Finland: Energy Resources
|Energy Consumption||1.29 Quadrillion Btu|
|2-letter ISO code||FI|
|3-letter ISO code||FIN|
|Numeric ISO code||246|
|UN Region||Northern Europe|
|Energy Maps||2 view|
|Energy Organizations||3 view|
|Research Institutions||0 view|
|CIA World Factbook, Appendix D|
Finland (/ˈfɪnlənd/; Finnish: Suomi [suomi]; Swedish: Finland [ˈfɪnland]), officially the Republic of Finland, is a sovereign state in Europe. A peninsula with the Gulf of Finland to the south and the Gulf of Bothnia to the west, the country has land borders with Sweden to the northwest, Norway to the north, and Russia to the east. Estonia is south of the country across the Gulf of Finland. The nation is an area in the geographic region of Fennoscandia, which also includes Scandinavia and parts of the Russian federal subjects of Leningrad Oblast, Murmansk Oblast, and the Republic of Karelia.
|Wind Potential||5,472||Area(km²) Class 3-7 Wind at 50m||42||1990||NREL|
|Coal Reserves||Unavailable||Million Short Tons||N/A||2008||EIA|
|Natural Gas Reserves||0||Cubic Meters (cu m)||178||2010||CIA World Factbook|
|Oil Reserves||Unavailable||Barrels (bbl)||N/A||2010||CIA World Factbook|
Energy Maps featuring Finland
Electricity is transmitted to retailers through the main grid and regional grids (110-400kV).
Since 2005 Nordic energy regulators have been working to promote and facilitate a common end-user market for electricity in Finland, Denmark, Sweden and Norway. In October 2009 Nordic ministers for energy expressed their political support to the initiative to establish a common Nordic end user market. The Energy Market Authority has actively continued working towards that target during 2012.A significant part of Finland’s climate and energy strategy (published 2008) is the goal of securing self-sufficiency in the sourcing of electricity. Self-sufficiency is expected to remain short of European targets, even following the construction of the third power unit at the Oikiluoto nuclear power plant. The 2008 strategy sets out goals for the increasing of market share of decentralised and small-scale energy production. Significant targets have also been set for the share of renewable energy in the energy mix by 2020, including a 25 TWh target for the use of forest chips in heat and power generation, replacing coal in many areas. A 6 TWh objective for wind power has also been set, and procedures are to be put in place to expedite the construction of new wind power installations, mainly through improving planning and permitting procedures, as well as the removal of investment obstacles. Finally, a new Waste Act has been implemented as of 1 May 2012, with waste recovery and improving recycling measures mandated as part of regional planning in the country.
A topical theme that has spurred a lively debate is the demanding EU renewable energy target, which, for Finland, means an increase from 28% to 38% by 2020. A lot of emphasis is put on additional use of wood-based energy both in small- and medium-scale heating applications as well as utility- scale CHP plants. Forest industries have a strong position in wood procurement, which makes for tough competition for biomass fuels. On the other hand, forest industries are concerned about their raw material procurement due to subsidies for biomass for energy production. According to current plans, the additional energy use of wood is based on harvesting residues and small diameter wood from forest thinning and not on industrial-grade wood.A second theme that has recently provoked a lot of exchange of opinions is the ambitious wind power capacity expansion plan. According to government’s climate and energy programme from 2008, some 6 TWh of electricity should be produced from wind by 2020. This would require that wind power capacity is raised from the current 200 MW to around 2,500 MW. Optimal wind conditions can be found at sea and in coastal areas as well as from the fields of Lapland. The NIMBY (not in my backyard) syndrome is visible in people’s attitude towards wind mills: Most people support expansion of wind power capacity but would not like to have a windmill near their areas of living or holiday houses.
