10. Energy technology research, development and demonstration
Key data
(2017)
Government energy RD&D spending: EUR 21.9 million
Share of GDP: 0.94 per 1 000 GDP units (IEA* median: 0.30) RD&D per capita: USD 18.7 (IEA* median: USD 13.8)
* Median of 19 IEA member countries for which 2017 data are available.
Overview
In 2017, Estonia had the second-highest share of spending on research, development and deployment (RD&D) per unit of gross domestic product (GDP) of all International Energy Agency (IEA) member countries. In line with the National Development Plan of the Energy Sector 2030 (NDPES 2030) Estonia has realigned its priorities for energy RD&D, by including the transport and the building sectors among its priority areas (MEAC, 2017).
Public spending on energy RD&D
In 2017, the government spent EUR 22 million on energy-related RD&D. Energy efficiency accounted for 83% of total spending, followed by renewables (13%) and other technologies (3%). Energy efficiency funding was directed at various sectors, including industry and buildings. Public spending on energy RD&D in Estonia has shifted significantly in recent years, away from fossil fuels towards energy efficiency and renewable energy (Figure 10.1).
From 2013 to 2016, Estonia had the highest public spending on energy-related RD&D among all IEA countries. In 2017, Estonia’s public spending on energy-related RD&D decreased by more than half compared to EUR 59 million in 2016. Despite this, Estonia still had the second-highest share of spending among IEA member countries, at 0.094% of GDP (Figure 10.2). The decrease in 2017 was a result of reduced funding for RD&D related to fossil fuels and some power and energy storage technologies. On the other hand, funding of RD&D related to energy efficiency increased to EUR 18 million, from EUR 16 million in 2016.
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10. ENERGY TECHNOLOGY RESEARCH, DEVELOPMENT AND DEMONSTRATION
Figure 10.1 Government energy RD&D spending by category, 2011-17
70
60
50
40
30
20
10
Million EUR (2017 prices)
Fossil fuels
Renewables
Energy efficiency
Other power and storage technologies
Other*
2011 2012 2013 2014 2015 2016 2017
IEA 2019. All rights reserved.
The government spent EUR 22 million on energy-related RD&D in 2017; energy efficiency received the largest share.
* Other includes nuclear, hydrogen and fuel cells and cross-cutting technology and research. Source: IEA (2018), Energy Technology RD&D Budgets 2018, www.iea.org/statistics.
Figure 10.2 Government energy RD&D spending per GDP in IEA countries, 2017
Energy RD&D spending per thousand units of GDP
1.2
1.0
0.8
0.6
0.4
0.2
0.0
IEA 2019. All rights reserved.
As in 2016, Estonia continues to rank high in RD&D spending per unit of GDP among IEA countries for 2017.
Note: Data are not available for Belgium, the Czech Republic, Finland, France, Greece, Hungary, Ireland, Korea, Luxembourg, Portugal or Spain.
Source: IEA (2018), Energy Technology RD&D Budgets 2018, www.iea.org/statistics.
General RD&D strategy and organisational structure
The Research and Development Council advises the government on all matters relating to Estonia’s RD&D strategies and innovation policies. Its approval is required before policy documents are passed forward to the government. The government then submits the national RD&D policies to the national parliament (Riigikogu) for approval. The Estonian Research Council, established in 2012, is the main RD&D funding body and co-ordinates external RD&D co-operation (MER, 2018a).
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10. ENERGY TECHNOLOGY RESEARCH, DEVELOPMENT AND DEMONSTRATION
The Ministry of Education and Research and the Ministry of Economic Affairs and Communications1 jointly developed the third Estonian Research and Development and Innovation Strategy (RDI) for 2014-2020 entitled “Knowledge-based Estonia” (MER, 2014), through extensive consultations with researchers, the business sector, policy makers and implementing agencies. The RDI 2014-20 reduced the number of national RDI programmes to make them more efficient. RD&D funding is focused on a limited number of areas under the so-called smart specialisation concept that aligns priorities for economic, RD&D and education policies with the aim to support knowledgebased economic development. One of the smart specialisation areas is targeting the more effective use of resources, including in the energy sector. The RDI aims to enhance co-operation between RD&D institutions and the private sector and to make research more relevant to the business sector (MER, 2018b).
