COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Estonia Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION amending Council Implementing Decision (EU) (ST 12532/21 INIT; ST 12532/21 ADD 1) of 3 November 2021 on the approval of the assessment of the recovery and resilience plan for Estonia
Date: 2023-05-12
Institutions: European Commission, Secretariat-General
Subjects: EU aid, Estonia, climate change policy, digital transformation, economic and social cohesion, economic recovery, economic reform, energy policy, investment, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 12.5.2023  SWD(2023) 142 final  COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Estonia Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION amending Council Implementing Decision (EU) (ST 12532/21 INIT; ST 12532/21 ADD 1) of 3 November 2021 on the approval of the assessment of the recovery and resilience plan for Estonia {COM(2023) 265 final}  
 
 
Table of contents 
1. 

Executive summary ............................................................................................................................... 2 

2.  Objectives of the modification of the plan ........................................................................................... 3 

3. 

Summary of the assessment of the plan .............................................................................................. 9 

3.1. Comprehensive and adequately balanced response to the economic and social situation ............. 9 

3.2. Link with country-specific recommendations and the European Semester .................................... 11 

3.3. Growth potential, job creation, economic, institutional and social resilience,  European Pillar of 
Social Rights, mitigating the impact of the crisis, and social territorial cohesion and convergence ...... 13 

3.4. The principle of ‘do no significant harm’ ......................................................................................... 13 

3.5. Green transition ............................................................................................................................... 14 

3.6. Digital transition ............................................................................................................................... 16 

3.7. Lasting impact of the plan ................................................................................................................ 16 

3.8. Milestones, targets, monitoring and implementation .................................................................... 17 

3.9. Costing ............................................................................................................................................. 17 

3.10. Controls and audit .......................................................................................................................... 19 

3.11. Coherence ...................................................................................................................................... 20 

3.12. REPowerEU .................................................................................................................................... 20 

3.13. Cross-border or multi-country dimension or effect ...................................................................... 22 

ANNEX: Climate tracking and digital tagging .............................................................................................. 23 

1 

 
 
 
 
 
 
 
 
1.  EXECUTIVE SUMMARY  

In 2022 Estonia’s economy was strongly hit by the rise of energy prices, negative effects from 
the war in Ukraine and supply  disruptions, while the labour  market  remained strong. In 
light of  the socio-economic challenges that Estonia  has  been facing since the beginning of 
2022, the country submitted a modified Recovery and Resilience Plan (RRP) along with a 
REPowerEU chapter on 9 March 2023.  Estonia proposed modifications to its RRP pursuant to 
three legal bases. Firstly, in accordance with Article 18(2) of Regulation (EU) 2021/241, Estonia 
updated its RRP to take into account the updated maximum financial contribution published on 30 
June  2022.  Secondly,  in  accordance  with  Article  21(1)  of  Regulation  (EU)  2021/241,  Estonia 
considered the RRP to be partially no longer achievable due to objective circumstances and made 
a reasoned request to the Commission to make a proposal to  amend the Council Implementing 
Decision. Finally, in accordance with Article 21c of Regulation (EU) 2021/241, Estonia included 
a REPowerEU chapter in its national RRP. 

The modifications submitted by Estonia under Article 18(2) and Article 21(1) of Regulation 
(EU) 2021/241 affect 22 measures of the initial plan. In addition to the modifications of these 
22 measures, the modified RRP submitted by Estonia rectifies clerical errors in one measure. 
Four  investments  have  been  removed  from  the  initial  RRP,  in  particular  the  construction  of  a 
section  of  the  westbound  Tallinn-Rohuküla  railway,  the  Rail  Baltic  multimodal  joint  terminal 
Ülemiste  in  Tallinn,  the  Northern  Estonia  Medical  Campus,  and  the  multipurpose  medical 
helicopters. Estonia has also requested amending 13 existing measures. The amendments include 
increasing the budget, postponing deadlines and in some instances decreasing the targets. Estonia 
has also added five new measures to its plan: a new general hospital and a primary health care 
centre (“TERVIKUM”), replacing a radar system to remove barriers to deploying offshore wind 
energy, the construction of Rail Baltic viaducts, investments to support companies in switching 
energy sources from fossil to renewable, and a multifunctional vessel to increase the capacity to 
carry out environmental studies. 

The REPowerEU chapter contains measures to help address the key energy challenges that 
Estonia  is  currently  facing.  The  proposed  measures  contain  an  investment  to  increase  the 
capacity of the electricity distribution network, to accommodate new renewable energy production  
(investment  8.2);  a  reform  of  the  permitting,  planning  and  environmental  impact  assessment 
processes for wind energy and strengthening local authorities (reform 8.1) and an investment in 
the production of sustainable biomethane (investment 8.3). The three measures contribute to the 
REPowerEU  objective  of  increasing  the  share  and  accelerating  the  deployment  of  renewable 
energy, while one measure contributes to strengthening the domestic electricity grid. By increasing 
the share of renewable energy sources, the implementation of the envisaged measures is expected 
to  contribute  to  reducing  dependency  on  fossil  fuels  in  line  with  the  country-specific 
recommendation on energy (CSR 4 in 2022). All the new measures in the REPowerEU chapter 
have a cross-country dimension that is further described in the next part of this analysis. 

Based on the assessment of the submitted  modification and the  REPowerEU chapter,  the 
Estonian modified plan receives an A-rating on all criteria, except for costing and coherence, 
where the plan receives a B-rating (unchanged from the original plan assessment).  

2 

 
(3)  
 Growth, 
jobs…  

(4)  
 DNSH  

(5)  
 Climate 
target  

(1)  

(2)  
 CSRs  

Balance
d 
Respons
e  

A  

A  

A  

A  

A (59%)  

(6)  

Digit
al 
targe
t  

A 
(24.1
%) 

(7)  
 Lasting 
impact  

(8)  
 M 
& T  

(9)  
 Costing  

(10)  
 Control 
Systems  

(11)  

(12)  

(13)  

Coheren
ce  

Crossb
order/
Multic
ountry  

REPo
werE
U 
objec
tives  

A  

A  

B  

A  

B  

A  

A 

2.  OBJECTIVES OF THE MODIFICATION OF THE PLAN  

The  Estonian  modified  recovery  and  resilience  plan  adds  a  REPowerEU  chapter  to  the 
original plan pursuant to Article 21(c) of the RRF Regulation and is a strong response to the 
geopolitical and energy challenges that the European Union has faced since the end of 2021 
and beginning of 2022. The amendment of the RRF Regulation provides for additional support 
for reforms and investments helping to phase out imports of Russian fossil fuels and providing 
clean,  affordable  and  secure  energy  to  households  and  businesses  across  Europe.  The 
modifications proposed under the plan and the newly integrated REPowerEU chapter are aimed at 
addressing the country specific recommendations for Estonia presented in the context of European 
Semester 2022 cycle. 

Pursuant  to  Article  18(2)  of  the  RRF  Regulation,  Estonia  has  justified  a  part  of  its 
modifications by the decrease of its maximum financial contribution. The maximum financial 
contribution for Estonia was updated on 30 June 2022 and decreased from EUR 969.5 million to 
EUR 863.49 million (before the deduction of support expenses). To take this update into account, 
Estonia  proposes  to  remove  three  measures  from  its  RRP:  construction  of  a  section  of  the 
westbound Tallinn-Rohuküla railway, construction of the Rail Baltic multimodal joint terminal in 
Tallinn  and  capacity  building  for  multipurpose  medical  helicopters.  These  measures  should  be 
removed due to the decrease in the allocation.  

Pursuant to Article 21(1) of the RRF Regulation, Estonia has justified the modification of 19 
measures due to objective circumstances. In 2022, Estonia faced a considerable general price 
increase compared to 2021 and its economy was hit harder than other EU Member States due to 
the  Russian  unprovoked  military  aggression  in  Ukraine  since  24  February  2022.  According  to 
Eurostat, in comparison to the other EU countries, the prices of energy, electricity and gas have 
increased considerably in 2022 in Estonia. The consumer price inflation peaked in August 2022 at 
25,2 %, recording 19.4% on average in 2022, which was the highest level in the last 25 years. This 
inflation rate presented also the highest among the Eurozone countries, with the average rate of 
2022.  Estonia’s economy was impacted by multiple factors such as the disrupted supply chains, 
high energy prices, acceleration of investment prices, higher construction prices and disruptions 
of construction materials. The rise in construction prices made procurement of some of the initial 
projects  under  the  RRP  much  more  costly  than  expected  and  led  to  significant  delays  in  some 
procurement  processes.  The  cumulative  effect  of  the  above-mentioned  socio-economic 

3 

 
 
  
 
 
 
circumstances  constitute  objective  circumstances  which  have  rendered  part  of  the  plan  non 
achievable, underpinning Estonia’s reasoned request for modifications in the RRP.  

