers the period and excludes energy used for transport from the country s final energy consumption. However, the NEEAP sets an energy savings target of 2.1 TWh by 2016 (or 235 ktoe). The program focuses on the more efficient use of fuels in Estonia and involves the investment of a total of 96 million euros (about $130 million) by A Climate and Energy Efficiency Agency (KENA) was created in In, measures on the energy performance of buildings as well as a National Housing Development Plan for were adopted. Energy efficiency labels for buildings have been mandatory since 1 January. The first baseline document for activities in the field of energy efficiency, the Estonian Energy Efficiency Program, was approved in The Government approved a second Energy Efficiency Plan in January ; it was completed in with an implementation plan covering the period Energy consumption trends: slow increase since 1993 Estonia s energy consumption per capita is slightly higher than the EU average (3.5 toe/cap in ). Total energy consumption (primary consumption) increased slightly between and (+0.9 percent/year). In, it dropped by 12 percent as a result of the severe impact of the global economic slowdown on Estonia (-14 percent for the GDP). Figure 1: Total and final energy consumption trends consumption. Between and the share of industry in final energy consumption fell from 37 percent to 27 percent. The energy consumption of the transport sector is increasing rapidly (+3.8 percent/year, on average, between and ), causing the share of transport in final consumption to rise from 17 percent in to 24 percent in. Households and services now account for 49 percent of final consumption, compared with 45 percent in. consumption. Figure 2: Distribution of final energy consumption by sector Households -Services -Agriculture Transport Industry (including non energy use) At around 5,700 kwh/cap, the country s electricity consumption per capita is slightly lower than the EU average (by 6 percent). The share of electricity in final energy consumption grew from 14 percent in to 20 percent in. Indeed, since electricity consumption has, on average, grown 3 times faster than final energy consumption (3.3 percent/year and 1.1 percent/year, respectively, between and ). The industrial sector accounts for 35 percent of electricity consumption, compared with 45 percent in. Mtoe 3 Figure 3: Electricity consumption trends by sector Primary consumption Final consumption 7 6 Industry Others 0 5 TWh Oil shale accounts for 64 percent of primary energy consumption () and its share has remained stable since. Oil and gas account for 11 percent each of primary energy consumption. Biomass consumption has increased steadily over time and now accounts for 14 percent of total energy 1 0 Country reports Estonia 2

3 Estonia Energy efficiency report 1.3. Energy efficiency and CO 2 trends: substantial reductions Over the period - primary energy intensity (primary energy consumption per unit of GDP) fell at the rapid pace of 4.4 percent/year, which is more than twice as fast as the EU average. Nevertheless, the country s primary energy intensity, measured at purchasing power parity, remains 82 percent higher than the EU average. Final energy intensity (final energy consumption per unit of GDP) decreased slightly less rapidly (by 3.8 percent/year). That improvement in energy efficiency is linked to the sharp decrease in the energy intensity of the industrial sector (-7.4 percent/year between and ); efficiency gains were lower between and (-4.1 percent/year), which in part limited the reduction in final energy intensity over that period. CO 2 intensity (CO 2 emissions per unit of GDP) fell by 5.2 percent/year between and ; 47 percent of that improvement was achieved through the fall in final energy intensity, 22 percent through efficiency gains in the energy transformation sector and 21 percent through fuel substitutions in favor of low-carbon energies. Despite that rapid improvement, Estonia s CO 2 intensity remains more than twice as high as the EU average, which is mainly due to the importance of oil shale in the country s energy supply. Figure 4: Energy and CO 2 intensity trends %/year Primary energy intensity Final energy intensity CO 2 intensity 2. Power generation 2.1. Policies: 4.8% share of renewables in electricity production by 2020 Estonia aims to diversify its energy balance, mainly to cut the share of oil shale in the energy balance from 45 percent in to 30 percent by 2020, and to limit the share of oil-shale electricity in the country s gross electricity production to less than 70 percent by 2018 (from 94 percent in ). The National Development Plan of the Energy Sector until 2020 aims to develop renewables. The Renewable Energy Action Plan, adopted in July 2010, sets the target for the share of renewables in electricity production at 4.8 percent by By then, renewable energy should account for 25 percent of final energy consumption. The Development Plan of the Estonian Electricity Sector up to 2018 sets the target for the share of CHP electricity in gross electricity consumption at 20 percent by 2018, and aims to limit distribution losses to less than 6 percent in The Development Plan for Enhancing the Use of Biomass and Bioenergy for 2013 also aims to increase the consumption of electricity produced from biomass-based CHP installations to 3 percent by To support the development of renewables (wind and cogeneration), the Electricity Market Act of offers eligible producers (under 400 GWh/year) two options: they can either sell electricity at a fixed tariff within the framework of the purchase obligation, or they can receive a subsidy and sell electricity at market prices. The transmission system operator, Elering OÜ, reviews its purchase obligation costs every year, and splits them between the distribution companies proportionally to their sales volumes. Green certificates were created in by Eesti Energia, the largest power producer in Estonia Power generation trends by source: oil shale exceeds 90 percent of the power mix Estonia s electricity mix is marked by a national specificity, namely the overwhelming share of oil shale in its energy consumption and electricity production. That share has decreased slightly, from 95 percent in to 91 percent in. Natural gas accounted for 3 percent in, and the shares of wind and biomass are marginal (2 percent and 3 percent, respectively, in ). 3 Estonia Country reports

