Electricity prices - Estonia

Estonian Electricity Market

Primary generation sources: Estonia’s power mix is transitioning rapidly. In 2023 about 47% of domestic generation still came from non‐renewable sources (mainly oil shale), with renewables (biomass, wind, solar, hydro) making up the remaining ~53%. By early 2025 Estonia’s installed generation capacity includes roughly 695 MW of wind and 1 210 MW of solar. (For context, in 2023 biomass supplied ~25% of production, wind ~14%, solar ~14% and hydro ~1%.) However, Estonia is phasing out oil shale – its “strategic” indigenous fuel – for power generation. Eesti Energia has announced it will stop burning oil shale for electricity by 2025, in line with EU and national climate policy. (The government plans to end all oil shale power by 2035.) As a result, renewable generation (wind, solar, biomass, imported hydro, etc.) is expected to dominate domestic output by 2025. Estonia is also deeply integrated into the Baltic‐Nordic grid (via EstLink cables to Finland and the planned LitPol Link to Poland), and increasingly imports power. (For example, in 2024 Estonia imported ~5.55 TWh versus ~5.25 TWh generated domestically.)

Trends: Between 2023–2025, Estonia’s generation mix is seeing: (1) Declining oil shale: historic reliance on oil shale (which was ~49% of generation in 2021) is being cut back sharply; by 2025 direct oil shale use ends. (2) Surging renewables: wind and solar capacity have grown quickly (record production of 588 MW wind and 788 MW solar in 2024) and offshore wind projects are under development. (3) Biomass (wood waste, etc.) remains important (≈25% share), often co-fired in combined heat/power plants. By 2030 Estonia aims 100% of annual demand from renewables, a goal propelled by these trends.

2. Electricity Price Formation (Consumers)

End-customer electricity bills in Estonia have three main components: (a) the energy price (what the customer pays per kWh of electricity); (b) the network (grid) fee; and (c) state‐imposed taxes/charges (including the renewable support fee and electricity excise).

• Energy price: Customers can choose a fixed-rate package or a spot‐market (variable) package. In either case, the base energy cost includes the wholesale price (from Nord Pool or hedged/futures contracts), plus the supplier’s margin (to cover risk and operating costs) and any monthly service fee. For fixed‐price contracts the supplier hedges via futures, whereas for spot‐based contracts the price simply tracks the hourly exchange rate. All suppliers must also charge VAT on the energy portion (22% standard rate as of 2025). In practice, electricity prices in Estonia closely follow the Nord Pool Baltic price area (Nordic/Baltic market). Average wholesale prices were €90–87/MWh in 2023–24, but retail rates vary by contract. (As examples, fixed‐price offers in late 2023 were ~13–14 c/kWh, while dynamically‐priced packages can average lower or higher depending on market fluctuations.)

• Network fee: This regulated fee is paid to the transmission/distribution operators (Elering for high-voltage grid; Elektrilevi for local distribution) for delivering power. It covers grid maintenance and expansion. Network tariffs are set (and changed) by the Competition Authority; customers cannot negotiate them. (Elektrilevi is the largest distributor for households.) Distribution charges typically include a fixed monthly access fee (on the order of €1–3 per month) plus a per‑kWh delivery tariff (on the order of ~1.0–1.7 senti/kWh in 2024). These rates rose ~7% in late 2024, averaging ~4.4 senti/kWh nationwide. (Actual tariffs depend on consumption profile and meter type. Customers can check their exact network tariff with their distributor.)

• Taxes and surcharges: On top of the above, Estonian consumers pay two statutory charges per kWh: a renewable energy surcharge and an excise, plus VAT on those charges. Specifically:

  • Renewable support fee: To finance subsidies for renewable and cogeneration producers, consumers pay a “taastuvenergia tasu.” This was 0.84 eurocents per kWh in 2025, down from 1.05 cents in 2024. (Elering publishes the annual rate based on the next year’s forecast support cost.) This charge appears as a separate line item on the bill (with VAT on top).
  • Electricity excise: Estonia imposes an excise tax on electricity consumption. In 2024 this was raised from €1.45 to €2.10 per MWh (≈0.21 c/kWh). The Finance Ministry notes this adds only a few euros per household per year. (Heavy consumers with excise-exempt status pay less, e.g. 0.5 €/MWh.)
  • VAT: All energy and fees are subject to VAT. As of 2025 the standard VAT rate is 22% (rising to 24% in mid-2025).

