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WP2 DH report

Results: Drivers and Barriers for Flexibility in the District Heating-Electricity Interface 5.2. Country Profile: Estonia 26 5.2.1. Main Drivers and Barriers Main barriers for flexibility are baseload operation of CHPs due to FiT, operational custom of generation following demand, lack of heat storages to balance daily load and limited incentives and deployment for P2H technologies due to taxation on electricity consumption when used for heating. Table 6: Framework conditions for flexibility in the DH‐electricity interface in Estonia  ESTONIA  Framework conditions for CHP  Absence of  mandatory  procurement  of electricity  Absence of  feed‐in  tariffs  Absence of  feed‐in  premiums  Presence of  market  pricing for  electricity  Presence of  power  capacity  payments  Presence of  other  subsidy to  CHP  Presence of  tax  exemptions  for fuel to  electricity  production  Presence of  energy, CO2  or other tax  reductions  Presence of  grid  connection  discounts  Absence of  tariffs levied  on CHP for  feeding into  grid  Framework conditions for P2H  Absence of  PSO on  electricity  (when used  for heat  generation)  Absence of  Grid tariffs  on  electricity  (when used  for heat  generation)  Absence of  other levies  or taxes on  electricity  (when used  for heat  generation)  Presence of  reduced  electricity  tax on  electric  boilers  Presence of  reduced  electricity  tax on heat  pumps  Absence of  regulatory  priority to  heat from  waste, RES,  biomass or  geothermal  Presence of  subsidy for  heat pumps  Presence of  subsidy for  electric  boilers     Framework conditions for general resources  Absence of  heat price  regulation ‐  price caps  Absence of  heat price  regulation ‐  flat tariff  structures  Absence of  heat price  regulation –  profit caps in  commercially  owned DH  Absence of  operational  practice of  generation  following  demand  Absence of  tax  exemption  for RES  fuels  Absence of  subsidies  for HO  boilers             5.2.2. Flexibility Options in the DH System DH in Estonia accounts for approximately 44% of the total heat consumption. The heat is produced by HO boilers and CHP units with a share of 62% and 38% respectively. The main fuel types are natural gas and biomass. Estonia has the World’s largest oil-based power plants, supplying the majority of electricity produced in Estonia (Eesti Energia n.d.). 5.2.3. Framework Conditions for CHP in Estonia Current Aspects Co-generation of heat and power is politically prioritized due to efficiency. CHP installations qualify for a FiT, which means that there is no incentive for operating flexibly with respect to the power market conditions and market prices. For the same reason, CHP is used for electricity base load, which in turn reduces the incentive for investing in heat storages.


WP2 DH report
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