Estonia drops sale of 250 MW Kiisa reserve plant: it will be leased out and its reserve role reduced

Estonia is changing course on the Kiisa emergency power plant. Instead of being sold, transmission system operator Elering's 250 MW gas-fired facility will be leased to a private company, public broadcaster ERR reported on Monday, after Elering announced the first steps on 30 October.

What was decided. At the proposal of Energy and Environment Minister Erkki Keldo, Elering will reduce the plant's capacity counted in the Baltic frequency reserve market by 100 MW from 1 May 2027. According to ERR, 125 MW would remain in that market, taking into account an earlier 25 MW reduction. The lease is expected at the end of 2027 and would allow the plant to take part in all electricity markets, including the day-ahead market.

The figures. According to Elering's analysis, the number of reserve service providers has grown by 185% and offered volumes by 75%. The balancing fee, at €3.73/MWh this year, will be €3.89/MWh from 1 May 2027; in the first months of the year the €2.97/MWh level stays in force. For a household using 250 kWh a month, the bill will rise from May by about 5 euro cents a month, including VAT. Elering estimates that Kiisa's presence on the day-ahead market could lower the electricity price by about €0.9/MWh on average.

Context. In April 2025 the government approved preparations to sell the plant, with an auction no later than the first half of 2028, the year in which the EU derogation allowing it to be included in the frequency reserve expires. Keldo told ERR that leasing keeps the plant as a security-of-supply asset and brings it to the market almost a year earlier than a sale would.

What comes next. Elering is preparing the lease by the end of next year. Karl-Joonatan Kvell, head of Evecon, which operates a large battery park next to Kiisa, told ERR that the company could consider a lease, but that in his view the current government has no mandate for this decision.

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