4 Figure 5: Power generation by source Figure 7: Thermal electricity capacity, by technology Steam TWh Other* Wind Hydro Gas Oil Coal-Lignite GW The rate 1.5 of T&D losses is close to the EU average, at 6.4 percent in. It has been following a decreasing trend *Including biomass, geothermal and solar 2.3. Efficiency of the power sector: efficiency gains since Estonia s power capacity is almost exclusively thermal, and the efficiency of those thermal power plants which use steam technology is relatively low (32 percent in, ie, 7 percentage points lower than the EU average). Nevertheless, efficiency has increased since thanks to retrofitting operations on thermal power plants. Figure 6: Efficiency of power generation and thermal power plants Estonia managed to halve the rate of network losses between and, although it remains high (11 percent in, ie, 69 percent above the EU average). Figure 8: Electric T&D losses % % Total power generation Thermal power plants The average CO 2 emission factor is high because of the importance of oil shale in the power mix (880gCO 2 /kwh in compared with 340gCO 2 /kwh, on average, in the EU). Over the last 15 years it has fluctuated around gco 2 /kwh produced. Country reports Estonia 4

5 Estonia Energy efficiency report Figure 9: CO 2 emissions factor for power generation Figure 10: Industrial energy consumption gco ₂/kWh Mtoe Industry 3.1. Policies: voluntary agreements and promotion of CHP The NEEAP includes measures concerning the industrial sector, such as the provision of training courses for energy efficiency specialists and the analysis of technical solutions to improve energy efficiency. Estonia has introduced energy audits for buildings and mandatory energy consumption reporting. Voluntary agreements in industry were created in to reduce polluting emissions (and indirectly energy intensity, as better energy management and new technologies are introduced). Those voluntary agreements are entered into for 2-3 years by industrial companies or industrial associations and the Ministry of Environment. In the Electricity Market Act was amended to promote CHP electricity generation. CHP producers can either choose to sell electricity produced in installations with capacities under 10 MW and that burn waste, peat or oil-shale processing retort gas as a fixed supply to a seller appointed by the transmission network operator; or they can receive subsidies and sell electricity to the distribution network at market prices Energy consumption trends: sharp drop between and The energy consumption of the industrial sector decreased rapidly between and (-7.6 percent/year on average) and picked up again between and (+3.7 percent/ year); in, industrial consumption fell by 15 percent as a result of the economic crisis, which had a severe impact on the country. The share of electricity in industrial energy consumption is quite high and stable (27 percent in ). Biomass is the second most popular energy source in industry and its market share increased from 14 percent to 19 percent between and. The share of oil and gas declined over the period, from 16 percent to 10 percent in the case of oil, and from 21 percent to 18 percent in the case of gas. The share of coal grew slightly, from 13 percent to 17 percent. Estonia s industrial energy consumption is marked by the relatively low share of energy-intensive industries (45 percent in ). The country does not have a steel industry. The nonmetallic minerals sector (cement) is the largest consuming branch, accounting for 23 percent of industrial consumption in, followed by the chemical industry (15 percent) and the paper sector (7 percent). Figure 11: Energy consumption of industry, by source Biomass Heat Electricity Gas Oil Coal/Lignite 5 Estonia Country reports

6 Figure 12: Energy consumption of industry, by branch Figure 14: Share of Industrial CHP in industrial consumption % 8 16% Other Paper Non metallic minerals Chemical 14% 12% 8% 6% 4% 2% 3.3. Energy intensity trends: rapid gains between and The energy intensity of the Estonian industrial sector decreased by 4.1 percent/year between and. That improvement is linked to efficiency gains in the chemical industry, which is the largest industrial consumer. Efficiency improvements were more modest in the cement and paper industries. Measured at purchasing power parity, the energy intensity of industry in Estonia is 24 percent higher than the EU average (). Figure 13: Trends in the energy intensity of industrial branches % %/year % % % Total* Chemical Cement Paper % -5. *Including construction and mining The share of power generation from industrial CHP installations in the power consumption of Estonia s industrial sector is small (under 4 percent in ), and four times lower than the EU average. All information or data provided by Enerdata, in any form, is the property of Enerdata and is protected in each country by national laws governing intellectual property. All information or data provided by Enerdata is copyright protected, inclusive of material appearing in a hard copy format or electronically. Data provided by Enerdata are based on compilation and analysis of the best sources in the industry. Enerdata has agreements with those providers to use and publish this data. All pictures Copyright ABB Country reports Estonia 6

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