Finnish Climate and energy strategy and electricity markets 14.9.2016 Professor Sanna Syri, Energy Technology and Energy Economics, Dept of Mechanical Engineering Aalto University

Energy news in Finland Finland is preparing new Climate and Energy strategy until 2030. Olkiluoto 3 NPP (1600 MW) is still under construction, estimated production in late 2018. Fennovoima NPP project with Rosatom as partner. Next, building permit will be applied. The project has recently been in news due to lack of expertise and problems with safety culture http://yle.fi/uutiset/economic_affairs_minister_fennovoima_nuclear_pr oject_safety_severely_lacking/9157634 Finland’s target for wind power is 2500 MW by 2020. It will be reached soon. Role of solar pv has been neglible, but now there is more interest at household and offices scales. FiT also for wood chips (residual wood) in (large-scale) electricity and heat production (max 18 €/MWh), mostly used in combined heat and power production.

Energy news in Finland Due to economic recession and strong increase of wind power in the Nordic system, also Finnish electricity prices have been record low (25-30 €/MWh) and futures show a further declining trend. Finland is also achieving the EU 2020 targets: National GHG emissions show a clear decreasing trend (not only policy, but also recession, warm winters and increased wind power) Kyoto target was stabilisation at 1990 level during 2008-2012 => OK National target (transport, small-scale heating, agriculture etc) for 2020 is -16 % => probably OK RES in final energy consumption 38% by 2020 (3rd highest in EU) => is now OK

Energy news in Finland During 2015, 900 MW condensing power (coal and gas) has been dismantled. Otherwise ok to reduce coal condensing power, but wintertime electricity security is already compromised + lack of regulating power. Next in danger is Combined Heat and Power due to lack of profitability? CHP is extremely important for Finland, fuel use efficiency is about 90%. CHP, heat pumps and heat storages could have an important role to balance future energy systems with large VRES shares.

Serious electricity import dependence in Winter Russian holidays ”saved us!” Wind usability 10-16% of capacity MW Hour Data source: Fingrid.

Likely elements of the new strategy The present Government (PM from Central party) favours wood use very much Strong emphasis on bioproducts industry and on advanced transportation biofuels Not similar conrete elements yet for electric vehicles etc. Forest industry is investing in new large-scale pulp& paper mills Chinese Kaidi Ltd. Plans a new tranport biofuels mill in Kemi, northern Finland. Concerns have been raised on the amount of Finnish state subsidies needed Also public discussion on possibly to extensive use of forest resources (risk of reducing the forest carbon sink => becoming a net CO2 emission from the point of atmosphere) Present guarantee price of wind power (83,5 €/MWh) has become unexpectedly expensive for state budget due to the low spot prices => Next RES support might be smaller and based on auctions?

Example of our current research: scenarios for district heating in Järvenpää: how to adapt to future variable electricity prices 30 000 inhabitants, near Helsinki region Biofuel CHP plant (140 MWe) + heat-only boilers Heat storage 20 000 m3 Heat pump 20 MW Solar heat area 20 000 m2 Simulations with strongly varying electricity prices:

One year: CHP, heat pumps and active use of heat storage are all needed

Thank you for your attention! January in Oulu, Northern Finland Peat & REF CHP plant