ABB Estonia exported over 200 wind generators in 2016

The manufacturer of energy sector and automatics equipment ABB Eesti exported a couple of hundred wind generators with a capacity of 2 to 5 megawatts to Spain, Denmark and Germany during 2015.

“The main markets are Spain, Denmark and Germany. But we exported to countries outside Europe too, such as diesel generators for ships to South Korea,” Matti Pekkarinen, head of the electrical machines division for the Baltic countries at ABB, told BNS.

The power generators and frequency changers for wind generators are manufactured at the plant of ABB Eesti in Jüri not far from Tallinn.

“As far as manufacture and sales go, we are talking about Estonia because we have no manufacturing facilities in Latvia and Lithuania,” Pekkarinen said.

He couldn’t say how big was ABB’s revenue from Estonian exports.

Asked about ABB’s plans in Estonia for the current year, Pekkarinen said that uncertainty in the global economy is affecting also the developers of wind farms and financing of large projects has been postponed.

“Things are better in the outlook for the longer term, especially if we look at the decisions made globally and on the national level that have to do with halting climate change and support a rise in the share of renewable energy,” Pekkarinen said.

Source: Baltic News Service via Estonian Review

Shale oil producer to lay off nearly 500 workers

Citing a continuous significant decline in global oil prices, the northeast Estonia based shale oil producer Viru Keemia Grupp (VKG) announced on Jan.15 2016 it will make approximately 500 employees redundant.

The management board of VKG decided to conserve the oil plants using Kiviter technology. Production of shale oil will continue at three oil shale processing plants using Petroter technology for which oil shale is mined at VKG’s own Ojamaa mine, VKG said.

Source: Baltic News Service via Estonian Review

Energy kept prices moving downwards in 2015

  • 2015 was a year of a sharp fall in commodities prices
  • The majority of the fall in prices in Estonia came from five goods: motor fuels, heating energy, electricity, meat products and dairy products
  • Inflation will be pushed up from February by tax rises

Data from Statistics Estonia show that the consumer basket was 0.9% lower in price in December than a year earlier and 0.7% lower than in November. The price level in Estonia fell by 0.5% over the whole of 2015. Harmonised consumer price inflation for the euro area was 0.2% in December and early estimates suggest that prices did not change over the whole year in the euro area.

The year 2015 was one of a sharp fall in commodities prices as food prices were down 19% on global markets and the oil price fell 47% over the year. A large role in the fluctuation of prices has been played by the development of oil technology and the advances in shale oil, increased oil production, favourable weather, and slower growth in emerging markets that has led demand for commodities to be weaker than expected. The mismatch between demand and supply means that commodities prices may fall further, but prices are already at the level of the middle of the last decade and there is little room for them to descend much more.

The fall in prices in Estonia in 2015 was narrowly based, with the majority of it coming from only five goods: motor fuels, heating energy, electricity, meat products and dairy products. Cheaper prices for those goods had a major impact on the consumer price index though, as they account for about one quarter of the consumer basket. The remainder of the consumer basket rose in price by 1.4% last year.

Food other than alcohol and tobacco was down 0.5% in price during 2015 and the fall in the prices of dairy and meat products was one of the largest in the European Union. Producer and consumer prices for food in Estonia have previously moved more in line with the cycle of rises and falls on the global market than have those in most other European Union countries. It may be expected in consequence that if food prices start to rise on global markets, food price inflation will be higher in Estonia than the average in the euro area.

The decline in the oil price at the start of the new year will restrain prices from starting to rise in the early months of the year at least. Inflation will be boosted from February by the rise in excise on motor fuels and alcohol. Rises in excise will lift inflation by around 0.7 percentage point, though the rise in excise on tobacco in June will only be felt in retail prices in the second half of the year because of stocks built up in warehouses. The impact of administrative factors will be further increased in the second half of the year when the effect of the introduction of free higher education passes out after three years during which it has held inflation down by 0.3-0.4 percentage point. Taking all these factors together, consumer prices will increase slowly in 2016, with the price level forecast to rise by 1.2%.

Source: Bank of Estonia

Author: Rasmus Kattai, Economist at Eesti Pank

Wind energy producers received 32.2 mEUR support in 2015

While in 2014 the Estonian state-owned transmission system operator Elering paid out 26.3 million euros of wind energy support, in 2015 the paid sum is to be around 32.2 million euros.

Last year support was paid for 489 gigawatt-hours of wind energy produced. Elering CEO Taavi Veskimagi said on Monday that by Christmas a record amount of 600 GWh of wind energy had been produced in Estonia this year and by the end of the year the amount should exceed 700 GWh.

