World Energy Council Finland (or WEC Finland) was founded in 1993 as a co-operation body for various companies and organisations in the energy sector. WEC Finland is a leading platform for energy producers, users and technology providers facilitating the energy policy dialogue and finding new strategic insights.
In order to achieve this aim WEC Finland organises various high-level events and activities. Co-operation activities include regular seminars as well as organising one of the biggest annual energy industry events. The WEC Finland also provides prices indexes for heavy fuel oil and coal. In addition, WEC Finland annually awards the best master’s thesis in fields of energy technology and energy economics in co-operation with Finnish Energy Economists. The WEC Finland is a National Member Committee of the World Energy Council.
Helena Kivi-Koskinen, the Executive Director of Finnish Member Committee of the World Energy Council since 2017, holds a MSc in Political Science from University of Helsinki. After her studies she has been managing strategic sustainability issues in various businesses: retail; consulting and training; energy; and steel industries. She is specialized in environmental legislation, emission trading.
Energy in Finland
The Finnish energy sector has been working for years to combat global warming. Finland’s concerns about this issue have increased significantly year-on-year. Over 60% of Finnish citizens consider climate change to be a real and an extremely serious threat that the whole world should combat immediately.
This concern can be seen in the Critical Uncertainties and Action Priorities of the Finish 2019 Energy Issues Map. The key Critical Uncertainties are digitalisation, market design and electricity prices. The three Action Priorities are climate framework, EU cohesion and renewable energies, all related to climate change.
Russia has been one of the top uncertainties over the past years. However, Russia has been a reliable supplier of gas, coal, oil and electricity to Finland for decades without interruptions. Indeed, Finnish energy supply is characterised by strong reliance on Russian energy imports.
The Finnish Energy Industries estimate that energy production in the country could be carbon neutral in the 2030s, which is earlier than the official Finnish government plan of seeking carbon neutrality by 2045. Electricity and district heating emissions will halve from the present level during the next decade and will decrease to a margin in the 2030s. However, this requires, among other things, EU’s emission target be set at the level determined by the Paris Agreement.
It is possible to eliminate greenhouse gas emissions from the transport sector by 2045 with zeroand low-emission cars, renewable energy, mileage reduction of passenger cars and sustainable forms of transportation. Transport produces one fifth of the greenhouse gas emissions in Finland. The measures of reducing transport emissions would be covered by increasing the taxes and fees for activities that produce most of the emissions.
Digitalisation represents a major development in Finland’s ongoing Energy Transition and it is high on the agenda of every energy leader in the country. New technological innovations are profoundly changing the industry on its way to a smart energy system. Asset-intensive energy production is turning into service-oriented and digitalised, decentralised businesses. New players and aggregators will emerge and take a new service provider role in this development enabled by digitalisation. Finnish energy companies argue to be the world’s most advanced users of smart energy systems and energy markets. Still, Finnish energy leaders see digitalisation drivers such as internet of things, artificial intelligence, blockchain and big data as action priorities rather than as uncertainties.
Russia has persisted as a critical uncertainty for Finland’s energy leaders over the past years. Russia has been a reliable supplier of gas, coal, oil and electricity to Finland for decades without interruptions. However, the country is seen to have a large impact and to produce high uncertainty in Finland, which might be due to the economic sanctions imposed by EU and US. Finnish energy supplies are characterised by the European wide reliance on Russian energy sources. In the year 2018, most energy products were imported from Russia, accounting for about 63 percent of the value of imports.
Electricity Prices and Market Design are perceived with a similar level of uncertainty and impact. Both of these are critical for climate change policy and for future prospects of energy companies.
Non-household electricity prices in the EU were highest in Germany (€0.15 per kWh) and lowest in Finland (€0.07 per kWh) during the first half of 2018. However, the wholesale price of electricity rose by an average of 41 per cent last year, setting it up at the highest mark since 2011.
Finland has been an active party in the EU debate on the development of the electricity market model and renewable energy rules during the year 2018. With regards to the development of retail electricity market, Finland is seen to be ahead of most of the European countries. The Finnish Energy Industries welcomed completion of EU negotiations in December 2018. However, there is a need for a National legislation on smarter energy system, which is currently under development and creates an uncertainty to some degree.
Climate Framework is the Action Priority number one, but it overlaps with EU Cohesion and is very close to Renewable Energies, which last year was profiled as the key Action Priority. The transition towards carbon neutral energy generation is currently happening and it keeps Finland’s energy leaders busy at work. A progress can be seen in the fact that CO2 emissions of the energy sector have halved during the past ten years in Finland.
Curbing climate change requires political decision-making to look at energy system as a whole. By strengthening the interaction between electricity, district heat and gas through policy action, low-emission energy can be provided in a cost-effective manner. The customer’s role will change from a consumer to a prosumer, because smart energy system encourages investing in one’s own energy production and storage.
With reference to the earlier Issues Monitor, EU Cohesion has moved from a critical uncertainty to action priority number two. This might be caused by the fact that the regulation considering the energy use of forest biomass was discussed at the EU-level when the previous Issues Monitor questionnaire was delivered. Forest biomass is the most significant local renewable energy source in Finland.
Previously, there was a significant difference in the level of uncertainty of EU Cohesion between Finnish and other European leaders. Now the EU climate and energy policy 2019-2023 should continue enabling the Energy Transition consistently. However, the rapid development in the sector also makes it necessary for policy to evolve and it keeps the energy leaders busy at work. The future should be embraced by complying with the Paris agreement, securing the EU energy supply while empowering customers and supporting competitiveness.
The use of renewable energy sources has continued to grow in the year 2018. The share of renewables in energy production is now the second highest in Europe. In 2018, the share of renewables in district heating production rose to almost 38%, with recovered heat adding another 9% and raising the total to 47% of carbon neutral production of district heating.
The construction and maintenance of wind power plants were at a turning point in the year 2018. With decreasing technology costs, new wind power capacity started to be more cost-effective than maintaining the conventional power plants. The old feed-in tariff scheme to support renewable energy production expired in November 2017 and wind power investments halted in 2018. In the new renewables subsidy system, launched in November 2018, companies offer a premium for which they are willing to produce renewable electricity and the lowest bids are selected for the system.
Biofuels in transportation are high on the agenda of energy leaders. Finland has set an ambitious goal for biofuels. The objective is to increase the share of liquid biofuels to 30% of all liquid fuels in domestic transport by 2030 and to 100% by 2045. The absolute volume of liquid biofuels in road transport will not, however, increase after 2030. In addition to liquid biofuels, the use of domestically produced biogas will be strongly increased. A prohibition on the sale of fossil -based transport fuels in 2045 would promote the shift to renewable fuels and alternative sources of energy.
The Finnish energy system is in transition towards carbon neutrality, which has an impact on business models and revenue generation. It also appears that due to technological development and rapid decrease in the cost of renewables, climate action will not become as expensive as it was previously thought. This change will bring threats and opportunities simultaneously.