Solar growth may cut power prices but raise grid fees

Expanding solar power could lower electricity prices while increasing network charges, ERR reports. More frequent zero and negative prices during sunny summers are also raising questions about whether renewable energy investments will pay off.

A 74-megawatt solar park has begun operating at the former military airfield in Raadi. It is the largest in southern Estonia and, on paper, can cover half of the electricity needs of households in Tartu. But falling prices during sunny periods pose a serious risk to the park’s profitability.

“With projects like these, you have to think very carefully about when you produce, when you sell and when you store the electricity. There will certainly be quite a lot of shutdowns,” said Kristo Seli, chief executive of the Estiko group.

Researchers say the electricity grid faces a paradox: summer solar generation can push exchange prices down, but connecting more power plants can bring additional costs for consumers. Ivo Palu, a professor at Tallinn University of Technology’s Institute of Electrical Power Engineering and Mechatronics, said new equipment makes the grid more complex and could increase network charges.

The underlying challenge is that electricity production and consumption do not always happen at the same time. “We cannot take the summer solstice sunshine with us into Christmas; different solutions are needed then,” said Toomas Plank, director of the University of Tartu’s Institute of Physics.

Although more energy storage is needed to balance the grid, the state does not plan to require developers to install it, leaving market prices to create the incentive. Energy and Environment Minister Erkki Keldo said hybrid parks can store low-cost solar power and sell it when prices peak, benefiting both developers and consumers.

Estiko plans to build a large battery park at Raadi by the middle of next summer.