After the independence of the Republic of Estonia in 1918, energy production was one of the most important economic issues that needed to be resolved quickly. The availability of oil was extremely questionable due to the civil war in Russia, and then a decision was made - electricity would be produced in Estonia using domestic fuel. In Ida-Viru County, Estonian Oil Shale Industry had been producing electricity from oil shale for its own use and it was possible to expand it. Large peat deposits in Western Estonia were also found to be suitable for use as fuel in electricity production. Eesti Turbatööstüstus AS was founded, with the task of finding suitable locations for power plants, building the plants and starting up electricity production.

In 1922, construction work on the Ellamaa power plant began. This was preceded by a long search for a site and an architectural competition, which was won by Aleksander Vladovski, a Russian-Polish man who emigrated to Estonia after the revolution in Russia. The power plant, designed in a historicist style and more reminiscent of a castle than an industrial building, was completed in 1923 and ceremonially opened on May 14. The original capacity of the power plant was 1,400 kW, but by 1940 it had already reached 8.5 MW. The power plant building consists of three main parts – a boiler house, a generator hall and a switchboard. No materials or money were spared in the construction of the building.

On May 1, 1966, the power plant was closed. For the next 40 years, the building served as the boiler house of the Turba settlement. During this time, no funds were invested in improving the condition of the building and the process of decay began. The restoration of the independence of the Republic of Estonia did not bring any change in this regard. The building, which had changed ownership several times but continued to be used as a boiler house, depreciated at an ever-accelerating pace.

In 2005, a delegation from the MOMU Motorsports Museum visited the old power plant building to explore the possibilities of establishing a museum here. However, the initial plan was shelved. In 2007, the parties reached an agreement and the restoration of the building began. During the work, the plans changed repeatedly due to the increase in the number of exhibits, as well as problems caused by the condition of the building.

In 2017, the boiler house and generator hall were restored and ready to receive exhibits. The third life of the Ellamaa power plant had begun.