The  main  elements  of  the  amended  RRP  and  REPowerEU  chapter  are  listed  below  by 
component:  

Component 1 (Digital transformation of enterprises), targeted modification: 

Investment  1.2  Development  of  e-construction  and  investment  1.3  Development  of  digital 
waybills services: Estonia decreased the targets for two investments to support the development 
of e-construction and digital waybills services. The changes are justified  under Article 21(1) of 
Regulation (EU) 2021/241, due to the increased inflation and increased wages in the IT sector.  

Reform 1.4 Skills reform for the digital transformation of businesses: A target in the reform 
on skills for the digital transformation of businesses is postponed for one year and an operational 
detail  (the  IT  platform  for  the  registration  of  the  training  activities)  is  changed.  The  change  is 
justified  under  Article  21(1)  of  Regulation  (EU)  2021/241,  as  the  need  to  integrate  Ukrainian 
refugees into the education system took priority for the Estonian Ministry of Education and led to 
delays  in  other  activities  of  the  ministry,  including  the  work  on  the  target  proposed  for 
postponement.   

Component 2 (Green transition of enterprises), targeted modification:  

Investment  2.2  Green  skills:  An  intermediary  target  for  the  investment  on  green  skills  is 
postponed  by  one  year  ,  following  the  need  to  integrate  Ukrainian  refugees  into  the  Estonian 
education system, which caused delays in other activities of the responsible ministry, including 
the  work  on  developing  the  upskilling  and  retraining  modules  for  green  skills.  This  change  is 
justified under Article 21(1) of Regulation (EU) 2021/241.  

Investment 2.5 Deployment of resource-efficient green technologies: This measure consists of 
two types of investments - promoting resource-efficient green technologies for industrial plants 
and  valorisation  of  bio-resources.  On  the  basis  of  Article  21(1)  of  Regulation  (EU)  2021/241, 
Estonia has proposed to increase the estimated costs of the measure by EUR 5 million to the part 
of valorisation of bio-resources due to increased costs for construction and equipment in order to 
be able to achieve the agreed target of 10 projects. Additionally, Estonia has requested to increase 
by EUR 10 million the estimated costs of the part of resource-efficient green technologies which 
enables to implement 11 additional projects.  

Investment 2.7 Creating opportunities for the uptake of renewables-based green hydrogen 
technologies: On the basis of Article 21(1) of Regulation (EU) 2021/241, Estonia has proposed to 
delay one milestone, namely the installation of technologies for the production of green hydrogen, 
to Q3 2025. Estonia had designed its call for proposals based on reasonable assumptions as regards 
the content of the amendment to the General Block Exemption Regulation (GBER), then under 
preparation  and  subsequently  endorsed  by  the  Commission  on  9  March  2023.  Since  the 
assumptions made by Estonia are not reflected in the amended GBER, Estonia has to change the 
design of the call for proposals and as a result, extend the deadline for submitting proposals. 

4 

 
 
Investment 2.8 Supply security investment support: The removal of several investments under   
Article 21(1) of Regulation (EU) 2021/241, enables Estonia to introduce new measures to the plan. 
In  particular,  the  modified  plan  contains  a  new  measure  that  aims  to  support  the  transition  of 
companies  from  fossil  energy  to  alternative  energy  sources.  The  supported  energy  sources  are 
renewable energy sources, electrification, behind the meter storage applications and connection to 
efficient  district  heating  systems.  The  investment  will  ensure  security  of  energy  supply  for  the 
companies and contributing to diversifying energy sources.  

Component 3 (Digital State), targeted modification:  

Investment 3.8 Construction of very high-capacity broadband networks: Under this measure, 
a modification has been proposed to delay the target of one investment, namely the roll-out of a 
very high-capacity broadband network to new sites, by December 2025. The delay is based on 
Article 21(1) of Regulation (EU) 2021/241 due to the unexpected problems encountered in the 
preparatory phase of the call for proposal. 

Component 4 (Energy), targeted modification:  

Investment 4.3 Support for the renovation of small residential buildings: Estonia has scaled 
up the measure by increasing the estimated costs by EUR 28.9 million and adding a new target of 
900 dwellings to be renovated. 

Investment 4.5 Programme to strengthen the electricity grid to increase renewable energy 
production capacity and adapt to climate change: Estonia has increased the estimated costs by 
EUR 6.2 million due to rising construction and equipment costs on the basis of Article 21(1) of 
Regulation (EU) 2021/241.  

Investment  4.6  Programme  to  boost  energy  production  in  industrial  areas:  Following  the 
increase  in  construction  and  equipment  costs  on  the  basis  of  Article  21(1)  of  Regulation  (EU) 
2021/241,  the  total  estimated  cost  of  the  measure  was  increased  by  EUR  2.1  million.  This 
investment aims to boost and incentivise renewable energy production in industrial areas through 
supporting connections to the electricity grid.  

Investment 4.7 Pilot Energy Storage Programme: This measure is a pilot programme to support 
energy storage facilities. In accordance with Article 21(1) of Regulation (EU) 2021/241, and due 
to  the  increase  in  construction  and  equipment  costs,  the  estimated  cost  was  raised  by 
EUR 1.6 million.  

Investment 4.8 Boosting offshore wind farms development: The removal of several investments 
under Article 21(1) of Regulation (EU) 2021/241 enables Estonia to introduce new measures to 
the  plan.  In  particular,  Estonia  added  a  new  measure  to  replace  a  radar  system,  which  was 
preventing the deployment of offshore wind farms. Estonia will remove the height restrictions on 
wind turbines in the Gulf of Riga and the Estonian islands of Hiiumaa, Saaremaa and Vormsi once 
the new radar system is operational.  

5 

 
 
 
Component 5 (Sustainable mobility), substantial modification:  

Investment 5.2 Construction of a section of the westbound Tallinn-Rohuküla railway: The 
downwards  update  of  the  maximum  financial  contribution  for  Estonia  implies  that  a  smaller 
number of electrified railway kilometres (15 km in place of 55 km) can be financed. In accordance 
with Article 18(2) of Regulation (EU) 2021/241, Estonia requested to remove this investment from 
the modified RRP.  

Investment 5.2.a Multifunctional work vessel: The removal of several investments under Article 
21(1)  of  Regulation  (EU)  2021/241  enables  Estonia  to  introduce  new  measures  to  the  plan.  In 
particular, the modified plan includes a new measure, which enables sea patrol and anti-pollution 
operations to be carried out as well as increases research capacity for environmental studies. In 
addition, the vessel aims at ensuring the safety and condition of the waterways necessary for the 
operation  of  maritime  transport.  For  these  purposes,  a  low-emission  vessel  with  research 
capability, buoy installation capability and pollution control capability will be procured.  

Investment  5.3  Construction  of  the  Rail  Baltic  multimodal  joint  terminal:  Due  to  the 
downwards update of the maximum financial contribution for Estonia in line with Article 18 (2) 
of  the  RRP  Regulation  and  due  to  the  objective  circumstances  in  line  with  Article  21(1)  of 
Regulation  (EU)  2021/241,  Estonia  asked  to  remove  the  investment  and  the  corresponding 
milestones.  The  objective  circumstances  relate  to  the  impact  of  Russian  military  aggression  in 
Ukraine  on  construction  prices  in  Estonia.  In  addition,  the  timeframe  of  construction  of  the 
completion of Rail Baltic construction in 2026 has become unrealistic, due to general delays in the 
procurement phase.   

Investment 5.3.a Construction of the Rail Baltic viaducts: The removal of several investments 
under Article 21(1) of Regulation (EU) 2021/241 enables Estonia to introduce new measures to 
the  plan.  In  particular,  Estonia  added  a  new  investment  which  aims  to  increase  the  share  of 
sustainable mobility in Estonia by contributing to the Rail Baltic project, which connects the three 
Baltic States and improves regional connectivity. The investment consists of the construction of 
five viaducts in Kangru junction near Tallinn.  