The energy landscape of Finland can be described as versatile. Unlike most countries that rely heavily on one or two main energy sources, in Finland several different energy sources make up the total energy consumption. The share of oil in total energy consumption is slightly above 20%, followed by wood-based energy with close to 20% share, and by coal and nuclear energy, each representing an approximately 15% share of the total. Natural gas and peat are also important energy sources, together contributing close to 20% of the total energy consumption.A distinctive feature in the Finnish energy production structure is the high share of wood-based energy. The main reason for this is the sizable forest industry sector and the role of pulp mills in particular. The bioenergy produced at pulp and paper mills as well as in mechanical wood processing plants account for over 60% of the total renewable energy production, and the share in bioenergy is even bigger: around 80%. In recent years, energy companies have made investments in bioenergy, replacing fossil fuels with biomass. This trend is expected to continue in the future too. In 2012, total electricity consumption in Finland was 85.5TWh, of this 88% of the electricity consumed was produced domestically and 12 was imported.
The Energy Market Authority (EMV) enhances and monitors the activities of the electricity and natural gas market and enhances the realisation of climate goals.Operations are divided into five units. Market Supervision takes care of matters pertaining to the distribution and retail of electricity and natural gas as well as their production and wholesale market. Renewable Energy designs, implements and administrates the production subsidy systems for electricity. Network Regulation is responsible for the financial, technical and system responsibility monitoring of electricity and natural gas grid operations. Emissions Trade processes and supervises emissions licences and manages the emissions trading register. Administrative Services takes care of fiscal, personnel and data administration plus other services supporting the functioning of the other units.
ElectricityFinland’s electricity market was gradually opened to competition after the passing of the Electricity Market Act (386/1995) in 1995. Since late 1998, all electricity users, including private households, have been able to choose their preferred electricity supplier. The purpose of the electricity market reform was to increase the efficiency of operations and to integrate Finland’s electricity market into the Nordic market. These liberalisation and integration actions increased productivity and environmental efficiency, as the Nordic hydropower capacity can now be utilised efficiently and the market allows for trading in “green” energy.Before the liberalisation of the market had a strong impact on the electricity trade, electrical distribution installations and large-scale consumers made long-term delivery contracts for wholesale electricity with electricity producers. Today, a major part of the wholesale trade in electricity takes place in the Nord Pool Nordic Power Exchange, whose ELSPOT market sets the market price for electricity in the Nordic countries. Besides the exchange, electricity is traded on the OTC market and directly between buyers and sellers. Development of the forms of electricity trading has resulted in fluctuations in the price of electricity on the Nordic electricity market, depending for instance on hydropower production capacity due to rain, and on electricity consumption.Electricity network operations in Finland are run as a monopoly and require a grid permit from the Energy Market Authority. Fingrid Oyj is the national grid operator in Finland. Around one hundred regional distributors are engaged in electricity transmission in the distribution networks. Since early 2007, the largest companies have had to divide their network operations and electricity sales into separate companies.In addition to physical electricity trading, it is possible to trade in other electricity-related contracts in the Nord Pool. These contracts are used for example for managing the risks of the electricity trade, which allows electricity retailers and large-scale consumers to hedge against electricity price fluctuations.GasUnlike the electricity market, the Finnish natural gas wholesale market does not face competition. All the natural gas needed is imported from Russia and there are no transmission connections to other EU countries.The retailers often function as local distribution network companies. They provide electricity to households and smaller businesses and usually measure users’ electricity consumption and invoice them. There are some 100 retail distribution network companies, most of which are owned by municipalities.
Primary energy intensity in Finland as of 2010 was significantly above the European average, and in particular energy intensity of the industrial sector, which was over double the European average. The second National Energy Efficiency Action Plan has set savings targets of 2 Mtoe by 2016, of which 58% should be achieved in buildings; 13% in transport, 11% in industry and 7% in agriculture. Beyond this, and through to 2050, a further 30% reduction in final energy demand levels is targeted. Mandatory energy savings targets have traditionally faced stiff opposition from various sectors of the Finnish economy, and as such all targets set out under the current NEEAP are non-binding. Commentators have noted that despite the national view that mandated European energy savings targets, for example those under the European Savings Directive, would not be applicable to the Finnish context, detailed sectoral plans have been developed, and opinion is shifting towards Finland being able to make greater savings at modest extra cost.
