The price of heating for consumers is significantly affected by the type of fuel used in its production.
The only undertaking that currently produces heat for the Narva city district heating network is Enefit Power AS, which owns the 11th cogeneration unit of the Balti Power Plant (Balti EJ 11th unit) and sells heat energy to consumers through the network operator AS Narva Soojusvõrk. In 2023, the Competition Authority approved the maximum price of heat in that area at 60.44 €/MWh.
In August 2024, the Competition Authority received Enefit Power AS’s application for approving the maximum price of 96.43 €/MWh for heat produced from natural gas at the Balti Power Plant. The increase in the maximum price of heat is due to the fact that the Balti EJ 11th unit has been in conservation since May 2024, with no changes expected in the near future. Therefore, all the heat needed for the Narva district heating network is produced from natural gas, the high purchase price of which results in a significant price increase for heat consumers in Narva, as well as persistent price pressure and possible security of supply problems in the coming years.
The Competition Authority analysed the data provided in the undertaking’s application and approved the maximum price for the heat produced at 91.13 €/MWh. The Authority also imposed a secondary condition on Enefit Power AS that if the Balti EJ 11th unit is again deployed for electricity production, the undertaking must apply the approved maximum price of heat – 60.44 €/MWh – to cogeneration.
The most important obligation of both the heat producer and the network operator that transmits heat to consumers is to ensure the security of heat supply to consumers. The Competition Authority has the right to assess the economic profitability of heat supply, and since the heat supply of the city of Narva is no longer in line with this principle – to ensure a reliable heat supply at a reasonable price and in line with environmental requirements and consumer needs – the Authority issued a memorandum to AS Narva Soojusvõrk, requiring that it immediately launch a call for tenders for the acquisition of new heat production capacities. Competitive tendering ensures that alternative fuel types could be used for heat production, which would make the price of heat cheaper. Heating undertakings wishing to participate in the tender are guaranteed equal conditions that are in line with the principles of the Competition Act and District Heating Act.
Despite the Competition Authority’s proposals, AS Narva Soojusvõrk did not remove certain terms and conditions from the tender notice, which was sent to the Authority for review before publication. These terms would have prevented the heat purchase tender procedure from being conducted and hindered the connection of sufficient alternative heat production capacities to the network within a reasonable timeframe. Therefore, the Authority issued a precept to eliminate the deficiencies in the notice.
After publishing a notice that met the requirements, AS Narva Soojusvõrk announced in December 2024 that the following heating undertakings expressed interest in concluding a contract in response to the published notice (of the intention to start purchasing thermal energy produced using renewable, fuel-free or carbon-neutral energy sources no later than 01.09.2028): Adven Eesti AS Geothermal Baltic OÜ, Gren Eesti AS, Enefit Power AS ja N.R.Energy OÜ. The undertaking also notified of starting preparation for the tender in accordance with the procedure provided for in the District Heating Act and submitted the heat purchase tender specifications to the Competition Authority for approval. The proceedings are currently still pending. The acquisition of additional heat capacities through a tender procedure will certainly help ensure the security of heat supply for the residents of Narva in the future.