Estonia is home to a unique circular economy project, the country’s first pumped storage hydroelectric plant currently being built at an oil shale mine in Ida-Virumaa.
The 225MW plant will be constructed using limestone rubble and closed tunnels created during the mining of oil shale. The upper reservoir will be built on a tailings structure, and a closed mine will be used as the lower reservoir.
The project is an extension of energy company Enefit’s sustainability strategy and represents the remarkable progress Estonia is making on its path to energy transition.
Margus Vals, a member of the management board of Baltic energy company Enefit spoke to Pamela Largue about the project and provided insight into the country’s energy transition.
The pumped hydro project
As part of Enefit’s plan to transform the oil shale industry in Estonia to an industry focused on chemicals production and clean energy, the company is looking to use current assets in new ways.
To this end, explained Vals, the existing oil shale mine at Ida-Virumaa is the site of a pumped hydro facility development, a circular economy project designed to impact the whole region.
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According to Vals, the electricity systems of Estonia, Latvia, and Lithuania are currently synchronised with Russia’s grid. However, these countries are planning to connect to Europe’s electricity system, thereby avoiding the use of Russian assets in the future. In order to achieve this energy independence, grid stability is essential, which makes projects like this pumped storage project critical.
The project is unique, said Vals, as the mine needs to remain operational while the project is being built. He explained that mine tailings (pulverised rock that remains after the extraction process) will be used to create a new hill on which the higher reservoir will sit. A closed mine will be used as the lower reservoir.
“At the lower reservoir, the space is already there to store the water. But we need to create a sealed system to ensure part of the mine can continue operating as a mine and not get flooded.”
Enefit is also using different renewable technologies in the project, said Vals. “We will use the sides of the hill to install solar photovoltaics, using a good angle to catch the best sun. Within the upper reservoir, we will use floating solar to maximise the asset.”
A boost for Estonia’s circular economy
Enefit’s overall goal is to transform the oil shale industry into a chemicals industry, thereby becoming carbon neutral and minimising both scope 1 and scope 3 emissions.
To aid this transformation from energy producer to chemical producer, explained Vals, recycling is a key focus for the company. For example, Enefit is working on a project to use alternative resources, such as waste tyres and plastics, to create chemical products.
“Our assets can treat 10% of Europe’s leftover tyres in one year,” explained Vals. “We want to move into Europe to offer a sensible alternative to landfilling tyres.”
Vals explained the purpose is to turn “assets with extraordinary capabilities from problem makers into problem solvers,” while reducing CO2 emissions.
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Currently, Enefit is in the process of gaining the necessary permits for the project, which is expected to begin in Q1 2023.
A greener business model
Besides the need for energy independence through more indigenous generation, there is also a need for more renewable energy throughout the Baltics.
And Vals believes this transition is possible, even without subsidies. “We have piloted a new business model over the past 24 months, where we act as renewables developer but secure the financing through long term PPAs with our clients.
“Three or four years ago, the typical PPA agreement length was 12 months or many purchased power on the day ahead spot index. Two years ago, in our push for more renewables, we offered our clients a ten-year PPA, with a fixed price. The contract secured the funds to develop new assets.”
Vals said many of their clients opted for this opportunity, which ultimately allowed the company to make final investment decisions on six wind parks, a fast-paced development indeed.
The electricity from the wind parks has already been pre-sold through PPAs, before the assets exist, “this is how we make the green transition happen,” said Vals.
Future focus
Enefit is also focused on increasing electrification and using client assets, such as EVs and electric heaters, to introduce greater flexibility and boost renewables consumption.
But most importantly, the team is focused on easing the burden of high electricity prices via automating demand management for clients and piloting smart charging. Said Vals, “Our clients face daily choices whether to pay their electricity bill or buy food for their children. This is not something we can tolerate as a society”.
Improving the situation for a society struggling with record-high bills is at the core of their plans, balanced with achieving energy independence and greener energy for the country and region.