According to the Energy Market Authority’s estimates, Finnish electricity production capacity will not be able to cover the need for capacity during winter consumption peak periods at least until 2016. The resulting capacity deficit must be covered by importing electricity from other countries. The Energy Market Authority has estimated that the capacity need covered by electricity imports will be around 2,100 MW at its highest peaks during the winters of 2012–2015. The future completion of the Olkiluoto 3 nuclear power plant will alleviate the situation, but the need for electricity imports is anticipated to continue after that as well.
Finnish Environment Institute (SYKE)The Finnish Environment Institute (SYKE) is a research institute and government agency under the Ministry of the Environment, located in Helsinki, Finland. It is both a research institute, and a centre for environmental expertise. SYKE's research focuses on changes in the environment and seeks ways to control these changes.Vaasa Energy InstituteVaasa Energy Institute (VEI) is a cooperation organisation to combine the know-how within the field of energy, and was founded by the University of Vaasa Faculty of Business Studies, Faculty of Technology and Levón Institute together with the Vaasan ammattikorkeakoulu, University of Applied Sciences and Yrkeshögskolan Novia, University of Applied Sciences. The function of Vaasa Energy Institute is to offer energy research, consultancy and supplementary training services to energy actors at local, domestic and international levels.
Finland, Norway, Sweden and Denmark have formed a single electricity market based upon the electricity exchange Nord Pool Spot where the market price of electricity is established. Fingrid (the Finish TSO) owns 20% of Nord Pool Spot AS. In 2010, approximately 77% of electricity in the Nordic market was traded through the spot market; the rest was traded through bilateral transactions.The major companies providing electricity in Finland are Fortum Corporation, Pohjolan Voima (including Teollisuuden Voima Oy), Helsing Energia, Vattenfall and E.ON. Retail electricity agreements with consumers are governed by the EMA, which also includes provisions that protect the rights of consumers.The transmission of electricity within the main grid in Finland is operated by Fingrid Oyj. Due to the unbundling requirements set by TEP, the two major shareholders of Fingrid, Fortum Power and Heat Oy (25%) and Pohjolam Voima (25%), divested their holdings to the State of Finland and the Llmarinen Mutual Pension Insurance Company. As a result of the transaction, the State has a holding of 53%, Llamarinen a holding of 20% and other institutional investor a holding of 27% of Fingrid. By virtue of the EMA, Fingrid is responsible for the functioning of the main power grid as well as for the management of the national power balancing system. The terms for the sale of grid services must be equal and non-discriminatory towards all parties in the electricity market.
Degree of independence
The Energy Market Authority, subordinate to the Ministry of Employment and the Economy, fulfils its supervision task in co-operation with the ministry, the Finnish Competition Authority and various other authorities. Operations are financed mostly through licence and permit fees collected from electricity and natural gas grid holders. Emissions trading operations are funded mostly by the national budget.
Finland participates to the energy-related work of the Council of the Baltic Sea States and Barents Council. This way Finland also supports the strengthening of the EU's Northern Dimension in the energy sector.Finland takes part in the OECD countries’ co-operation on energy in the IEA (International Energy Agency) and the NEA (International Energy Agency). The IEA carries out comprehensive co-operation in various sectors of energy policy, particularly in security of oil supply (security stockpiles) and energy markets. In addition, the agency also carries out statistical expert work and research co-operation, managed by Tekes in Finland. The NEA promotes safe, environmentally friendly and economical use of nuclear energy for peaceful purposes.Among the UN agencies the IAEA (International Atomic Energy Agency) and the sustainable energy committee UNECE (the UN's Economic Commission for Europe) are important forums for co-operation in the energy field. Bilateral co-operation on energy and environment is carried out with several countries. Outside of Europe, one of Finland’s main partners is China.
