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Estonian ministry proposes renewable energy subsidies to firms with up to 10 pct profitability

Published at: Oct 4, 2010
source: BNS

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Estonian Ministry of Economy and Communications has drafted a bill according to which renewable energy subsidies would from next year be paid only to companies whose return on invested capital is not above 10 percent.

The decision on paying the subsidy would be made by the Competition Board on the basis of the producer's economic results since starting production, justified expenses in the business year preceding the year in which the decision is made, and a 10 percent rate of return on invested capital.

The ministry proposes to pay up to one kroon support per one kilowatt-hour provided electricity has been produced from a renewable source and up to 0.66 kroons per kilowatt-hour if production is based on cogeneration from waste in the sense of the Waste Act, peat, retort gas from oil shale processing or using equipment whose capacity does not exceed 10 megawatt.

The Competition Board will not okay an application for support if the producer has earned operating profit since the start of production and included in prices capital asset consumption that allows it to recoup the investment.

The payment of subsidy will be decided anew every year and support will be paid for up to 12 years since the start of production.

It is planned for the law to become effective on Jan. 1, 2011.

Prime Minister Andrus Ansip said at the governmental news conference on Thursday that he is not in favor of subsidizing the less-profitable and taking away support from the more profitable companies because this would amount to supporting inefficient production. Reduction of subsidies is rather an election issue and support should not be cut "as if by a campaign and hastily," he added.

The Ministry of Economy awaits opinions and proposals regarding the bill by Oct. 15.

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