Investment  5.4  Construction  of  the  Tallinn  Old  Port  tram  line:    The  initial  cost  of  the 
investment  became  more  expensive  than  initially  estimated  due  to  changed  socio-economic 
situation, unexpected significant increases in construction costs and delays in construction works. 
The continuous health  crisis  as  well as  global lack of materials  together  with  important  supply 
chain disruptions due to the war in Ukraine and lack of labour force (as many Ukrainian workers 
have left to protect their homeland) have had a significant influence on construction  prices and 
delays.  In accordance with Article 21(1) of Regulation (EU) 2021/241, Estonia proposed to delay 
the completion of the target on new tramway line in operation by one and a half years from Q2 
2024 to Q4 2025. Estonia also  requested to use the resources freed up by the removal of other 
measures to increase the estimated cost of the investment by EUR 10.5 million. 

Component 6 (Healthcare and social protection), substantial modification:  

Investment  6.2  Establishment  of  the  Northern  Estonia  Medical  Campus:  The  Northern 
Estonian Medical  Campus investment  would be removed based on Article 21(1) of Regulation 

6 

 
(EU) 2021/241. Estonia proposes to remove the Northern Estonia Medical Campus because the 
Russian aggression towards Ukraine has created the need to add a bunker (underground floor) to 
the hospital which would increase the costs and delay the construction works beyond 2026, the 
RRF timeline.  

Reform 6.1 A comprehensive change in the organization of health care in Estonia:  In line 
with Article 21(1) of Regulation (EU) 2021/241,  the establishment of the reimbursement system 
for nurses has been postponed to Q2 2024. Estonia has explained that not all the elements of the 
measure can be achieved within the indicative timeline. The delay is due to the necessity to give 
priority to the legislative work and issuing guidance to nurses who provided support to refugees 
from Ukraine and only concerns the establishment of a new reimbursement system for nurses. The 
amendments  to  the  reimbursement  system  for  doctors  and  pharmacists  are  not  affected  by  this 
delay. 

Investment  6.2.a  Construction  of  “TERVIKUM”  in  Viljandi:  The  removal  of  several 
investments under Article 21(1) of Regulation (EU) 2021/241 enables Estonia to introduce new 
measures to the plan. In particular, the Estonian modified recovery and resilience plan includes a 
new investment in the hospital and a primary health care center in Viljandi “TERVIKUM”, which 
aims to improve access to health care and the provision of health and social care in an integrated 
way in Estonia. The investment will contribute to providing high quality integrated care for the 
inhabitants of the Viljandi county as well as for those living in the neighboring counties. 

Investment  6.5  Capacity  building  for  multipurpose  medical  helicopters:  The  measure  on 
capacity building for multipurpose helicopters was removed from the plan based on Article 18(2).  

Component 8 (REPowerEU chapter):  

Under the REPowerEU chapter and based on Article 21c of Regulation (EU) 2021/241, Estonia 
has proposed measures for two new investments and one scaled-up reform:  

Reform 8.1 facilitating the deployment of renewable energy sources: The activities under the 
reform, which builds on reform 4.4, focus on increasing the roll out of wind projects in Estonia by 
reducing legislative hurdles for wind energy developers and creating the necessary framework for 
speedier development. In addition, the reform will strengthen the capacity of local authorities in 
those administrative procedures necessary for wind energy development. 

Investment  8.2  programme  to  increase  the  access  of  renewable  energy  production  to  the 
electricity distribution system: The measure will improve the capacity of distribution networks 
by  an  additional  160  MW,  thereby  ensuring  greater  access  for  producers  of  electricity  from 
renewable energy sources as well as resistance to climate change (storm resistance).  As the free 
capacity  of  the  grid  decreases  with  each  new  connection.  In  order  to  ensure  the  ability  of 
connections, it is essential to continuously invest in the grid.  

Investment 8.3 to increase the production and uptake of sustainable biomethane: The measure 
will  help  to  make  cross-sector  mapping  and  analysis  across  the  entire  biogas  chain  to  identify 
possible bottlenecks and opportunities for increasing both production and deployment, and also 
foresee scenarios and activities for directing the use of sustainable biogas/methane based on the 

7 

 
latest trends. The goal is to support projects to rapidly increase sustainable biomethane production 
capacity to reduce dependence on Russian fossil fuel imports and accelerate the transformation of 
the energy system. 

The measures presented under the REPowerEU chapter are broadly consistent to address 
the  main  challenges  set  out  by  the  REPowerEU  plan  according  to  the  Regulation  (EU) 
2023/435. The implementation of the measures included in the REPowerEU chapter are expected 
to contribute notably to supporting the objectives in Article 21c(3), points (b) and (e) of Regulation 
(EU) 2021/241. The newly presented measures were elaborated on the basis of extensive work that 
Estonia  used  under  a  Technical  Support  Instrument  (hereinafter  TSI)  to  help  identify  the  most 
suitable reforms and investments under the report “Support to REPowerEU Revised Country Note 
Estonia”1. In addition, an audit on acceleration of development of renewable energy2 was carried 
on by the Estonian Government to identify the best suitable measures in Estonian energy sector. 
The reform of permitting procedures is particularly ambitious, aims at identifying suitable areas 
for wind power, simplifying permitting and building capacity at the permitting authorities and thus 
facilitating the deployment of renewable energy sources. The measure on sustainable biogas and 
sustainable biomethane will create an updated and comprehensive vision on its deployment and it 
will support projects to increase the uptake of sustainable biogas and sustainable biomethane. 

The  previous  description  of  the  implementation  and  monitoring  aspects  of  the  plan  as  well  as 
gender equality, as reflected in the Staff Working Document (2021) 2853 final remains valid. 

State aid and competition rules fully apply to the measures funded by the Recovery and Resilience 
Facility. Union funds channeled through the authorities of Member States, like the RRF funds, 
become State resources and can constitute State aid. When this is the case and State aid is present, 
these measures must be notified and approved by the Commission before Member States can grant 
the aid, unless those measures are covered by an existing aid scheme or comply with the applicable 
conditions of a block exemption regulation, in particular the General Block Exemption Regulation 
(GBER) declaring certain categories of aid compatible with the internal market in application of 
Articles 107 and 108 TFEU4. When State aid is present and it requires notification, it is the duty 
of  the  Member  State  to  notify  State  aid  measures  to  the  Commission  before  granting  them,  in 
compliance with Article 108(3) TFEU. In this respect, the State aid self-assessment carried out by 
Estonia in the recovery and resilience plan cannot be deemed a State aid notification. In as far as 
Estonia considers that a specific measure contained in the recovery and resilience plan entails de 

1 The report in finalisation stage.  
2 Audit report: Taastuvenergia arendamise kiirendamine | Eesti Vabariigi Valitsus 
3 COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Estonia Accompanying 
the document Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the 
recovery and resilience plan for Estonia 

4 Annex to the Communication to the Commission of 9 March 2023 on the Approval of the content of a draft for a 
Commission Regulation amending Regulation (EU) No 651/2014 declaring certain categories of aid compatible with 
the internal market in application of Articles 107 and 108 of the Treaty and Regulation (EU) 2022/2473 declaring 
certain categories of aid to undertakings active in the production, processing and marketing of fishery and 
aquaculture products compatible with the internal market in application of Articles 107 and 108 of the Treaty; 
available at: https://competition-policy.ec.europa.eu/system/files/2023-
03/GBER_amendment_2023_EC_communication_annex_0.pdf 

8 

 
                                                           
 
minimis aid or aid exempted from the notification requirement, it is the responsibility of Estonia 
to ensure full compliance with the applicable rules. 

Table of new and modified components and associated estimated costs. 