As with other EU countries, also for Finland the overall EU 20-20-20 target for energy efficiency, greenhouse gas emissions and renewable energy sets the framework for a national energy policy.In Finland, the share of renewable energy in total final energy consumption must be increased to 38% by 2020 from the current 28% level. In energy terms, this means some 38 TWh of additional renewable energy. In the government scenarios, total energy consumption in 2020 measured in final energy is 327 TWh, showing only modest growth from the 2005 level of 303 TWh. The share of electricity in total energy consumption is nevertheless expected to grow.Finnish targets meet Europe’s Energy and Climate Policy by reducing greenhouse gas emissions by 20% and raising the share of renewable energy to 38% in compassion to an average of one fifth of total consumption by the year 2020. Energy efficiency will be improved in the same period by 20%. The so-called emissions trading sector (ETS) aim is to reduce the EU’s emissions by 21% from 2005 to 2020. Non-ETS, including activities such as transport and agriculture, reduction is an average of 10% from 2005 to 2020. For Finland, a reduction target of the non-ETS sector is set to 16% below 2005 levels by 2020. Renewable energy share in final energy consumption in Finland is defined in the target 38% in 2020.Finland submitted the National Action Plan for Promoting Energy from Renewable Energy Sources (NREAP) in June 2010. To meet the obligations to increase the share of renewable energy to 38% of final energy consumption by 2020, three notable proposals regarding the promotion of energy production from renewable energy sources were passed at the end of 2010 and came into force in the beginning of 2011, namely: the Act on Production Subsidy for Electricity Produced from Renewable Energy Resources (PSRESA) establishing subsidy scheme of feed-in tariffs and fixed production subsides; the amended Act on Promoting Use of Bio-fuels in transportation (PUBTA) introducing an increased bio-fuel distribution obligation for the fuel distributors and the amended Act on Production Tax for Liquid Fuel launching energy tax reform. Furthermore, the Act on Energy Subsidy for Small Sized Wood expanding the scope of energy subsidies for small sized wood was enacted in 2011. The feed-in tariff scheme under the PSRESA came into effect on 25 March 2011. The new system of production subsidies introduces a feed-in tariff for wind power and biogas, a feed-in tariff for small wood-fuelled CHP plants, a variable feed-in tariff for electricity generated using forest chips, and a fixed production subsidy for hydropower as well as for wind power, biogas and electricity generated using forest chips. Electricity generators may receive subsidy for up to 12 years in the fee-in tariff scheme. Wind power plants will be accepted within the scheme until the total output of generators exceeds 2,500 MVA. Secondly, for biogas power plants the corresponding limit is 19 MVA. Thirdly, wood-fuel powered plants will be accepted into the scheme until the total generator output exceeds 150 MVA and the number of power plants, 50. As for forest chip power plants, no restriction is enacted.Since 2011 all fossils fuels and biofuels are subject to an energy content tax based on the known heating value of the fuel as well as being subject to increased carbon dioxide emissions tax. Furthermore, a quality scaling of the biofuels used in transportation was introduced based on the fine particle emissions of biofuels which are harmful to health.
Finland has no domestic fossil energy resources and this means that the country is fully dependent on imports. The main source for imported fossil fuels is Russia. Over 80% of oil products, over 90% of coal and a full 100% of natural gas comes from Russia. In addition to fossil fuels, a notable amount of the annual consumption of electricity, over 10%, is also imported from Russia.
Role of the government
Ministry of Employment and the EconomyThe Ministry of Employment and the Economy of Finland is the national authority in charge of energy policy and integration and also coordinates the National efforts to comply with the climate policy set by the European Union. This new Ministry, in operation since 1stJanuary 2008, assumed among others the responsibility for the duties of the existing Ministry of Trade and Industry.
The regulatory framework for the electricity industry consists of the EMA, decrees issued by the Ministry of Employment and the Economy and the Council of State and the rules and regulations issued by the Finnish Energy Market Authority (FEMA).Finland has recently adopted a market based feed-in system, which has been fully implemented in March 2011. The RES-E producer receives a flexible premium which is the difference between the quarterly average spot market price and the fixed guaranteed price. Hence, the producer is integrated in the electricity market and can reach higher profits if he produces electricity when the market prices are more expensive than the quarterly average spot market price. RES-E generators will be treated like every other market participant and are financial responsible for imbalances. The feed-in tariff is only available for wind and biomass. Beside the market based feed-in system RES-E producers can receive tax aid which is a guaranteed payment and could be compared to a fixed feed-in tariff. However, the tariff level is very low.
