Estonia has achieved an unprecedented increase in photovoltaic (PV) solar installations, adding 513 MW in 2024, marking a historic milestone for the country.

Silver Sillak, director of Eesti Taastuvenergia Koda (the Estonian Renewable Energy Chamber), states that this growth has been driven by the decline in technology costs, financial support from previous solar auctions, and the need to compensate for a 40% annual electricity deficit due to the reduction in oil shale production.

Is Estonia’s Solar Market Reaching Its Limit?

Despite the rapid expansion, the market is already showing signs of saturation. In the summer of 2023, there were 236 hours of zero or negative electricity prices, indicating an oversupply of energy at certain times of the year. This could slow down the expansion of solar capacity in the short term.

Barriers to Growth: Grid Infrastructure Challenges

One of the biggest challenges facing solar energy in Estonia is the electric grid’s capacity to absorb new renewable generation. According to the executive, there are currently areas where even small-scale solar farms cannot be connected due to insufficient grid infrastructure and ongoing reinforcement work.

In this regard, the future success of Estonia’s solar sector will largely depend on the government and grid operators accelerating the construction of new infrastructure and improving the efficiency of connection processes.

The Future of the Sector: Can Estonia’s Solar Capacity Keep Growing?

Estonia’s Energy Development Plan forecasts 1,500 MW of solar capacity by 2030 and over 2,500 MW by 2040. However, the Estonian Solar Electricity Association estimates that, with proper battery storage development, solar capacity could reach up to 3,500 MW by 2050.

“This might seem too optimistic at first, but in reality, all past predictions about solar capacity growth in Estonia have been exceeded by a large margin,” Sillak emphasises.

The Role of Wind Energy and New Offshore Auctions

Despite solar energy’s strong growth, its seasonal variability remains a challenge for Estonia. “Solar plays a key role in the energy mix, especially from March to October. But from November to February, production is very low, which is why other solutions are needed,” Sillak explains.

In that context, the synergy between wind and solar power is an advantage for Estonia. “Wind and solar complement each other well, as wind generation is highest from October to February, exactly when solar production is at its lowest,” the director notes.

The upcoming renewable energy auctions in Estonia will focus on wind energy, as this source is behind solar energy, a technology that has reached a point where it no longer requires subsidies or guarantees for further expansion.

Additionally, recent seabed auctions have granted two new areas to Ignitis Renewables and Deep Wind Offshore, further strengthening offshore wind development in the region.

The Impact of Decoupling from the Russian Grid and Synchronising with Europe

The synchronisation of the Baltic electricity grid with Europe has been a major milestone for Estonia’s energy security. In February 2024, the Baltic transmission system operators (TSOs) successfully disconnected from Russia and Belarus, operating in island mode for over 24 hours before synchronising with Continental Europe.

“This was a vital milestone for our energy security. We freed ourselves from Russian influence risks and strengthened our independence,” Sillak states.

The integration with Europe has created new opportunities for renewable energy, such as the establishment of a Baltic balancing capacity market, which benefits battery storage operators and renewable energy investors.

The Rise of Energy Storage: The Key to Estonia’s Energy Stability

Estonia’s energy storage capacity is expanding rapidly. By the end of 2024, the country had 6 MW of battery storage, but this has now grown to over 30 MW. Additionally, major storage projects are underway, including:

• A 200 MW battery park, set to be one of the largest of its kind in Europe.
• A 500 MW pumped hydro storage plant in Paldiski, expected to be built in the early 2030s.

Estonia’s Energy Development Plan sets a target of 1,000 MW of storage capacity by 2030 and over 1,500 MW by 2040. This will enable higher renewable energy integration and reduce the need for fossil fuel-based dispatchable capacity, such as oil shale and gas power plants, by around 600 MW – approximately one-third of Estonia’s peak demand.

Estonia’s solar sector has experienced explosive growth, with 513 MW added in 2024, but the country now faces new hurdles. Market saturation, grid infrastructure limitations, and the need to scale up energy storage will be decisive factors in shaping the future of the renewable energy sector.

Despite these challenges, Estonia has strong potential to become a regional leader in renewable energy, driven by the combination of solar, wind, and battery storage. With the right policies and grid infrastructure improvements, the country may exceed even the most optimistic growth forecasts.