Estiko Group CEO says Raadi solar park faces risks from negative prices

Sunny summers are bringing zero and negative prices to the electricity market with increasing frequency, creating distinct profitability risks for solar park developers trying to recoup their investments, news.err.ee reported. Southern Estonia’s largest solar park recently began operating at the former Raadi military airfield.

Summer Sunshine Risks Raadi Solar Park Profitability

The Raadi facility features a capacity of 74 megawatts. The installation could theoretically satisfy half of the electricity needs of households in Tartu. However, summer sunshine and the resulting plunge in wholesale electricity prices pose a significant financial hazard for the producer.

With projects like these, you certainly have to think very carefully about when to generate electricity, when to sell it and when to store it. There will certainly be quite a few instances when production has to be curtailed, said Kristo Seli, CEO of Estiko Group, as reported by news.err.ee.

New Power Plants May Increase Network Fees

Estonia’s electricity network faces a structural paradox. While high summer generation drives wholesale prices down, connecting new power plants introduces fresh infrastructure expenses for consumers.

When we add power plants or solar parks and they generate more energy, that should bring electricity prices down. At the same time, additional equipment is being added to the grid, making it more complex, and that could lead to higher network fees, said Ivo Palu, a professor at Tallinn University of Technology’s (TalTech) Department of Electrical Power Engineering and Mechatronics, according to news.err.ee.

The fundamental difficulty remains the calendar mismatch between generation and consumption peaks. We can’t take the sunshine from Midsummer Day and bring it with us to Christmas. That would require different kinds of solutions, noted Toomas Plank, director of the University of Tartu’s Institute of Physics, cited by news.err.ee.

Hybrid Parks and Battery Storage Lower Electricity Prices

Although grid-balancing storage grows increasingly vital, the government does not intend to impose mandatory storage rules on developers, leaving market prices to dictate investment decisions.

It also makes much more economic sense to build hybrid parks. When the sun is shining, you can generate cheap electricity from solar panels, store it and then sell it on the market when prices peak. Both the developer and, in the long run, the consumer benefit, with consumers getting lower electricity prices.

Erkki Keldo, Minister of Energy and the Environment

Estiko intends to construct a large-scale battery storage facility at the Raadi site by the middle of next summer. The project highlights how future solar operations depend on hybrid configurations to stabilize pricing during periods of low sunlight.