Oil shale oil switch may not cut heating bills

Heat producers may burn oil shale oil this winter to guard against gas shortages, but the fuel’s procurement, transport and operating costs could offset any savings for consumers, ERR reports.

The Environment Board has granted temporary exemptions to Enefit Power in Narva and Utilitas in Tallinn to replace natural gas with oil shale oil from November 1 to April 30. The companies say the measure is intended to protect district heating supplies and reduce the risks of gas supply disruptions and high prices.

Oil shale oil is cheaper than gas but causes more air pollution. Enefit Power may burn up to 23,000 tonnes over the winter, while Utilitas may use up to 20,000 tonnes. The permits require the companies to report when they start and stop burning the fuel, track quantities and operating hours, and carry out additional checks and emissions sampling. They must also stay within existing limits for air pollution beyond their facilities.

The Competition Authority approved new district heating price caps in October: 84 euros per megawatt-hour in Tallinn and 137.69 euros in Narva. The cost of meeting permit conditions, as well as buying, transporting and handling the oil and paying environmental charges, could erase the potential savings.

Enefit Power board chairman Raine Pajo said the company could instead use the Baltic power plant’s cogeneration unit in Narva. He said heat from the plant, which burns a mix of oil shale and wood chips, would cost consumers 74 euros per megawatt-hour plus VAT. The company would use this option when prices are higher, he said, and burn less oil shale oil.

Utilitas board chairman Robert Kitt said the price of natural gas had doubled in a year, creating both price and supply risks. The companies and the Environment Board are still clarifying details of the permit conditions.