1. 31.1.2012 JUL 1 Power generation and energy policy in Finland and in EU Jukka Leskelä Finnish Energy Industries Helsinki 31.1.2012

2. 15.8.2011 Pertti Salminen 2 Finnish Energy Industries Branch organisation of companies operating in the electricity and district heating sectors –250 member companies and 60 co-operation members Focus on industrial policy and labour market policy 40 employees Member of the Confederation of Finnish Industries (EK) Owns the service company Adato Energia Oy

3. 15.8.2011 Pertti Salminen 3 Special energy features in Finland Lack of own energy resources, - the share of bioenergy, peat and hydropower is 30 %, the rest is imported energy. High energy consumption per capita - The share of manufacturing industry in the final energy consumption and in the electricity consumption is almost 50 %. - EU’s coldest Member State, the share of space heating is 23 % of the total energy consumption - Long distances inside the country and to the EU and other markets High energy efficiency in buildings (triple windows etc.) High share of biomass in heat and electricity production High share of combined heat and power production (CHP), 30 % of the total electricity is generated with heat production High share of district heating, almost 50 % market share Trust on nuclear power The Finnish energy system is efficient and emissions are at low level compared to the EU average

4. Agenda Power generation in Europe, in Nordic countries and in Finland Main challenges in power generation –Environmental sustainability –Security of supply –Competitiveness Policy measures –EU´s common energy and climate change policy –National energy policy –Focus on greenhouse gas abatement, renewables and nuclear 31.1.2012 JUL 4

5. 15.8.2011 Pertti Salminen 5 Major energy challenges in Finland and in the EU Development of energy and climate technology, innovations and know-how - education, efficiency, international cooperation Competitive energy prices - fuel prices, emissions trading, economic instruments Security of supply - global unbalance between energy sources and consumption - dependence on imported energy, especially Russian fossil fuels Combating climate change - EU targets emissions-renewables-efficiency/20-20-20 - global cooperation Vast investments are needed in the energy sector - Globally 16000 billion euros (630 billion/a), in EU 1800 billion euros and in Finland 30 billion 2005-2030

6. Power generation by energy source in EU-27 Total 3210 TWh (2009) 31.1.2012 JUL 6 19 % 28 % 24 % 26 % 3 %

7. 31.1.2012 JUL 7 Integration of European electricity markets IPS/UPS CWE Nordic UK/IE CEE SWE CSE SEE Baltic

8. 31.1.2012 JUL 8 Combining French, German and Nordic electricity markets - generation Germany 550 TWh/a FI – SE – NO – DK 400 TWh/a France 570 TWh/a Conventional thermal Nuclear Hydro power Wind and solar power

9. 31.1.2012 9 Electricity Generation in Nordic Countries 2010 Hydro power Nuclear power Fossil fuels Wind power 17 TWh 145 TWh 77 TWh 37 TWh 123 TWh Total 399 TWh Source: ENTSO-E Other renewable Non-identifiable 25 % 75 % 28 % 40 % 17 % 14 % 53 % 19 % 18 % 7 % 3 % 1 % 95 % 4 %1 % 46 % 39 % 5 % 8 % 2 % 72 % 21 % 7 % JUL

10. 31.1.2012 10 Electricity Consumption in Finland (84.4 TWh, year 2011) JUL

11. 31.1.2012 11 Variation of Electricity Supply in Finland in 2011 Weekly average consumption JUL

12. 31.1.2012 12 Net Supplies of Electricity in Finland (84.4 TWh, year 2011) JUL

13. 31.1.2012 13 Imports and Exports of Electricity in Finland JUL

14. Share of combined heat and power (CHP) in total power generation by country in EU Source: Eurostat, figures 2009 31.1.2012 JUL 14

15. 31.1.2012 15 Electricity Production by Energy Sources in Finland (70.6 TWh, year 2011) Renewable 33 % Carbon dioxide free 64 % JUL