By the end of November Elering had paid out renewable energy support for 530 GWh of wind energy. Pursuant to the Electricity Market Act renewable energy support can be paid for up to 600 GWh of wind energy per year which means that no support will be paid for the excess wind energy produced.

Source: Baltic News Service via Estonian Review

Estonia getting less dependent on Russian gas

Estonia’s one-way gas dependence on Gazprom and Russia is in the past, which should mean natural gas, as an environmentally friendly fuel, should be used more in the Estonian economy, says Elering CEO Taavi Veskimägi, adding that Elering’s priority is the creation of a common gas market in Finland and the Baltics.

For years Estonia’s gas dependence on Russia was seen as a security threat, Veskimägi said, adding that this has now changed and Estonia should use more gas.

From January 1, the Estonian gas network will belong to Elering. Elering purchased Gazprom’s 37-percent stake in the nation’s gas transmission network in the summer, having purchased over 51 percent at the beginning of 2015 from Finnish Forum Heat and Gas OY. Elering paid Gazprom 19.9 million euros and Forum 27.5 million. Previously, Elering had only operated Estonia’s power grid.

Energy security expert Andres Mäe said the Balticconnector gas pipeline between Estonia and Finland will raise prices in Estonia. “This will increase the transmission network price for natural gas as someone must pay for the construction of Estonia’s side of the pipeline,” he said.

Mäe added that Finland will win the most as it will then have access to Latvia’s gas storage facilities. He said that the price hike for Estonian consumers will probably be small as the EU is picking up 75 percent of the bill for the construction.

Veskimägi said the pipeline will only be useful if it creates a common gas market between the four nations, creating a larger market with more companies offering gas. Besides the pipeline between Estonia and Finland, the rest of the Baltic nations must also be connected. He said work is currently being done on cost estimates for Balticconnector and the project is top priority for Elering.

Estonia still purchases the majority of its gas from Russia, although gas imports from Lithuania have jumped to 20-30 percent of the market in less than a year. Gas from Lithuania also originates from Russia, but Estonia now imports much of its gas through Lithuania as Russia sells gas to Lithuania cheaper. The rate for Lithuania is calculated on six-month world oil prices, while for Estonia it is calculated on the 9-month average and since oil prices have dropped quickly, Russian gas is sold cheaper to Lithuania.

Source: ERR via Estonian Revew

The producer price index decreased in September

According to Statistics Estonia, in September 2015, the producer price index of industrial output changed by -0.2% compared to August 2015 and by -2.8% compared to September 2014.

In September, compared to the previous month, the producer price index was more than average influenced by a decrease in prices in electricity, gas, steam and air conditioning supply, in the manufacture of chemicals and chemical products and in the manufacture of wood, but also by an increase in prices in the manufacture of electronic products and beverages.

Compared to September 2014, the producer price index was more than average influenced by a decrease in prices in electricity, gas, steam and air conditioning supply and in the manufacture of fuel oils, food products and electronic products, but also by an increase in prices in mining and quarrying.

Read more from Statistics Estonia

Falling energy prices keep consumer prices moving downwards

Data from Statistics Estonia show that consumer prices continued to fall in August, declining by 0.3%, as they had in the previous month. The consumer price index stood 0.3% lower in August than in July. Inflation in the euro area has been stable at 0.2% for the past three months despite significant volatility in the prices of fuels.

Prices of the main sources of energy continued to fall in August as motor fuels were down 14% on the year, natural gas was down 19%, and heat energy was down 5%. Prices of imported energy are still some 30% higher than they were during the crisis in 2009, partly because the euro has been weak against the dollar. Cheaper energy benefits the Estonian economy as it allows consumption to increase, boosting GDP growth. The fall in energy prices in the past year has raised real household incomes by 1.3%. The low price of oil on global markets is likely to prove temporary however, and long-term consumption and investment decisions should not be based on that price.

The remainder of the consumer basket without energy increased in price by 1.1% in August. The share in the consumer basket of goods and services for which prices are falling has shrunk consistently over recent months, and whereas prices were falling for half of all goods and services at the start of the year, in August they were falling for only 43% of them. Having fallen for a long time, the import prices of manufactured goods started to rise from the second quarter. This was probably due to the weaker exchange rate for the euro. The rise in import prices has been more clearly transmitted into retail prices in the euro area but the effect in Estonia has been minor so far. Service price rises accelerated to 2.2% in August, mainly because prices for leisure services and rents rose.

Source: Bank of Estonia

Author: Rasmus Kattai, Economist at Eesti Pank


Get every new post delivered to your Inbox.