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Eesti Energia to build its first large-scale energy storage system

Large-scale energy storage devices help to ensure affordable electricity by switching to renewable energy. Estonia will soon have one, at the Auvere industrial complex.

Eesti Energia will build the company’s first large-scale storage system at the Auvere industrial complex later this year to balance the fluctuations in electricity prices caused by the growth in renewable energy production and to support the stability of the electrical system. This is a pilot project to make sure the solution is suitable both in Estonia and the company’s other retail markets.

Kristjan Kuhi, member of the management board of Eesti Energia, explains that the large-scale energy storage device enables participation in the energy and auxiliary services markets to ensure security of electricity supply. “The more production of unmanageable renewable energy we have on the market, the more the electricity system will need storage to keep prices stable. So the development of renewable energy production and storage device plans should, ideally, go hand in hand. In addition, the transition to a 15-minute balancing period and the desynchronisation of the Baltic electricity system from the Russian grid will increase the need for storage,” Kuhi explains.

Estonia is scheduled to be decoupled from the Russian electricity system in 2025, after which the Baltic electricity grids will have to manage their own frequencies. Storage solutions will help to ensure that the electricity system is operational (i.e. that the balance between consumption and generation and frequency is guaranteed). As batteries are able to react very quickly to changes in the electricity system, they are ideal assets for ensuring such “system services”.

The capacity of the large-scale energy storage device is 26.5 megawatts and 53.1 megawatt-hours, which corresponds to the daily consumption of about 6250 households. The storage devices can be used for a wide range of purposes, and the stored electricity can be traded on several electricity markets. This makes storage devices a little more flexible than solar or wind energy. By managing the storage wisely and constantly analysing the electricity markets, it is possible to ensure that the storage will remain profitable for years to come.

This project is a pilot project, which means that the energy company wants to convince itself that it is possible to design similar storage facilities outside Estonia (i.e. in Eesti Energia’s other home markets, in Latvia, Lithuania, and Poland).

“Future storage plans will depend primarily on the outcome of our large-scale energy storage system, but as things stand, the announced storage device will not be the last,” Kuhi says, convinced. “As there are a lot of areas requiring large investments, we will have to keep a close eye on which investments require a quicker undertaking and which ones can wait a few more years. In order to enable more storage device installations in Estonia, Enefit – a subsidiary of Eesti Energia focused on retail business – offers its customers smart battery management, which allows both home and business customers to get a faster return on their investment while contributing to maintaining the balance of the electricity grid.”

How does the energy storage device secure more stable electricity prices?

The addition of weather-dependent electricity generation to the grid makes storage increasingly necessary. Since the wind does not blow and the sun does not shine all the time, its energy needs to be stored. One solution for storing renewable energy is large energy storage devices, which can help to avoid ultra-high electricity prices, as we experienced recently. On the other hand, battery solutions create additional consumption in those low-price hours when electricity production is high or remaining demand is low.

In other words, storage devices help to smooth electricity prices by generating consumption for low-priced hours and creating supply for high-priced hours. This means that for consumers affected by stock market prices, the ultra-high price peaks disappear with sufficient storage capacity, while for generators, the low-priced hours disappear. This, in turn, will make investing in renewable energy more attractive, for example, by setting up a company solar farm.

Who won the deals

The international procurement organised by Eesti Energia was won by the joint tender of Diotech OÜ and Solar Wheel OÜ, with LG Energy Solution supplying the battery technology. According to Mart Moora, member of the management board of Diotech OÜ, the company›s mission is to accelerate society›s transition to carbon-neutral electricity production and consumption.

“To serve our mission, we have, over several years, deliberately developed the ability to design and build battery technologies, as they are key in making renewable energy production controllable,” says Moora. “We are honoured to bring LG Energy Solution’s state-of-the-art storage systems to the Estonian market and to cooperate with Eesti Energia in this pilot project. We will do our best to ensure that the system we are building performs as expected and that the pilot project meets everyone’s expectations.”

Interested in investing in Estonia? Find out more about the country’s energy sector here and book a time via e-Consulting to speak to your personal advisor.

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