Vital pulp mill shuts after EU state disconnects from Russian grid – media — ApsnyNews Business News

Estonia’s largest pulp mill has halted production due to skyrocketing electricity prices after the Baltic nation disconnected from the Russian-Belarusian energy network (BRELL) and synchronized with the EU’s grid, news outlet Delfi has reported.

BRELL was originally part of the unified Soviet energy system and remained in operation after the USSR’s collapse in 1991, connecting Belarus, Russia, Estonia, Latvia, and Lithuania. Under a 2001 agreement, the five countries committed to sharing electricity and providing mutual support during power emergencies. Earlier this month, the Baltic states severed their ties with BRELL and integrated with the EU’s network.

The move sparked a massive surge in electricity prices in the three Baltic countries. Last week, the average daily price almmost doubled from €126 ($131) to €230 ($240) per megawatt-hour, while peak hours saw prices up to €483 ($505) per MWh, according to the Nord Pool exchange.

The sudden price spike forced Estonia’s largest energy consumer, pulp mill Estonian Cell, to suspend production.

“We stopped production on Tuesday, and now we wait for the next day’s price every day at lunchtime,” Estonian Cell chief financial officer Meelis Kuzma told Delfi Business last week.

Although representatives from Elering, Estonia’s power operator, blamed the price hike on weather conditions and market dynamics, the increase came soon after the country disconnected from the Russian power grid.

The power operator noted reduced wind energy production, increased consumption due to colder weather, and a rise in gas prices as key factors influencing the surge.

“The fact that the price of electricity depends on the weather and thus affects our production is actually absurd!” Kuzma argued.

Estonian Cell has faced significant financial challenges in recent years due to the volatility of energy prices, and has suspended production several times because of soaring electricity prices.

Estonia, Latvia, and Lithuania – all NATO members – have stopped electricity supplies from Russia since the escalation of the Ukraine conflict in 2022, although they maintained their connection to the BRELL grid. The Baltic countries now have to purchase reserve capacity on their own.

Elering said earlier that in 2025, the Baltic states will require around 1,500 MW of balancing capacity, with demand expected to rise amid growing consumption. While most residents in the Baltic countries pay fixed electricity tariffs, price hikes have primarily hit businesses and industries.