Estonia will lease Kiisa power plant instead of selling it

Estonia has dropped plans to sell the Kiisa gas-fired power plant and will instead prepare to lease it to a private company, ERR reported. Elering plans to reduce the plant’s participation in the frequency-reserve market, a move expected to add five cents a month to the average household’s bill.

The Elering-owned plant has a capacity of 250 megawatts, some of which is kept in reserve. The company plans to cut its capacity in the reserve market by 100 megawatts in May, leaving 125 megawatts there after the reduction. Other market participants will be able to take up the capacity Elering releases, said the company’s chief executive, Kalle Kilk.

Consumers and electricity producers pay for Estonia’s frequency reserves. The change will add five cents a month to the average household’s balancing-fee bill, while industrial company Estonian Cell faces an additional annual cost of 100,000 euros.

With new providers entering the reserve market, the state plans to withdraw from it. Energy Minister Erkki Keldo said Elering would reduce its participation by a further 100 megawatts from May next year. The longer-term plan is to prepare the Kiisa emergency power plant for operation by a private company, allowing it to participate in the day-ahead electricity market and help reduce price peaks.

Elering is preparing to lease the plant by the end of next year. Keldo said leasing would allow Kiisa to remain available for security of supply and enter the day-ahead market almost a year sooner than under a sale plan.

The government decided in 2025 in principle to sell Kiisa by the end of 2028. Evecon chief Karl-Joonatan Kvell said the lease plan would delay that process. Evecon, which has a large battery park next to the plant, said it would consider leasing Kiisa if the terms were suitable.