Component 
Digital transformation of enterprises 
Accelerating the green transition in enterprises 
Digital state 
Energy and energy efficiency 
Sustainable transport 
Healthcare and social protection 
REPowerEU 

Status 
Modified 
Modified 
Unchanged 
Modified 
Modified 
Modified 
New 

Costs (EUR million) 

116.2  
255.2 
121.7 
197.7 
90.6 
82.0 
90.0 

3.  SUMMARY OF THE ASSESSMENT OF THE PLAN 

3.1. Comprehensive and adequately balanced response to the economic and social situation 

Estonia’s  modified  plan  along  with  the  REPowerEU  chapter  includes  a  balanced  set  of 
reforms  and  investments  contributing  to  the  Union’s  economic,  social  and  territorial 
cohesion  by  referring  to  the  six  pillars  of  Article  3  of  the  Regulation  (EU)  2021/241.  The 
modification of the plan along with the REPowerEU chapter only impacts the assessment of the 
contribution  of the plan to  pillar 1 on the green transition.  For the other pillars, the nature and 
extent of the proposed modifications to the RRP do not have an impact on the previous assessment 
of  the  plan’s  comprehensive  and  adequately  balanced  response  to  the  economic  and  social 
situation, and on its appropriate contribution to all six pillars referred to in Article 3 of the RRF 
Regulation, as reflected in Staff Working Document SWD(2021) 285 final. Regarding the green 
transition  pillar,  Estonia’s  modified  RRP  along  with  the  REPowerEU  chapter  addresses  green 
challenges  in  particular  under  Component  2  (Green  transition  of  enterprises),  Component  4 
(Energy  efficiency),  Component  5  (Sustainable  transport)  and  Component  8  (REPowerEU 
chapter).  

Green transition challenges are addressed under a new Investment 2.8 in Component 2 that 
aims to support the transition of companies from fossil energy to alternative energy sources. 
The aim is to support the transition of companies from existing and unreasonably expensive energy 
sources to alternative competitive energy sources, which will have a positive effect in the context 
of climate change mitigation and energy security. The supported energy supply sources will be 
renewable energy sources, electrification and connection to efficient district heating systems.  

An  important  effort  is  made  by  the  measure  aiming  at  boosting  offshore  wind  farms 
development  under  Component  4  that  helps  to  develop  renewable  energy  resources  and 
thereby increase the share of renewable energy in Estonian energy mix. Onshore and offshore 
wind farms hold a great production potential and represent the most cost-effective way to increase 

9 

 
 
 
renewable  energy  production,  and  electricity  production  in  general.  The  construction  of  new 
renewable energy production installations will help to switch to climate-neutral energy production 
and decrease dependence on fossil fuels.  

The  newly  added  sustainable  transport  measures  under  Component  5  help  to  develop 
greener  transport  modes  and  contribute  to  the  increase  of  share  of  the  climate-friendly 
transport modes, mainly with the help of rail and maritime transport. The construction of five 
Rail Baltic viaducts will contribute to the development of a new electrified railway connection, 
while a new low-emission multifunctional vessel will, among other uses, contribute to protection 
of  biodiversity.  These  investments  will  help  Estonia  to  foster  a  shift  to  more  climate-friendly 
transport modes and contribute to long-term emission reduction in the transport sector.  

The measures in the REPowerEU chapter contribute to the attainment of the Union’s 2030 
climate targets and the objective of EU climate neutrality by 2050 as they aim to incentivise 
the  uptake  of  renewable  energy.  More  precisely,  under  Component  8  Estonia  has  foreseen 
measures  that  will  facilitate  the  deployment  of  renewable  energy  sources  and  prepare  the 
decarbonisation of selected economic sectors, increase the access of renewable energy production 
to  the  electricity  distribution  system  and  increase  the  production  and  uptake  of  sustainable 
biomethane.  

Coverage of the six pillars of the Facility by the modified Estonian RRP components 

●  =  investments  and  reforms  of  the  component  significantly  contribute  to  the  pillar;  ○  =  the  component  partially 
contributes to the pillar 

Green 
transition 

Digital 
transformation 

Digital transformation 
of enterprises 
Accelerating the green 
transition in enterprises 
Digital State 
Energy and energy 
efficiency 
Sustainable transport 
Healthcare and social 
protection 
REPowerEU chapter 

○ 

● 

● 

● 

● 

● 

○ 

● 

○ 

*** 

Social 
and 
territorial 
cohesion 

○ 

○ 
○ 

○ 
● 

Health, and 
economic, 
social and 
institutional 
resilience 
○ 

○ 

● 

● 

Policies 
for the 
next 
generation 

○ 

○ 

● 

Smart, 
sustainable 
& 
inclusive 
growth 
● 

● 

○ 

○ 
○ 

○ 

Taking  into  consideration  all  reforms  and  investments  envisaged  by  Estonia,  its  modified  RRP 
continues to represent, to a large extent, a comprehensive and adequately balanced response to 
the economic and social situation, thereby contributing appropriately to all six pillars referred to 
in Article 3 of the RRF Regulation, taking the specific challenges and the financial allocation of 

10 

 
  
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estonia into account. This would warrant a rating of A under the assessment criterion 2.1 in Annex 
V to the RRF Regulation.   

3.2. Link with country-specific recommendations and the European Semester  

Overall, Estonia’s modified RRP represents a comprehensive and adequate response to the 
economic and social challenges faced by Estonia.  Although the modified plan removes some 
measures, it also introduces new reforms and investments that help to maintain the coverage of a 
significant subset of the challenges identified in the country-specific recommendations (CSRs).  

In the latest CSRs, Estonia was recommended to take action in 2022 and 2023 in four main 
policy areas. To begin with, in 2023, Estonia should ensure that the growth of nationally-financed 
current expenditure is in line with an overall neutral policy stance, taking into account continued 
temporary and targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  In  this  regard,  the  country  needed  to  stand  ready  to  adjust  current 
spending to the evolving situation and expand public investment for the green and digital transition 
and for energy security (CSR 1, 2022). The second recommendation consisted in proceeding with 
the  implementation  of  its  recovery  and  resilience  plan,  in  line  with  the  milestones  and  targets 
included  in  the  Council  Implementing  Decision  of  29  October  2021.  (CSR  2,  2022)  The  third 
recommendation consists in strengthening social protection, including by extending the coverage 
of unemployment benefits and improving the affordability and quality of long-term care (CSR 3, 
2022).  Finally,  Estonia  should  reduce  overall  reliance  on  fossil  fuels  and  increase  energy 
efficiency, including increasing incentives to encourage sustainable  and less polluting transport 
(CSR 4, 2022).  

A  new  measure  of  the  Estonian  plan,  including  its  REPowerEU  chapter,  expand  public 
investment for the green transition and for energy security (CSR 1, 2022). Under Component 
2  on  the  green  transition  of  enterprises,  the  country  has  foreseen  measures  on  green  skills  and 
deployment of resource-efficient green technologies. The measure on supply security investment 
support will ensure security of energy supply for the companies and contributing to diversifying 
energy sources. 

A new measure in the recovery and resilience plan contributes to improving the provision of 
health  and  social  services  in  an  integrated  way  (CSR  3,  2022).  The  investment  in  the 
construction of TERVIKUM medical center in Viljandi consists of building a general hospital and 
a primary health care centre, in order to make health more accessible to the citizens living in the 
Viljandi area. However, further efforts have been identified as necessary in area of strengthening 
social protection, including by extending the coverage of unemployment benefits, in particular to 
those with short work spells and in non-standard forms of work (CSR 3, 2022) 

Various new measures of the REPowerEU chapter aim at reducing overall reliance on, and 
consumption of fossil fuels by accelerating the deployment of renewables, including through 
further  streamlining  of  permitting  procedures,  and  strengthening  the  domestic  electricity 
grid (CSR 4, 2022). The reform of permitting procedures aims at identifying suitable areas for 
wind power, simplifying permitting and building capacity at the permitting authorities and thus 
developing  the  deployment  of  renewable  energy  sources.  The  investment  on  sustainable 

11 

 
biogas/biomethane will boost uptake of sustainable biomethane and accelerate the integration of 
renewable energy sources. The measure consists of an independent study identifying the necessary 
regulatory,  organisational  and  financial  interventions  and  of  the  uptake  of  the  production  and 
deployment of sustainable biogas and sustainable biomethane, which will help to accelerate the 
integration of renewable energy sources. Also, a new measure under Component 4 on boosting 
offshore wind farms will help Estonia to increase the share of renewable energy sources.  