The RDI consolidates the financing mechanisms for RD&D which are rather fragmented. The RDI sets out a number of performance indicators, including increasing the overall RD&D investment to 3% of GDP by 2020, of which the private sector would account for 2% of GDP, and to reach at least tenth position in the EU Innovation Union Scoreboard. Meeting the indicators requires an effective reorganisation of the statistics and monitoring system for financing RD&D (MER, 2014).
Energy RD&D priorities, funding and implementation
The NDPES 2030 is the guiding policy for Estonia’s energy research, development and deployment. The RD&D priorities in the NDPES 2030 are aligned with the five key areas necessary for the transition of the energy sector and focus specifically on demonstration and application:
electricity supply
development of local fuels (oil shale, biofuels, biomass, other fossil fuels)
transport and mobility
energy efficiency of buildings
heat supply (generation, transmission, storage and district heating).
The NDPES 2030 redefined the earlier priority areas of energy RD&D to include transport and buildings based on the lessons learnt from the Energy Technology Programme (ETP) that ran from 2008 to 2013. RD&D activities in the transport sector will focus on the development and commercialisation of alternative fuels, specifically the use of methane fuels (biomethane) and biogas. This is expected to help meet the 2020 renewable energy targets in the transport sector (see Chapters 4, 7 and 8). The priorities in the buildings sector are: developing new energy efficiency technologies for upgrading the existing building stock and developing affordable technology solutions for new nearly zero-energy buildings. The buildings sector RD&D is closely linked to activities in the area of heat supply.
1 Annex A provides more detailed information about institutions and organisations with responsibilities related to the energy sector.
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10. ENERGY TECHNOLOGY RESEARCH, DEVELOPMENT AND DEMONSTRATION
Oil shale remains a central part of Estonian energy RD&D activities given its importance in the Estonian energy sector (see Chapter 3). Among other projects, the Tallinn University of Technology (TalTech) undertook a project on the cogeneration of shale oil for heat and electricity and developed a cogeneration model. TalTech is also the key player in offering university curricula related to oil shale. The National Development Plan for the Use of Oil Shale 2016-2030 sets out the RD&D activities for the period to 2030 with an emphasis on the linkage between basic and applied research (MoE, 2016).
The NDPES 2030 includes a provision for the creation of a dedicated long-term investment fund sourced from the state budget. This proposal is a response to the findings from the evaluation of the ETP, which identified the need to address the fragmented nature of Estonia’s RD&D in order to increase its effectiveness in delivering results and to make the most efficient use of the existing funds. The fund was expected to become operational in 2019. However, currently no details on the structure, size or decision-making process of the fund are available. Among other activities, the fund will finance R&D institutions in the energy field, e.g. universities, for research areas identified through stakeholder consultations. Overall, Estonia relies heavily on funding from various EU programmes, the future of which is uncertain beyond 2020.
The Ministry of Economic Affairs and Commuications’ policy is implemented primarily through the Enterprise Estonia Foundation that manages support for the private sector, and innovation and technology programmes; through the KredEx foundation that assists business in accessing finance and has a special focus on supporting energy efficiency in the buildings sector; and the Environmental Investment Centre that funds renewable energy and energy efficiency projects (see Chapter 9).
Estonia does not systematically collect information on RD&D spending by the private sector. Instead, the data are contained in different databases and are collected and analysed through different methodologies. For example, the Ministry of Economic Affairs and Commuications collects data from the Estonian Research Information System, the Estonian Environmental Investment Centre, KredEx and the annual government budget manually. The responsible unit also directly contacts large energy companies and manually analyses the financial reports of smaller companies to compile private sector RD&D data.
Industry collaboration
Industry is particularly engaged in RD&D related to the exploitation of oil shale. The largest RD&D investment is undertaken by Eesti Energia, the country’s dominant company in the oil shale and oil shale electricity generation sector. The magnitude of Eesti Energia’s RD&D investments is such that it strongly influences the annual total of Estonian energy RD&D spending. In 2013, when Eesti Energia ended its RD&D investment in an oil shale refinery, Estonia’s overall RD&D investments for the year dropped below the EU average (Kattel and Stamenov, 2017).
One of the challenges the Estonian RD&D programme is facing is its small size and the dominance of small and medium-sized enterprises in its economy. Estonia is addressing these challenges by supporting the development of clusters, i.e. co-operation networks in the same area of specialisation, to leverage the available resources and help small and medium-sized companies gain competitiveness. For the period 2014-20, energy sector-
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