Thus, a sample residential bill might break down per kWh as follows:

(Exact numbers depend on household consumption and tariff.)

3. Dynamic (Nord Pool) Tariffs

“Dynamic” or spot‐price tariffs are now an option for Estonian consumers. In a dynamic contract, the customer’s per-kWh price varies hourly according to the Nord Pool day-ahead market. In practice, this means the retail price = the hourly spot price + a small per-unit margin + any monthly fee. For example, Alexela’s “Börsihinnaga” package charges the real-time Nord Pool price plus a 0.45 c/kWh margin and a €1.99 monthly fee. Eesti Gaas (Elenger) offers a “Muutuvhinnaga” package at Nord Pool price + 0.64 c/kWh. Other suppliers (Enefit/Eesti Energia, Elektrum/Latvenergo, etc.) offer similar Nord Pool–indexed products. Customers on these plans can save in low-price hours and are exposed to high prices in peak hours; suppliers typically provide apps or notifications so users can track hourly rates and adjust usage. (Nord Pool prices are region-specific; for Estonia the area price is labeled “EE.”)

Link to Nord Pool: Estonia participates fully in Nord Pool’s day‐ahead and intraday markets. Dynamic tariffs simply pass those market prices through to the consumer. All Nordic/Baltic states operate on this integrated electricity exchange. (Wind and solar output in the region can push prices down sharply at times of high generation.) Since prices change every hour, customers on dynamic plans are typically required to have a smart meter (Estonia has rolled out smart metering nationally).

Legal framework: EU law now requires dynamic tariffs to be available. As of 2025 (and indeed from 2023 for large suppliers), energy retailers with >200,000 customers must offer a dynamic (“dünaamilise elektrihinnaga”) contract option. This rule stems from the EU Electricity Directive (2019/944), which Estonia transposed into national law. The legislation specifies that consumers must be informed about how the price will vary and must give clear consent if switching from a fixed‐price to a dynamic contract. In short, Estonian consumers now have an explicit right to choose an exchange‐based tariff if they wish. Nord Pool and Estonian regulators have prepared for this: Nord Pool’s “Electricity Retailer” data service, for example, provides licensed suppliers with the necessary real-time price feeds and APIs to implement dynamic offers.

4. Providers and Dynamic Tariff Offers

Most major Estonian energy suppliers now offer both fixed and dynamic electricity contracts to households and businesses. Notable dynamic-tariff offerings include (sample plans for households):

• Alexela – Börsihinnaga elektripakett (spot tariff). Price = Nord Pool spot + 0.45 senti/kWh (0.0045 €) plus a €1.99 monthly fee. The supplier sends hourly price alerts and allows customers to switch plans freely.
• Eesti Gaas (Elenger) – Muutuvhinnaga pakett. Price = Nord Pool spot + 0.64 senti/kWh. (No fixed monthly fee.) The website explicitly notes the price follows the Nord Pool exchange.
• Enefit/Eesti Energia – Offers “Börsipakett” and hybrid plans (“Paindlik Fiks” package) for residential and business clients. These similarly tie to hourly Nord Pool prices with a stated margin. (For example, Enefit’s marketing notes a variable plan with an ~0.85 senti/kWh margin in summer.)
• Elektrum (Latvenergo) – Provides Nord Pool–linked plans (often marketed as “Börsihind” options) as part of its product lineup for consumers and SMEs.
• Others: Many smaller suppliers and new entrants (such as industrial suppliers) likewise offer spot-indexed contracts, as required by regulation.

These dynamic plans are generally aimed at retail and small business customers who can shift usage to lower-price periods. Large commercial/industrial customers often have bespoke contracts or may still use fixed price agreements, but they too can opt for spot-based pricing via their supplier.

Summary: By 2025 Estonia’s electricity market is characterized by a high share of renewables (driving price variability), complete integration into the Nord Pool exchange, and a regulatory environment that mandates consumer choice of dynamic tariffs. End-user bills are made up of the energy price (market or fixed), network charges (regulated), and statutory levies (VAT, renewable support, excise). The trend toward smart metering and EU policy means most households and businesses now have access to time-of-use (hourly) pricing linked to Nord Pool, in addition to traditional fixed-price packages.

Peak and Off-Peak Hours

Estonia 2024 – Average Hourly Wholesale Electricity Price (Nord Pool)