Ando Leppiman on how Estonia has become a digital leader

Mindset is a key driver for Estonia’s digitalisation of the energy sector, says Energy chief Ando Leppiman.
Published: Wed 31 Jan 2018

While western European countries tend to get the lion’s share of media coverage, their eastern neighbours are often equally if not more advanced when it comes to the energy transition.

Digitalisation is fundamental to the prosumer driven decentralised market and an example is Estonia, which has been at the forefront. The country was an early deployer of smart meters and for example, already is readying itself for electric vehicles with a nationwide charging infrastructure.

How has this digital advantage been achieved?

Digital culture

According to Ando Leppiman, Deputy Secretary General for Energy at the Ministry of Economic Affairs and Communications, when he read the European Clean Energy Package he was struck with its similarity to Estonia’s Electricity Market Act.

“It’s a mindset of using digital tools wherever possible,” he says.

For a country similar in area to the Netherlands, but with just a tenth of the population, digital solutions are necessary to maintain the provision of services at viable levels.

The wave started in the financial sector – “digital solutions are cheaper than keeping the neighbourhood post office open” – and subsequently consumers have demanded their availability from providers in other sectors.

 

Ando Leppiman discusses Estonia's approach to smart energy. 

Energy market liberalisation

In the energy sector, a key driver for the implementation of smart solutions was to optimise the system and make it easier to understand, Leppiman says.

“When we started liberalising the market, we ran a huge campaign which reached 98% of the population.”

Leppiman points to two innovations which Estonia introduced. One is the development of a central data collection platform, from which retailers can develop and offer services to consumers and which has benefitted from falling electricity prices.

The second is the smart meter rollout, which was pursued despite a poor business case.

“We’ve benefitted from aspects such as reduced grid losses and increased customer satisfaction and these positive benefits have made the business case work,” Leppiman says.

“All consumers are now metered on an hourly basis and about 40% buy electricity at wholesale tied prices,” he comments on outcomes of these innovations.

Market regulation

Looking ahead to the implementation of the Clean Energy Package, Leppiman says the first step should be to resolve outstanding aspects of the 3rd Energy Package, such as unregulated prices and capacity mechanisms.

Then he recommends a stepwise approach, gaining understanding and building regulation on that.

“We’ve had a discussion with the ICT sector in Estonia who have asked to allow testing of use cases and regulation when these become commoditized,” he says.

“We need to understand and let it roll.”

With Estonia’s track record to date, it will be a country to watch as the energy transformation evolves. Its plans are ambitious and under the current Energy Development Plan include achieving a 50% share of renewable energy in final consumption and 80% of the heat generation by 2030.

Reductions in outages, improved building energy efficiency and and near zero energy new buildings also are targeted.

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