Eesti Energia to buy Tootsi wind farm property for €51.5 million

An auction by State Forest Manager RMK for the plot of a would-be wind farm in Tootsi in western Estonia was won by state-owned energy group Eesti Energia. Photo: Eero Vabamägi

An auction by State Forest Manager RMK for the plot of a would-be wind farm in Tootsi in western Estonia was won by state-owned energy group Eesti Energia with a bid of €51.5 million.

Four companies took part in the auction. The second-best bid, €51.45 million, was made by Utilitas. The starting price of the public oral auction was €12.3 million and participants included Tuuleenergia OÜ, owned by Lithuanian state-owned company Lietuvos Energija UAB, UAB Atsinaujinancios energetikos investicijos, Eesti Energia AS and OÜ Utilitas. A total of 784 bids were made at the public auction, which lasted for three and a half hours.

The 160-hectare property of the would-be wind farm is located in Metsaküla village in the territory of the North-Pärnu municipality and is made up of 40 cadastral units. A wind farm will be built at Tootsi that will help Estonia achieve renewable energy goals.

The public oral auction started at 2 p.m. with a starting price of €12.3 million euros. A deposit of €1.23 million euros was required from the bidders, and the participation fee was €3,000. The starting price and the final price are inclusive of VAT.

The government in November 2019 decided to instruct the Ministry of the Environment to put the property of the Tootsi wind farm under its control up for sale at an auction. The government finds that the biggest advantage of selling over constituting a right of superficies is low risk of new legal disputes emerging.

The government on December 9, 2016, endorsed a decision to increase the share capital of Eesti Energia and hand over to the company the Tootsi plot then valued at €4.1 million as a non-cash consideration. In response to the decision, companies submitted complaints to the European Commission and court. On April 28, 2017, the government declared the decision invalid.

Also, on April 27, 2017, the government instructed the Ministry of the Environment to sell the Tootsi wind farm plot at a public auction. AS Eleon, AS Raisner and Tootsi Tuulepark OÜ then contested the decision in Tallinn Administrative Court.

With a ruling on November 5, 2017, the administrative court granted an interim injunction that halted the sell-off of properties designated for a large wind farm at Tootsi by RMK. RMK was forbidden to organize an auction until the ruling has entered into force.

The court rulings with which the complaints were dismissed entered into force with rulings of the Supreme Court on June 11, 2019. In the rulings, the courts found that RMK had the right to organize an auction on the terms highlighted in the rulings.

According to the thematic spatial plan, only a wind farm can be established on the property in question. According to an expert assessment given in 2017 and reiterated in 2019, the starting price of the auction of the Tootsi wind farm plot along with VAT is €12.3 million.

Eesti Energia’s interest in the plot is understandable as it might be eligible for benefits. Existing wind farms qualify for renewable energy support in the volume of €53.7 per megawatt hour for up to 600 gigawatt hours a year or a maximum of €32.2 million.

The old scheme ended in 2018, while new wind energy producers can only qualify for benefits through public underbidding. The law was amended with the interests of consumers in mind as renewable energy support is paid from renewable energy fees.

Public transmission network operator Elering has not yet decided whether the Tootsi wind farm is an existing producer eligible for bigger benefits for 12 years based on the old scheme or a new one. Because the would-be wind farm would have a power output of 138 megawatts, it would get the lion’s share of renewable energy support for the next dozen years.

Utilitas have said they will not be challenging the results of the auction.