Energy Community Insights: Estonia

The Life COMET project aims to transform the community energy landscape in Central and Eastern Europe through assessment, experience sharing, and coalition building. Our series of blog posts “Energy Community Insights: A Tour of Central & Eastern Europe” summarizes national assessments and action plans for enhancing energy community maturity* in Croatia, Estonia, Greece, Hungary, Poland, Romania, and Slovenia.

This seventh blog post explores the current landscape of energy communities in Estonia, highlighting key challenges and offering policy recommendations to foster their growth and ensure long-term sustainability.

Community energy is a relatively new concept in Estonia, with its development still in its early stages primarily due to low awareness, weak regulatory frameworks, and insufficient financial support. Despite Estonia’s small population, there is significant potential for energy community development, especially in wind, solar, biogas, district heating, and co-generation projects. However, the lack of public and political understanding of the benefits of community energy results in slow progress, creating a chicken-and-egg problem—without strong policy support, communities lack incentives to engage, and without grassroots demand, policymakers see no urgency to act. This dynamic also impacts financing—policymakers are hesitant to invest due to short-term development perspectives, while the absence of grassroots investment leaves communities stuck in a cycle of inaction.

Financial and market constraints

• High energy costs and the absence of dedicated support mechanisms restrict the ability of communities to invest in local renewable energy production.
• The lack of national funding measures further discourages new initiatives from emerging.
• Limited financing options hinder energy community development, with most projects relying on self-financing or European funding programs.
• Existing EU funding mechanisms are complex and not widely utilized by local communities.

Grid and bureaucratic hurdles

• The current grid infrastructure and regulatory framework are not designed to accommodate community energy projects efficiently.
• Restrictions imposed by DSOs limit decentralized production and energy-sharing opportunities.
• Multiple network charges for community energy projects increase financial burdens and deter participation.

Weak Local and Regional Strategies

• Municipal energy plans are outdated, and many local governments lack clear strategies.
• Coordination between national and local levels is weak, slowing down project implementation.

Public awareness and stakeholder engagement

• Awareness of energy communities and their benefits remains low among policymakers, businesses, and the general public, limiting grassroots demand and political support.
• Communication between stakeholders and government officials needs to improve to ensure better alignment on the importance of community energy.
• While a strong coalition of specialists advocates for policy changes, broader public engagement is necessary to exert pressure on decision-makers.

To accelerate the development of community energy in Estonia, a coordinated approach is needed, addressing awareness, regulation, financing, and local strategy development. Strengthening public-private collaboration and integrating energy communities into national and municipal strategies will be crucial. 

Financial and business model development

• Develop national funding mechanisms to support community-led renewable energy projects, with a focus on energy-poor regions.
• Provide low-interest loans and grants for energy communities to encourage investment in local production and self-consumption.
• Promote business models that integrate self-consumption, energy savings, and co-generation to enhance community resilience.

Improved stakeholder engagement and public awareness

• Strengthen dialogue between energy communities, policymakers, and municipal authorities to integrate community energy into national and regional strategies, and strengthen the role of the Community Energy Roundtable in shaping national policies.
• Launch national awareness campaigns to educate policymakers, businesses, and the public on the benefits of energy communities for individuals and local economies.
• Encourage municipalities to support community-led energy projects by incorporating them into development plans and providing advisory support.

Although energy community development in Estonia is still in its early stages, there is growing momentum driven by a dedicated coalition of stakeholders. The Estonian Community Energy Roundtable, which includes representatives from the Ministry of Climate, energy associations, Distribution System Operators (DSO), political groups, and academic institutions, serves as the primary platform for discussion and strategy development. Despite the current limitations, Estonia has the potential to build a strong community energy sector by leveraging European best practices and aligning national strategies with grassroots initiatives. The first steps have been taken with ENMAK2035 (the Estonian Energy Economy Development Plan 2035), but significant regulatory and financial barriers remain. The next major milestone is expected by 2027, with further regulatory progress and increased community engagement on the horizon. Stay tuned for our next blog post, where we will explore the role of the Estonian Community Energy Roundtable in shaping the future of energy communities in the country.

*  To measure maturity, a tailor-made assessment tool was created, incorporating weighted criteria and scoring countries' performance across 11 areas: political will, transposition process, local, regional and national strategies, regulatory framework, business models, financing, collective self-consumption, networking, knowledge, awareness and stakeholder engagement. Read the full assessment for all 7 countries studied here.