A  set  of  added  measures  aim  at  intensifying  efforts  to  improve  the  sustainability  of  the 
transport system on decarbonising the transport sector to reduce emissions in line with the 
Country Report. Although some of the sustainable transport recommendations were covered by 
the deleted measures on Rail Baltic Ülemiste terminal and electrification of Rohuküla railway, the 
newly  added  measures  still  contribute  to  the  goal  of  intensifying  efforts  to  improve  the 
sustainability of the transport system (CSR 4, 2022). In this regard, the newly added investment 
on  a  multifunctional  vessel  is  related  to  the  challenge  to  address  the  need  for  less  polluting 
transport, similarly to the investment on constructing Rail Baltica viaducts. However, Estonia’s 
modified plan does not address the challenge of including the renewal of the road vehicle stock. 
Also,  a  measure  addressing  the  electrification  of  rail  was  removed  from  the  plan  and  the  new 
measures do not address this recommendation anymore.  

The modifications of Estonia’s RRP help also to increase the ambition in achieving higher targets 
in renovation of small residential buildings and in deploying resource-efficient green technologies 
in line with the country-specific recommendation of 2022.  

One  country-specific  recommendation  falls  outside  the  scope  of  Estonia’s  RRP.  This  is  the 
recommendation related to ensuring that the growth of nationally-financed current expenditure is 
in line with an overall neutral policy stance, taking into account continued temporary and targeted 
support  to  households  and  firms  most  vulnerable  to  energy  price  hikes  and  to  people  fleeing 
Ukraine.  However,  it  is  worth  mentioning  that  Estonia  is  projected  to  continue  using  the  non-
repayable  support  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance  additional 
investment in support of the recovery. 

Estonia’s modified RRP continues to address the country specific recommendations (CSRs). 
The  priorities  of  the  plan  are  coherent  with  progress  on  the  relevant  country-specific 
recommendations.  As  a  result  of  the  proposed  reforms  and  investments  addressing  the  most 
imminent challenges to the Estonian economy and society, the priorities of the plan focus on the 
relevant issues and are expected to contribute effectively to the resolution of these challenges. 

 *** 

Taking into consideration the reforms and investments envisaged by Estonia, its modified RRP is 
expected to contribute to effectively addressing all or a significant subset of challenges identified 
in  the  country-specific  recommendations,  or  challenges  in  other  relevant  documents  officially 
adopted  by  the  Commission  under  the  European  Semester.  The  modified  RRP  represents  an 
adequate response to the economic and social situation of Estonia. This would warrant a rating 
of A under the assessment criterion 2.2 in Annex V to the RRF Regulation. 

12 

 
 
3.3. Growth potential, job creation, economic, institutional and social resilience,  European 
Pillar of Social Rights, mitigating the impact of the crisis, and social territorial cohesion and 
convergence  

*** 

The nature and extent of the proposed modifications to Estonian recovery and resilience plan do 
not have an impact on the previous assessment (Rating of A) of the plan’s impact on the growth 
potential, job creation, and economic, social and institutional resilience of the Member State, on 
contributing to the implementation of the European Pillar of Social Rights, including through the 
promotion of policies for children and youth, and on mitigating the economic and social impact of 
the  COVID-19  crisis,  thereby  enhancing  the  economic,  social  and  territorial  cohesion  and 
convergence within the Union, as reflected in SWD (2021) 285 final.  

3.4. The principle of ‘do no significant harm’  

The modified Estonian recovery and resilience plan including the REPowerEU chapter is expected 
to continue to ensure that no measure included in the plan does significant harm to environmental 
objectives, within the meaning of Article 17 of the Taxonomy Regulation. 

The  modified  plan  assesses  compliance  with  the  ‘do  no  significant  harm’  (DNSH)  principle 
following the methodology set out in the Commission’s technical guidance on the application of 
‘do no significant harm’ under the Recovery and Resilience Facility Regulation (2021/C58/01). 
The assessment is done systematically for each modified reform and investment following the two-
step approach. The assessment concludes that for all modified measures, there is either no risk of 
significant  harm  or,  where  a  risk  is  identified,  a  more  detailed  assessment  is  performed 
demonstrating the absence of significant harm. 

For the new measures, the assessment provides assurance for instance that TERVIKUM, the new 
hospital and primary health care centre in Viljandi, will be equipped with solar panels reducing 
emissions  for  heating  of  the  complex,  the  rest  will  be  district  heating.  The  assessment  pays 
particular  attention  on  construction  waste  treatment.  Waste  will  be  sorted  and  reused,  where 
possible. 

The  selection  criteria  for  the  multifunctional  work  vessel  include  among  others  that  the  vessel 
would  use  either  electricity,  sustainable  biomethane  or  green  hydrogen  as  fuel,  and  that  these  
would meet the conditions set out in the Renewable Energy Directive (RED II).  

The replacement of an  existing  radar in  West-Estonia  is  undertaken to  enable large-scale wind 
energy installation in the area.  As the radar is installed onshore, there is no impact on sea eco-
systems.  

The support to companies’ energy supply security is promoting companies to replace the use of 
fossil fuels for notably renewable energy sources and electrification. Fossil fuels are not eligible 
for support, that is, the DNSH exclusion list applies. 

13 

 
 
The Rail Baltic viaducts are not planned to be constructed in a Natura 2000 or protection area, but 
a dedicated assessment will be done for each viaduct. Measures alleviating impact on ecosystems 
will be used during construction. The assessment pays particular attention on construction waste 
treatment. Waste will be sorted and reused, where possible. 

As regards the REPowerEU measures, the reform accelerating the decarbonisation of the energy 
system  by  speeding up the implementation  of renewable  energy projects aims  to  untap at  least 
1,000  MW  of  wind  energy.  The  DNSH  assessment  focuses  on  the  impact  of  wind  energy 
developments and assures that climate proofing of investments will be integrated into the process 
of  selecting  suitable  areas.  The  assessment  also  includes  a  list  of  mitigating  measures  to  limit 
impact on biodiversity. For the programme to increase access of renewable energy to the electricity 
distribution system, it is clarified that impact on biodiversity is not expected as the measure targets 
micro-producers, so land use will not be affected significantly. The investment incentivising the 
production of sustainable biomethane will target local waste and residues, thereby supporting the 
circular economy. It is specified that when determining waste input, the waste hierarchy should be 
respected to encourage reuse and recycling. Waste and residues should be collected locally and 
regionally.  The  biogas  production  process  leaves  digestate  which  contains  plant  nutrients  and 
should  be  returned  into  the  soil  as  a  valuable  soil  improver  and  organic  fertilizer.  Energy 
production from biomass will only be allowed from waste and residues, not energy or feed crops. 

Where needed, the requirements of the DNSH assessment are enshrined in the design of a measure 
and specified in a milestone or target of this measure. This ensures that any disbursement for the 
respective measures can only be made once compliance with the DNSH principle is ensured. For 
instance, for some measures where calls for projects or calls for interest are necessary to select 
specific  projects,  such  as  security  investment  support  to  companies,  the  DNSH  principle  is 
complied with by ensuring that the terms of reference and other documentation prevent activities 
that  could  do  significant  harm  to  environmental  objectives  from  being  selected.  This  is  also 
integrated in the milestones of the measure. 

***   

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged,  no  measure  for  the 
implementation of reforms and investments projects included in Estonia’s modified recovery and 
resilience  plan,  including  its  REPowerEU  chapter,  is  expected  to  do  a  significant  harm  to 
environmental objectives within the meaning of Article 17 of Regulation (EU) No 2020/852 (the 
principle of  ‘do no significant  harm’). This  would  warrant a rating of  A  under the assessment 
criterion 2.4 of Annex V to the RRF Regulation.  

3.5. Green transition 

Four out of the five new measures in the modified plan and all three measures in the REPowerEU 
chapter, are expected to significantly contribute to the green transition, including biodiversity, or 
to addressing the challenges resulting therefrom, as well as to the achievement of the Union 2030 
climate targets and  of EU climate neutrality by 2050.  

