CITIZENS NEWS

Skyrocketing energy prices in Estonia cause the nation's largest pulp mill to SHUT DOWN

By ljdevon // 2025-02-19

In a dramatic turn of events highlighting the energy crisis gripping Europe, Estonia's largest pulp mill, Estonian Cell, has suspended production due to skyrocketing electricity prices. The shutdown comes after the Baltic nation disconnected from the Russian-Belarusian energy network (BRELL) and synchronized with the European Union's power grid earlier this month. The move has sent shockwaves through the region's energy market, causing electricity prices to surge to unprecedented levels and leaving businesses struggling to cope. Energy dependence: Europe has historically been dependent on Russian energy supplies, particularly natural gas. The conflict in Ukraine and subsequent sanctions on Russia have disrupted these supplies, leading to energy shortages and increased prices. This has forced European countries to seek alternative energy sources, which can be more expensive and less reliable in the short term. Transition to renewable energy: The global push for net zero emissions has led Europe to accelerate its transition to renewable energy sources. However, renewable energy sources like wind and solar are intermittent and require significant investment in infrastructure and storage solutions to ensure a stable energy supply.

Sanctions on Russia backfire, as EU learns it needs Russian energy

Estonia, Latvia, and Lithuania severed their ties with the BRELL network, which was originally part of the unified Soviet energy system, and integrated with the EU's grid as part of a broader effort to reduce energy dependence on Russia. While the move was intended to enhance energy security and align with the EU's green energy goals, it has inadvertently led to a sharp increase in electricity prices. Estonia's power operator, Elering, attributed the price hike to a combination of factors, including reduced wind energy production, increased consumption due to colder weather, and rising gas prices. However, the timing of the price surge, which coincided with the BRELL disconnect, has raised questions about the broader implications of the move. • Price surge: Last week, the average daily electricity price in Estonia almost doubled from €126 (131) to €230 (240) per megawatt-hour. During peak hours, prices soared to €483 ($505) per MWh, according to the Nord Pool exchange. • Impact on businesses: The sudden price spike has forced Estonian Cell, the largest energy consumer in Estonia, to halt production. The company consumes about 25 megawatts of electricity, making it a significant player in the local energy market. • Weather and market dynamics: Elering cited weather conditions and market dynamics as key factors influencing the surge. However, the company's chief financial officer, Meelis Kuzma, dismissed this explanation, calling it "absurd" that the price of electricity should depend on the weather. • BRELL disconnect: The disconnect from the Russian power grid has left the Baltic states to purchase reserve capacity on their own, further exacerbating the situation. Elering has projected that by 2025, the Baltic states will require around 1,500 MW of balancing capacity, with demand expected to rise amid growing consumption.

The legacy of Soviet-Era energy networks

The BRELL network, which remained in operation after the collapse of the Soviet Union in 1991, was a crucial component of the region's energy infrastructure, connecting Belarus, Russia, Estonia, Latvia, and Lithuania. Under a 2001 agreement, the five countries committed to sharing electricity and providing mutual support during power emergencies. The recent decision to disconnect from BRELL marks a significant shift in the Baltic states' energy policy, driven by a net zero carbon push, and the EU's plans for a unified energy market that does not support Russia. The move to disconnect from BRELL is part of a broader strategy by the Baltic states, all NATO members, to reduce energy dependence on Russia. Since the escalation of the Ukraine conflict in 2022, Estonia, Latvia, and Lithuania have stopped electricity supplies from Russia, although they maintained their connection to the BRELL grid until this month. The impact of the energy crisis is being felt acutely by businesses and industries, which are bearing the brunt of the price hikes. While most residents in the Baltic countries pay fixed electricity tariffs, the sudden surge in prices has left companies like Estonian Cell in a precarious position. Estonian Cell has faced significant financial challenges in recent years due to the volatility of energy prices. The company has suspended production several times because of soaring electricity prices, and the latest shutdown is expected to further strain its finances. Interestingly, electricity is almost five times cheaper in neighboring Finland, highlighting the disparities in energy pricing across the region. As Estonia and its Baltic neighbors navigate the complexities of the EU's energy policies and the realities of geopolitical tensions, the recent shutdown of Estonian Cell serves as a stark reminder of the challenges ahead. The transition to a new energy paradigm is fraught with uncertainty, and the consequences of missteps can be severe. In the words of Meelis Kuzma: "The fact that the price of electricity depends on the weather and, it turns out, affects our production, is actually absurd!" Sources include: RT.com Enoch, Brighteon.ai Rus.delphi.ee

power grid EU energy policy Russian Sanctions electricity prices energy dependence geopolitical tensions net zero failure BRELL network Estonian Cell weather vulnerabilities business failure interconnected economy pulp mill