The connection of plants generating electricity from renewable sources happens at the level of the distribution and transmission grid. Connection procedures are not regulated by law and depend very much on initial talks between grid and plant operators. The analysis has identified different barriers that currently impede the deployment and integration of RES-E. Most of them are directly or indirectly linked to the lack of grid capacity. This is true for insufficient investment security as a consequence of strong competition for attractive wind power sites, which is only partially mitigated by the option to reserve capacity. Another problem in this context that is about to become an issue is the virtual lack of grid capacity that further impedes new projects and makes grid planning more difficult. Moreover, the rules on distribution of costs are not entirely clear, sometimes leading to inadequate allocation of costs for the enforcement of the grid.
The Energy Market Authority (EMV) carried out the regulatory and supervisory tasks of electricity and gas market, renewable energy operating subsidies and emissions trading - the specificity of the Finnish energy regulatory authority - with a staff of 56 permanent employees at the end of 2012.
Finland is one of the leading industrialised countries to use renewable energy. Bioenergy has been the most important among used renewable sources.SolarThe solar energy reaching Finland from the sun annually amounts to 1,000 kWh per square metre. In Finland solar energy systems have so far mainly been used in locations not connected to conventional power grids. Such locations and uses include many holiday homes, boats and ships, navigational markers, mobile communications masts, and buildings on islands or in remote areas.Solar energy systems connected to the grid are becoming more common, however, as more people are realising that solar energy - even in Nordic countries - can also be exploited to provide a considerable proportion of the electricity used in a typical home, for instance.Wind EnergyMany localities in Finland would be suitable for the generation of wind power, including coastal sites, coastal waters of the Baltic Sea, and the exposed fells of Finnish Lapland. Surveys have indicated that the total potential for wind power in marine waters alone amounts to tens of terawatt-hours a year.The 2008 National Climate and Energy Strategy includes a target that six terawatt hours a year should be generated using wind power in Finland by 2020. This would necessitate an increase in total national wind power capacity to around 2,500 MW.BioenergyBiomass accounts for a larger share of energy consumption in Finland than in any other industrialised country. Wood and wood-based residuals from Finland’s large-scale pulp and paper industry, including black liquor derived from pulp-making processes, account for as much as 97.5 % of the bioenergy produced in Finland. Solid recovered fuels, biogas, energy crops like reed canary grass and organic liquid fuels make up the remaining 2.5%.Wood directly or indirectly accounts for as much as a fifth of the energy used in Finland. The largest users of wood energy are the forest industry companies, who produce large quantities of energy from residual wood such as bark, sawdust and woodchips, as well as the wood-based by-products of pulp and paper making processes, including black liquor.So far only relatively small amounts of bioenergy have been generated in Finland using energy crops, recovered fuels, liquid biofuels or biogas. But the importance of these bioenergy sources is growing rapidly as climate-friendly alternatives are sought to non-renewable fossil fuels, whose prices can be expected to rise considerably due to their declining reserves, as well as future climate policies.HydroHydropower accounted for about 4% or Finland’s total energy consumption in 2008. Hydropower’s share of electricity production in Finland has varied in recent years within the range 10-15%, depending on precipitation levels and other hydrological conditions. Hydropower is Finland’s second most widely exploited renewable energy source, after bioenergy. In 2007 hydropower provided 14% of the renewable energy produced in Finland.The total unexploited hydropower potential along river systems that are not protected for landscape or nature conservation is estimated at more than 600 MW, corresponding to annual production of over two terawatt-hours. Almost 400 MW (0.4 TWh/year energy potential) of this unexploited capacity lies on river systems that have already been harnessed to some extent. It is unlikely that hydropower developments could be launched along any remaining totally unharnessed rivers, for conservation reasons.
- Ecofys-Country Fact Sheets
- Energy Technology Systems Analysis Program (MARKAL)
- UNFCCC-Global Map-Annex 1
- Renewable Energy Projections as Published in the National Renewable Energy Action Plans of the European Member States
- OECD Input-Output Tables
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3 Energy Organizations
2 Clean Energy Companies
0 Research Institutions
<metadesc> Finland: energy resources, incentives, companies, news, and more. </metadesc>