Diotech OÜ and Transcom AS will commence construction in February 2026 of a 100 MW / 200 MWh battery energy storage system (BESS) facility in Tsirguliina, Valga County. Project Zirgu represents the largest 100% Estonian capital-based battery industrial park, designed to help balance the Estonian and Baltic electricity markets and mitigate regional power price volatility.
According to Mart Moora, Member of the Management Board of Diotech OÜ and project lead, the Zirgu development in Valga county marks a significant step in structurally strengthening Estonia’s energy system at a time when the rapid expansion of renewables and the evolving security environment require large-scale investments in dispatchable capacity and flexible electricity infrastructure.
“The battery energy storage system will increase system flexibility, reduce price fluctuations and support grid stability in a context where the share of renewable energy is rising and system management is becoming increasingly critical,” Moora said.
He added that the Zirgu BESS project addresses the growing structural imbalance in the Estonian and Baltic electricity markets. Although smaller and mid-sized storage solutions have entered the market, their system-level impact has so far remained insufficient. The Tsirguliina project is designed as a large-scale, rapidly expandable industrial park aimed at delivering a measurable stabilising effect on the electricity market.
“There is an insufficient volume of dispatchable generation assets in the region with competitive input costs. As a result, price spikes hit consumers hard, while zero and negative prices undermine the business models of renewable energy producers. Large-scale battery storage is one of the fastest mitigation measures with tangible impact, capable of reducing market volatility within one to two years,” Moora explained.
Estonian capital-based development framework enables rapid execution
The development was sold to Zirgu Bess OÜ by LignaMets OÜ. According to the seller, the decisive factors in the transaction were the local buyer team’s clear vision, execution capability and readiness to implement the project on schedule. In the seller’s assessment, Zirgu Bess OÜ demonstrated firm commitment and a realistic understanding of the project’s time-critical nature and associated obligations throughout the process.
“There was also interest from foreign investors. Negotiations were at times challenging and highlighted how different business cultures and attitudes towards project timelines can be. We sold the development project to Zirgu Bess OÜ because cooperation with them was smooth, efficient and constructive – they had the motivation, financing, practical experience in delivering battery projects in Estonia, and a clear action plan. Overall, we are pleased that both the development and the associated added value will remain with local entrepreneurs,” said Mihkel Nukka, representative of LignaMets OÜ.
According to Paul-Kristian Padrik, shareholder of Diotech, a development framework has been established for project implementation. Zirgu has secured a high-voltage grid connection from Elering, the required land plots, construction permits and completed permitting procedures, enabling systematic construction works to begin immediately from February. The capital required for the initial investment has been contributed by the shareholders of Diotech OÜ and Transcom AS.
“The project is fully executable based on the current equity financing. At the same time, we are analysing additional financing options to optimise the capital structure and to develop subsequent projects in parallel,” said Paul-Kristian Padrik, shareholder of Diotech OÜ.
In the first phase, a 100 MW / 200 MWh battery energy storage facility will be constructed. The high-voltage grid connection and substation infrastructure will be built to allow, subject to sustained market demand and price volatility, an expansion of the complex within 6–9 months to up to 200 MW of capacity and 800 MWh of storage, which would make it the largest battery power plant in the Baltics.
Zirgu Battery Energy Storage System to be Completed by March 2027
Lead technology delivery timelines enable the first phase to enter the market no later than March 2027.
Technology selection and delivery scheduling are based on prior cooperation with LG Energy Solution, with whom Diotech previously developed, within a similar timeframe, what was at the time the largest battery power plant in the Baltics for Eesti Energia, connected to the grid prior to the Baltics’ desynchronisation from the Russian electricity system.
In addition, Diotech is currently developing, in cooperation with LG Energy Solution, Europe’s largest battery energy storage facility to date in Poland, with a capacity of approximately 900 MWh.
“The success of such projects depends on whether the team has real-life experience in managing the entire process – from grid connection and supply chain coordination to construction management, equipment testing and commissioning. These competencies are in place in the Zirgu project, and therefore the target completion date in Q1 2027 is achievable,” said Kaspar Kokk, representative of Transcom AS.
Kokk added that the Zirgu project in Valga County is guided by the principle that local companies, in cooperation with the state, must play a key role in ensuring the balance and security of supply of Estonia’s electricity system.
The objective of the project is to reduce price volatility and strengthen market stability in a manner that serves the interests of Estonian households and businesses while retaining the created economic value within Estonia.
Zirgu Battery Energy Storage System project
The objective is to develop a battery industrial park with up to 200 MW of capacity and 800 MWh of storage;
– In Phase I, Zirgu Bess OÜ will construct a 100 MW / 200 MWh battery energy storage facility;
– The construction investment for Phase I amounts to approximately 35 million euros;
– The battery industrial park is designed to accommodate up to 800 MWh of storage capacity (Phase I will be engineered and delivered to enable additional capacity to be installed within less than one year);
– The capital required for the initial investment has been secured from the shareholders of Diotech OÜ and Transcom AS, keeping ownership 100% Estonian. Offers from Estonian commercial banks are being considered for project co-financing;
– Construction will commence in February 2026;
– Phase I will be completed no later than March 2027;
– Technology selection and delivery scheduling are based on prior cooperation with LG Energy Solution both in Estonia and in international markets.