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In February, the Baltic states switched from Russia’s grid to the EU’s, driving innovation in energy management.
“These chains of power lines linking you to hostile neighbours will be a thing of the past,” European Commission President Ursula von der Leyen declared when the desyncronisation happened.
For Estonia, the transition wasn’t just about politics, it was a test of innovation.
Building an Energy System from Scratch
“Desyncronisation from the Russian grid gave Estonia a unique lesson,” said Hannes Agabus, an energy economics expert at Tallinn University of Technology (TalTech). “In a way, we had to build the system up from scratch again.”
This had to be done in a completely changed environment.
In today’s world, electricity comes from a mix of sources. We no longer rely solely on fossil fuels but also on renewable energy. Each source generates power at different times and intensities. A calm, sunny afternoon produces different energy levels than a stormy winter night.
At the same time, demand is constantly shifting. Cruise ships require a surge of power during tourist season, while homes consume more energy for heating in the winter. It’s a delicate balance of supply and demand – one that’s becoming even more complex as people begin to generate and trade their own electricity.
So, what happens when households and businesses can sell excess energy back into the grid? And how do electricity grids handle this unpredictable exchange?
The Rise of Virtual Electricity Grids
The key is balancing the energy supply in real time. If too much or too little energy enters the grid, blackouts and equipment failures become real risks. That’s where companies like Estonia’s Fusebox come in.
Fusebox integrates renewable energy production, consumption, and storage into a virtual power plant. Unlike traditional electricity markets, which focus on selling electricity, Fusebox operates in the balancing market, ensuring the grid remains stable.
“We increase or decrease the load on all electrical systems connected to us based on signals,” explained Jaan Tiiman from Fusebox. “If Estonia’s national transmission system operator, Elering, detects that power supply will be too low or demand too high, they have two options: bring in additional energy or reduce consumption. We provide the latter – cutting unnecessary energy use is a better alternative than firing up a costly and environmentally harming fossil fuel power plant.”
A Smarter Way to Save Energy
Their system is simple: when electricity demand spikes, they send customers a signal offering two choices: either temporarily reduce energy consumption or face high electricity costs.
“Every time the grid operator tells us there’s too little electricity in the system, we shut down non-essential energy consumption,” Tiiman explained. “By doing so, we prevent the need to activate a fossil fuel power plant, which would produce 500 kg of CO2 per megawatt-hour. Right now, our solution saves Estonia around 8,000 tons of CO2 annually.”
That is roughly the size of 1500 football fields, just to offset these emissions in one year!
Fusebox works with clients across Europe. In Estonia, they mainly serve consumers, while abroad, they collaborate with energy companies in Greece, Finland, Sweden, and even Ukraine.
Estonia, with its open energy market and high electricity prices, has become an ideal testing ground for smart energy solutions. The country’s flexibility forces companies to be inventive.
One challenge, however, is the lack of clear regulations for energy aggregation – the practice of pooling small amounts of electricity from multiple sources to create a larger, grid-stabilizing power resource.
The Future of Smart Energy in Estonia
Agabus, who consults energy companies and grid operators, believes that digitalization is the key to enabling the sustainable markets and utilities transformation but holds both benefits and risks.
Digitalization will connect power generation, power grids, and other new technologies with consumers’ expectations and match infrastructures and markets with other sectors.
“Smart solutions are transforming the sector, but if they create unnecessary market distortions, they might do more harm than good,” he noted. “At the same time, if we don’t test new ideas, we won’t gain real experience.”
“In the end, more energy companies must transform into digital companies to survive,” Agabus believes.
In the end, more energy companies must transform into digital companies to survive, Agabus believes. That’s why the Estonian government, in collaboration with Estonian and Finnish researchers, invests in projects like the Finest Centre for Smart Cities. With their support, Agabus and his team developed an open-source software platform that allows the coordination of the operation of different local electricity grid devices. This ensures technical readiness for the formation of virtual power plants. This added value is intended mainly for companies in the renewable energy sector and energy communities that want to be aggregation service providers or plan to start operating as aggregators themselves.
“Consumers should have the right to choose!” Tiiman insisted. “Changing energy aggregators should be as simple as switching mobile providers.” The prototypes of their software are already in place.
Meanwhile, Estonia’s energy innovators continue pushing boundaries. In a country on the geopolitical frontline, where uncertainty is a constant, adaptation isn’t optional, it’s a way of life.
This article is written by Marian Männi. This article was funded by the European Regional Development Fund through Estonian Research Council.
If this spark of energy knowledge has charged you up, don’t power down! Plug into our next article and read more about how Reflexive-adaptive law could lead us through the maelstrom of energy transition!