14 

 
Support will be given to 70 companies to shift from fossil sources to renewable energy sources, 
electrification and connection to efficient district heating systems by 2026. The measure addresses 
the  economic  challenge  of  security  of  supply  resulting  from  the  green  transition.  Estonia  will 
replace a radar system in order to alleviate restrictions to develop offshore wind parks in Western 
Estonia. Estonia will also invest in a multipurpose work vessel, which will enable anti-pollution 
operations to be carried out and increase research capacity for environmental studies and facilitate 
the operation of maritime transport. The construction of five viaducts on the Rail Baltic track will 
speed up the crucial cross-border sustainable transport project in the region. On top of the new 
measures, the budget will be increased for several measures important for the green transition to 
reach higher targets, such as upscaling the renovation of small residential buildings to reach 900 
renovated  houses  instead  of  80  in  the  original  plan  and  supporting  resource-efficient  green 
technologies to reach 36 supported projects instead of 25. 

Under  the  REPowerEU  chapter,  one  reform  and  two  investments  are  added  facilitating  the 
deployment of renewable energy sources and  sustainable biomethane. In particular, one reform 
will identify suitable areas for deploying wind energy, streamline the permitting framework for 
renewable energy projects and build up capacity in permitting authorities. The related investment 
aims at increasing the capacity of the distribution electricity network by 160 MW to facilitate the 
access of renewable energy production facilities to the grid. One investment aims at creating the 
necessary regulatory, organisational and financial conditions to increase the production and use of 
sustainable biogas and sustainable biomethane  increasing the production and uptake of sustainable 
biomethane by 4 million Nm3. The REPowerEU measures address the crucial need to speed up 
renewable energy planning and installations to ensure security supply, reduce energy costs and use 
local resources. 

All the new or modified measures are expected to have a long-term impact.  

Climate target 

On the basis of the assessment guidelines provided for  in sub-criterion 5b, the measures in the 
modified RRP (including the REPowerEU chapter) supporting climate change objectives account 
for 59,4% of the plan’s maximum financial contribution (i.e. above the 37% required), based on 
the  methodology  for  climate  tracking  set  out  in  Annex  VI  to  the  RRF  Regulation.  The  most 
important contributions to this target are the investment in boosting offshore wind development, 
the  construction  of  the  Rail  Baltic  viaducts,  and  the  scaled-up  energy  efficient  renovations 
measures.  

Additionally, the proposed measures within the REPowerEU chapter supporting climate change 
objectives account for 77,6% of the chapter’s total estimated costs , based on the methodology for 
climate tracking set out in Annex VI to the RRF Regulation. The most important contributions to 
this  target  are  the  reform  facilitating  the  deployment  of  renewable  energy  sources  and  the 
investment  programme  to  increase the  access  of  renewable energy production to  the electricity 
distribution system. 

*** 

15 

 
Taking into consideration the assessment of all the measures envisaged, the modified recovery and 
resilience  plan,  including  its  REPowerEU  chapter,  is  expected,  to  a  large  extent,  to  make  a 
significant contribution to the green transition or to address the challenges resulting from it and 
ensures that at least 37% of its  maximum financial contribution contribute to the climate target. 
At least 37% of the total estimated costs of the REPowerEU contribute to the climate target. This 
would warrant a rating of A under criterion 2.5 of Annex V to the RRF Regulation. 

3.6. Digital transition 

The modified recovery and resilience plan entails small modifications to four measures regarding 
the digital transition and does not include new measures that contribute to the digital transition. 
The modifications related to lowering of three targets for digital measures in component 1 do not 
include change of the cost estimates and have therefore no impact on the allocation dedicated to 
digital objectives (i.e more than the 20% required). The same applies for the other modifications, 
related to shifting the deadline for completion of an investment in component 3 and a reform in 
component  1.  All  other  milestones  and  targets  contributing  to  the  digital  transition  remain 
unaltered in the modified RRP. Therefore, based on the methodology set out in Annex VII to the 
RRF Regulation, the contribution to digital objectives accounts for 24.1% of the modified plan’s  
maximum financial contribution (excluding the REPowerEU), an increase of 2.6 percentage points 
due to a decrease in the modified plan’s  maximum financial contribution. The contribution to the 
digital  transition  continues  to  come  from  four  out  of  the  six  components  of  the  plan,  with  13 
measures addressing digital priorities (out of a total of 49 for the whole plan). 

*** 

The nature and extent of the proposed modifications to Estonia’s recovery and resilience plan do 
not  have  an  impact  on  the  previous  assessment  (Rating  of  A)  of  the  plan’s  contribution  to  the 
digital transition or to address the challenges resulting from it and ensures that at least 20% of its 
total allocation (excluding the measures in the REPowerEU chapter) contribute to support digital 
objectives, as reflected in SWD (2021) 285. 

3.7. Lasting impact of the plan 

The modified recovery and resilience plan includes new measures that, in addition to the existing 
measures, are expected to have lasting positive effects on the Estonian economy and boost its green 
transition.  The  REPowerEU  measures  are  expected  to  contribute  to  the  green  transition  by 
facilitating  sustainable  biomethane  production  and  reducing  the  obstacles  to  renewable  energy 
development. The newly added measure for a hospital and health centre in Viljandi is expected to 
have a lasting impact on cohesion and inclusiveness, in a similar way to the withdrawn measure 
on the construction of Northern Estonia Medical Campus hospital in the original plan was expected 
to  do.  The  reform  and  investments  in  the  REPowerEU  chapter  will  contribute  to  social  and 
territorial cohesion by reducing the obstacles to renewable energy development and improving the 
distribution  of  renewable  energy  through  facilitating  access  of  additional  renewable  energy 
production capacities to the distribution networks. The new investment  boosting offshore wind 

16 

 
development  will  bring  structural  changes  to  energy  policy  by  removing  the  barriers  currently 
interfering the development of considerable wind power production capacities in the sea area.  

*** 

The nature and extent of the proposed modifications to Estonian recovery and resilience plan do 
not have an impact on the previous assessment (rating of A) of the lasting impact of the plan, as 
reflected in SWD (2021) 285.  

3.8. Milestones, targets, monitoring and implementation 

The nature and extent of the proposed modifications to Estonia’s recovery and resilience plan do 
not have an impact on the previous assessment of the effective monitoring and implementation of 
the recovery and resilience plan, as reflected in SWD (2021) 285. 

The milestones and targets of the modified Estonian recovery and resilience plan enable an 
adequate monitoring of the plan’s implementation. Each measure has on average one milestone 
and one target. The first indicator is usually a milestone that tracks the initiation of implementation, 
often the publication of the relevant call for tender. The second indicator is, wherever appropriate, 
a  target  tracking  the  accomplishment  of  a  tangible  objective,  such  as  the  outcome  of  a  certain 
number of projects. The milestones and targets contain the key elements of the measures and thus 
are  relevant  for  the  implementation  of  the  proposed  changes.  The  monitoring  milestones  and 
targets appear comprehensive and clear to ensure that their completion can be traced and verified. 
Estonia’s  modified  plan  still  corresponds  to  the  original  plan  in  terms  of  the  overall  level  of 
ambition. In addition, Estonia has sufficiently described the relevant verification mechanisms, data 
collection systems and responsibilities that also can be qualified as clear, robust and effective to 
ensure effective completion of milestones and targets.  

*** 

The arrangements proposed by Estonia in its modified recovery and resilience plan are expected 
to be adequate to ensure effective monitoring and implementation of the recovery and resilience 
plan, including the envisaged timetable, milestones and targets, and the related indicators. This 
would warrant a rating of A under the assessment criterion 2.8 of Annex V to the RRF Regulation. 

3.9. Costing 

Estonia has provided individual estimated costs for all the new measures that entail a cost in 
the recovery and resilience plan, including the REPowerEU chapter. Estonia has also provided 
individual justifications for all the measures  whose modifications entailed a  change in  the  cost 
estimates or related target including on the proportionality of the relevant amendments.   

The  cost  information  provided  by  Estonia  is  generally  detailed  and  well  substantiated. 
Estonia provided detailed estimates and assumptions on costs using the standard template 

17 

 
 
 
table,  which  was  intended  to  summarise  the  key  information  and  evidence  on  costing. 
Moreover,  Estonia  submitted  separate  documents  including  more  elaborate  descriptions  of  the 
methodology underlying the cost calculations. Lastly, Estonia submitted a dedicated file outlining 
the key drivers and changes in the costs of the amended measures and their proportionality. 

