ENERGO: Estonia orders analysis on possible merger of two major energy sector players

Estonia announced on October 26 it was commissioning an analysis of how to bring the power distribution network of Estonian grid operator Elektrilevi, which is currently part of the state-owned power generating group Eesti Energia, and the main grid belonging to the transmission system operator (TSO) Elering under a single enterprise.

Rein Vaks, head of energy markets at the Ministry of Economic Affairs and Communications, said that the government wants Elektrilevi to be independent from the Eesti Energia group.

"We need a very strong and impartial distribution network operator in today's electricity market," Vaks was quoted as saying.

An analysis completed in 2019 also concluded that the best course of action would be to separate Elektrilevi from Eesti Energia and merge it with Elering. That way, 5,500 kilometres of the main network and over 90% of the local distribution grid would be brought under a single enterprise.

In a 2019 assessment, the cost savings were estimated to amount to up to €10mn per year. The merger would also help better plan Estonia' electricity network, according to the assessment.

The analysis should reveal how the separation and merger transactions should be carried out in technical terms, what legal amendments are required for this purpose, as well as what the cost and expected revenue of such a move would be. It should also specify how the separation of Elektrilevi from Eesti Energia would affect the group.