The European Commission has given the green light to Estonia’s €750 million strategic reserve — a major initiative designed to ensure the country’s electricity supply remains stable during
emergencies.
What the strategic reserve is
A strategic reserve is a safety net for the power grid. It includes electricity resources that stay off the regular market but can be activated when demand exceeds supply — for instance, during cold winter days when electricity use peaks but wind and solar production is low.
Estonia’s reserve will operate until 2035 and will be open to all types of projects that can help keep the lights on. This includes:
- Power generation units (plants ready to produce electricity when needed)
- Energy storage systems (batteries that can quickly supply power)
- Demand-response providers (large consumers willing to temporarily reduce their electricity use during peak hours)
All projects taking part must meet the EU’s carbon emission standards under the Electricity Regulation.
How it will work
The projects eligible for support will be chosen through an open and transparent bidding process, ensuring fair competition. Participants will compete based on how much funding they need per megawatt (MW) of available capacity during power shortages.
Why the Commission approved it
The European Commission evaluated the plan under EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the 2022 Guidelines on State Aid for Climate, Environmental Protection and Energy (CEEAG).
The Commission found that:
- Estonia proved the need for the measure to ensure electricity security, especially during low renewable generation periods.
- The aid encourages investment — without it, companies would be less likely to maintain or build the necessary power capacity.
- The scheme’s impact on competition and EU trade is limited, as the aid will be granted through competitive tenders and kept to the minimum necessary.
- Market distortions are minimized since the reserve capacity is held outside the normal electricity market.
- Overall, the measure’s benefits outweigh potential downsides, helping strengthen energy security while supporting the EU’s clean energy goals.
Final decision
With these safeguards in place, the European Commission officially approved Estonia’s €750 million strategic reserve, confirming it meets all EU State aid and electricity market rules.