The assessment of the cost estimates and inherent supporting documents shows that the majority 
of the costs of the new measures are well justified, reasonable, plausible and do not include costs 
covered by existing or planned EU financing and are commensurate to the expected economic and 
social  impact  of  the  envisaged  measures.  Moreover,  the  changes  in  the  costs  estimates  of  the 
amended measures are justified and proportional.  

Reasonable costs 

Overall, the assumptions used by  Estonia to  estimate the  costs of the new measures, including 
those in the REPowerEU chapter, provide a reasonable explanation of the key cost drivers of the 
measures. The calculations are generally clearly spelled out allowing to identify the methodology 
used, even if for a limited number of measures the information provided is more limited or less 
clear. Nevertheless, there is no evidence that would allow doubting the costing estimates provided.  

The new measures included in the Estonian recovery and resilience plan, including those in the 
REPowerEU chapter, comply with the eligibility criteria set out in the RRF Regulation. All costs 
are  incurred  for  reforms  and  investments  after  February  2020  and  after  February  2022  for  the 
measures in the REPowerEU chapter. Value-added tax (VAT) is not included in any of the cost 
estimates. Some of the new or REPowerEU measures include temporary recurrent costs that are 
acceptable, as relevant justifications are provided showing that these costs are temporary and in 
line with the objective of the measures. 

The cost estimates have been validated by an internal government body (Grant Management Unit 
of the Support Development Department of the State Shared Service Center). 

The reasonability of the costs of the amended measures has not changed from the initial assessment 
of  these  measures,  as  the  changes  in  the  cost  estimates  for  all  of  them  are  duly  justified  and 
proportional.  In  the  case  of  measures  being  amended  under  Article  21(1)  of  Regulation  (EU) 
2021/241 for cost-related reasons, sufficient information has been provided to justify the objective 
circumstances and the proportionality of the changes in the cost estimates or related target. In this 
context, the reasonability of the cost estimates, taking into account the new measures, including 
those in the REPowerEU chapter, and the amended measures, has been established to a medium 
extent.  

Plausible costs  

The amount of the estimated costs of new measures, including those in the REPowerEU chapter, 
is in line with the nature and type of the envisaged reforms and investments. For most of these 
measures, Estonia provided supporting documents and links to online sources to substantiate the 
cost estimates, including explanations of how past projects relate to the cost estimates of the new 
measures. Nevertheless, in a limited number of instances the comparability of past projects to the 
ones proposed in the plan could not fully be established, partially due to the novelty of the measure. 

18 

 
The plausibility of the costs of the amended measures has not changed from the initial assessment 
of  these  measures,  as  the  changes  in  the  cost  estimates  for  all  of  them  are  duly  justified  and 
proportional. Sufficient information has been provided to justify the objective circumstances and 
the proportionality of the changes in the cost estimates or related target. 

Considering the limitations of an ex-ante assessment of cost estimates, the amounts proposed for 
financing were deemed appropriate and seen as establishing the plausibility of the cost estimates 
to a medium extent. 

No double Union financing 

Estonia has indicated for each individual new measure, including those in the REPowerEU chapter, 
that the costs to be financed by the RRF will not be funded at the same time by other Union funding 
sources. Furthermore, the set-up to prevent, detect and correct double funding has not been altered 
by the modification of the plan.   

Commensurate and cost-efficient costs 

The  total  cost  of  the  modified  Estonian  recovery  and  resilience  plan  is  commensurate  to  the 
expected  social  and  economic  impact  of  the  envisaged  measures.  The  plan  is  expected  to 
effectively  address  a  significant  subset  of  challenges  identified  in  the  country-specific 
recommendations (CSRs). The main objectives of the plan are to foster the twin transition, improve 
Estonia’s growth potential, job creation and economic, social and institutional resilience, thereby 
reducing vulnerability to shocks. The plan contributes to strengthening social cohesion and social 
protection and to the implementation of the European Pillar of Social Rights. The plan enhances 
the economic, social and territorial cohesion and convergence within the Union. The economic 
and social impact of the plan in combination with the positive cost assessment, indicates that the 
cost is in line with the principle of cost-efficiency. 

*** 

The justification provided by Estonia on the amount of the estimated total costs of the modified 
recovery and resilience plan is to a medium extent reasonable, plausible, in line with the principle 
of  cost-efficiency  and  is  commensurate  to  the  expected  national  economic  and  social  impact. 
Estonia provided sufficient information and evidence that the amount of the estimated cost of the 
reforms  and investments  of  the modified recovery and resilience plan  to be financed under the 
Facility is not covered by existing or planned Union financing. This would warrant a rating of B 
under the assessment criterion 2.9 of Annex V to the RRF Regulation. 

3.10. Controls and audit  

*** 

The nature and extent of the proposed modifications to Estonia’s recovery and resilience plan do 
not have an impact on the previous assessment (Rating of A) of the adequacy of the control and 
audit arrangements proposed by Estonia, as reflected in SWD (2021) 285. 

19 

 
 
3.11. Coherence 

The modifications to the RRP display coherence within each component and show thematic 
interlinkages and synergies between the different components, in particular those related to 
the green transition and the newly added REPowerEU chapter.  

The measures in the REPowerEU chapter improved the coherence of the RRP by reinforcing the 
original measures on energy storage, strengthening the electricity grid and promoting renewable 
energy in industrial areas. In particular, the REPowerEU measures consist of investments that aim 
to  increase  the  production  and  integration  of  renewable  energy  sources.  In  addition,  the 
amendments  and  updates  of  the  RRP  do  not  weaken  the  coherence  of  the  original  RRP.  The 
measure  to  support  energy-efficient  renovations  in  private  residences  has  been  extended 
significantly, increasing its importance in the component. The new investment to boost offshore 
wind development is closely linked to existing measures to increase the share of renewable energy 
and it should result in removing the height restrictions on wind turbines in the Gulf of Riga and 
three islands, and therefore untapping Estonia’s offshore wind potential. The new investment in 
health infrastructure ensures that access to health care, as envisaged in the original RRP, is still 
ensured.  

The modified recovery and resilience plan includes measures that are complementary with one 
another. This concerns the components related to green transition, sustainable transport and the 
new REPowerEU chapter. The modifications do not have contradictory aims or possible negative 
effects on one another.  

At the same time, some of the limitations related to coherence of the original plan have not been 
addressed. Although the green elements have been strengthened, concrete actions to phase out oil 
shale are not included in the RRP and only expected to be set out in the National Development 
Plan of the Energy Sector at the end of 2025 and broader reforms, such as green taxation, have not 
been added. The social dimension of the plan has not been strengthened and the modified plan 
overall remains stronger on investments than on reforms.   

*** 

Taking  into  consideration  the  qualitative  assessment  of  all  components  of  Estonia’s  modified 
recovery and resilience plan, their individual weight (importance, relevance, financial allocation) 
and their interactions, the plan contains measures for the implementation of reforms and public 
investments which, to medium extent, represent coherent actions. This would warrant a rating of 
B under the assessment criterion 2.11 of Annex V to the RRF Regulation. 

3.12. REPowerEU 

The REPowerEU chapter measures directly contribute to the production and integration of 
renewable  energy  sources.  As  a  result,  they  help  reducing  reliance  on  fossil  fuels  and 
contribute to increasing energy security and diversification of the Union’s energy supply.  

20 

 
 
In the implementation of the modified plan including the REPowerEU chapter, the stakeholders 
are  consulted  for  the  adoption  of  the  relevant  implementing  acts  for  each  measure  as  well  as 
regularly updated on the progress of the implementation of the plan in Estonia’s annual event on 
the implementation of the Estonian RRP. To ensure ownership by the relevant actors, it is crucial 
to involve all local authorities and stakeholders concerned, including social partners, throughout 
the implementation of the investments and reforms included in the modified RRP including the 
REPowerEU chapter.   

The activities under reform 8.1 (facilitating the deployment of renewable energy sources) aim to 
facilitate  the  rollout  of  renewable  energy  projects  in  Estonia  with  a  focus  on  wind  energy.  In 
particular, the reform involves reviewing the permitting framework and providing assistance to 
local permitting authorities that should result in speedier permitting processes. Activities under 
reform  8.1  thus  contribute  to  the  REPowerEU  objective  of  accelerating  the  deployment  of 
renewable energy. Reform 8.1 will have a lasting impact as removed legislative hurdles are not 
expected to be reintroduced at a later date. Reform 8.1 is coherent with other efforts of the Member 
State. In particular, there is synergy with measures in component 4 and especially reform 4.4. 

The investment in measure 8.2 (Programme to increase the access of renewable energy production 
to  the  electricity  distribution  system)  contributes  to  the  REPowerEU  objectives  of  addressing 
internal electricity transmission distribution bottlenecks and, therefore, accelerating the integration 
of  renewable  energy.  Measure  8.2  will  improve  the  energy  infrastructure  by  co-financing 
investments  to  increase  the  capacity  of  the  electricity  distribution  network.  The  measure  will 
benefit renewable energy producers including consumers that need to connect their facilities to the 
grid.  Investments  in  grid  infrastructure  have  a  long-lasting  impact  as  increasing  shares  of 
electricity  from  renewable  energy  require  additional  capacity  in  the  network.  Investments  in 
measure 8.2 are coherent with other efforts of the Member State. In particular, there is synergy 
with measures in component 4. 

Investment  in  measure  8.3  (Increasing  production  and  uptake  of  sustainable  biomethane) 
contributes to the REPowerEU objectives of increasing the production and uptake of sustainable 
biomethane  and  therefore  increasing  the  share  and  accelerating  the  deployment  of  renewable 
energy. Estonia’s actions consist of two sub-investments. Sub-investment one involves mapping 
and  analysing  the  entire  biogas  chain  to  identify  possible  bottlenecks  and  opportunities  for 
increasing both production and deployment. The survey will not look at the production and use of 
biogas  in  isolation  but  in  comparison  with  other  non-fossil  alternatives  in  terms  of  both  cost-
effectiveness and market maturity. Estonia will also approve an action plan for the production and 
deployment  of  biogas  and  biomethane  which  will  include  a  list  of  legislative  changes  and 
investments necessary for increasing the production and deployment of biogas and biomethane. 
Sub-investment two involves co-financing to companies interested in investing in the production 
and  marketing  of  sustainable  biomethane,  including  in  the  agriculture  and  energy  sectors.  The 
measure will also support local governments that generate large amounts of biowaste which could 
be used for sustainable biomethane production, wastewater treatment plants, as well as (industrial) 
companies with higher energy needs that could be covered by using sustainable biomethane. The 
measure will have a long-lasting impact as regards the production of sustainable biomethane in 
Estonia.  Investments  in  measure  8.3  are  coherent  with  other  efforts  of  the  Member  State.  In 

21 

 
particular, there is a synergy with measures in component 4. Furthermore, the measure reinforces 
the existing sub-measure on valorisation of bioresources under the existing measure 2.5, which 
will therefore allow higher sustainable biomethane production targets. Additionally, the measure 
is  complementary  to  existing  Cohesion  Policy  measures  that  support  sustainable  biomethane 
production and, in the transport sector, also consumption.  

*** 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged  in  the  REPowerEU 
chapter, the chapter is expected, to a large extent, to contribute effectively to energy security, the 
diversification of the Union’s energy supply, an increase in the uptake of renewables and energy 
efficient, an increase of energy storage capacities or the necessary reduction of dependence on 
fossil fuels before 2030. This would warrant a rating of A under criterion 2.12 of Annex V to the 
RRF Regulation. 

3.13. Cross-border or multi-country dimension or effect  

All three measures in the REPowerEU chapter and therefore 100% of its estimated costs, 
have a cross-country or multi-country dimension or effect. As described in detail above, the 
measures in the REPowerEU chapter will directly contribute to the production and integration of 
renewable energy sources. As a result they contribute to reducing the dependency on fossil fuels 
and secure energy supply in the Union as a whole and can therefore be considered as having a 
positive  cross-border  effect  as  established  in  the  Commission’s  guidance  in  the  context  of 
REPowerEU5.  

*** 

Taking  into  consideration  the  assessment  of  all  the  measures  envisaged  in  the  REPowerEU 
chapter, the measures in the chapter are expected, to a large extent, to have a cross-border of 
multi-country dimension or effect. This would warrant a rating of A under criterion 2.13 of Annex 
V of the RRF Regulation. 

REPowerEU measure 

Facilitating  the  deployment  of  renewable  energy 
sources 
Program to increase the access of renewable energy 
production to the electricity distribution system 
Increasing the production and uptake of sustainable 
biomethane 

(EUR 

Costs 
million) 
 31,84 

Contribution  to  the 
target in % 
 35 

 38 

 20, 2 

 42 

22 

TOTAL:  90,04 

100% 

5 Commission Notice Guidance on Recovery and Resilience Plans in the context of REPowerEU 2023/C 80/01, 
pages 21-22 

22 

 
 
                                                           
ANNEX: CLIMATE TRACKING AND DIGITAL TAGGING  

Measure/ 
Sub-
Measure 
Name ID 

1.1 

1.2 

1.3 

1.4 

1.5.3 

2.2 

2.3 

2.4 

2.5 

2.6 

2.7 

2.8 

3.1 

3.2 

3.3 

3.4 

3.5 

Measure/Sub-Measure Name 

Digital transformation in 
enterprises 
Development of e-construction 
Development of digital waybills 
services 
Skills reform for the digital 
transformation of businesses 
Global e-export impact groups 
and virtual stages 
Green skills to support the green 
transition of enterprises 
Green technologies development 
programme 
Modernisation of the business 
models in manufacturing 
companies 
Deployment of resource-efficient 
green technologies 
Green fund 
Creating opportunities for the 
uptake of renewables-based green 
hydrogen technologies 
Supply security investment 
support 
Creation and development of a 
centre of excellence for data 
management and open data 
Development of event services 
and proactive digital public 
services for individuals 
Development of event services 
and digital gateway for 
entrepreneurs 
#Bürokratt programme (national 
virtual assistant platform and 
ecosystem) 
Reconfiguration of basic digital 
services and safe transition to 
cloud infrastructure 

23 

Budget 
(EUR 
m) 

Climate 

Digital 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

58 

9 

6 

10 

8,17 

010 

010 

010 

100% 

100% 

100% 

108 

100% 

015 

40% 

15 

01 

100% 

8,38 

047 

40% 

9 

022 

100% 

52,80 

100 

022 

027 

100% 

100% 

50 

20 

7,14 

12,28 

20,80 

10,48 

42,83 

032 

100% 

034 

40% 

- 

- 

011 

100% 

011 

100% 

011 

100% 

011 

100% 

011 

100% 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Measure/ 
Sub-
Measure 
Name ID 

3.6 

3.7 

3.8 

4.2 

4.3 

4.5 

4.6 

4.7 

4.8 

5.2.a 

5.3.a 

5.4 

5.5 

8.1 

8.2 

8.3 

Measure/Sub-Measure Name 

Establishing the strategic analysis 
of money laundering and terrorist 
financing in Estonia 
Information system for real-time 
strategic analysis of money 
laundering and terrorist financing 
Construction of very high 
capacity broadband networks 
Support for the renovation of 
apartment buildings 
Support for the renovation of 
small residential buildings 
Programme to strengthen the 
electricity grid to increase 
renewable energy production 
capacity and adapt to climate 
change (such as protection against 
storms) 
Programme to boost energy 
production in industrial areas 
Pilot Energy Storage Programme 
Boosting offshore wind parks 
development 
Multifunctional working vessel 
Construction of the Rail Baltic 
viaducts 
Construction of the Tallinn Old 
Port tram line 
Municipalities’ investments in 
bike-and walkways 
Facilitating the deployment of 
renewable energy sources and the 
decarbonization of selected 
economic sectors 
Programme to increase the access 
of renewable energy production to 
the electricity distribution system 
Increasing production and uptake 
of biomethane  

Budget 
(EUR 
m) 

0,40 

3,50 

24,29 

Climate 

Digital 

Int. 
Field 

Coeff. 
% 

Int. 
Field 

Coeff. 
% 

011 

100% 

011 

100% 

053 

100% 

44,67 

025bis  100% 

31,30 

025 

40% 

36,20 

033 

100% 

9,10 

9,60 

66,80 

18 

31,05 

033 

033 

028 

050 

064 

100% 

100% 

100% 

40% 

100% 

36,50 

073 

100% 

5 

075 

100% 

31,84 

028 

100% 

38 

029 

100% 

20,2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

24