16. 31.1.2012 JUL 16 Bioenergy and power plant and boiler capacity Already large capacity of CHP plants and heating boilers –Large share of capacity suitable for wet and difficult fuels –Power plants and boilers diversified in all parts of country Many new installations –Around 50 new CHP plants and 300 boilers since 2000 using biomass Investments continue in larger CHP plants –Mainly replacement investments in municipalities or industrial facilities –Direction to multifuel boilers (biomass with peat, coal etc.) –Governments target around 50 small CHP plants (size around 20-30 MWth) To replace heat-only boilers (oil, peat, biomass) and to increase CHP

17. 31.1.2012 JUL 17 Case Alholmens Kraft, Pietarsaari (Jacobstad) World largest biomass-based CFB boiler –550 MWth, 165bar/545 o C Combined heat and power –240 MW electricity –100 MW process steam –60 MW district heat Fuel use –Forest energy 45 % 1500 GWh/a –Peat 45 % –Coal 10 % Owners –Pohjolan Voima, Skellefteå Kraft, Perhonjoki Oy, Oulun seudun sähkö

18. 31.1.2012 JUL 18 Case Keljonlahti, Jyväskylä Biomass-based CFB boiler –484 MWth, 160bar/560 o C Combined heat and power –210 MW electricity –250 MW district heat Fuel use (2,5 - 4 TWh/a) –Forest energy, appr. 30 % –Peat, appr. 70 % Jyväskylän Voima Oy

19. 31.1.2012 JUL 19 Case Oriketo, Turku Biomass-based BFB boiler –40 MWth Heat only boiler with heat recovery absorber –51 MW district heat Fuel use –Wood biomass, appr. 100% Turku Energia Oy

20. Key drivers & challenges – the corner stones of the European energy policy Security of supply Environment, Climate change Competition, Affordability BUSINESS AS USUAL NOT SUSTAINABLE

21. 15.8.2011 Pertti Salminen 21 Major energy challenges in Finland and in the EU Development of energy and climate technology, innovations and know-how - education, efficiency, international cooperation Competitive energy prices - fuel prices, emissions trading, economic instruments Security of supply - global unbalance between energy sources and consumption - dependence on imported energy, especially Russian fossil fuels Combating climate change - EU targets emissions-renewables-efficiency/20-20-20 - global cooperation Vast investments are needed in the energy sector - Globally 16000 billion euros (630 billion/a), in EU 1800 billion euros and in Finland 30 billion 2005-2030

22. 31.1.2012 JUL 22 The role of EU´s climate and energy policy Common targets for 2020 –Climate change (-20% vs. 1990) –Renewable energy (20 % share of end-use) –Energy efficiency (20 % more efficient use of energy) EU measures and efforts –Common and open energy markets –Emissions trading scheme with emission caps –Energy efficiency standards for applications –Common environmental minimum requirements Primary energy sources are part of national energy policy –National support schemes for renewable energy –National decision on the use of nuclear energy

23. 31.1.2012 JUL 23 Eurelectric Power choices –scenario 2050 Total consumption of energy will decrease... Paradigm shift to efficient electric technologies More electricity = less energy

24. 31.1.2012 JUL 24 Eurelectric Power choices –scenario 2050 … while electricity consumption will increase In 2050 RES: 38% of total mix (1800TWh) Wind: 56% of RES Nuclear: 27% of total mix (1300TWh) CCS: 30% of total mix (1414TWh) Other fossils: 5% of total mix (231TWh) Power demand increase of appr. 50 %

25. 31.1.2012 JUL 25 Finnish Energy Industries´vision 2050 Demand for electricity in Finland Sector Electricity consumption (TWh/a) 200720302050 Housing2324-2624-27 Household electricity111313-14 Heating of buildings12119-11 Cooling of buildings0,212 Industry4849-5648-58 Services & Public sector 15,52230-40 Transport0,538-10 Losses334 Total90100-111113-138 25

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29. EU Energy Road Map 2050 Policy initiative by European Commission, December 2011 –Under evaluation by EU member states and EU parliament Alternative pathways to low carbon energy future –Four different future scenarios With more or less renewables, nuclear, CCS, energy efficiency –In all scenarios appr. -85 % reduction in CO2 emissions in energy use Remarkable increase in energy efficiency Role and amount of electricity will increase Renewables will increase tremendously Role of energy infrastructure and market will increase 31.1.2012 JUL 29

30. JUL 30 Specific CO2 emission in selected EU countries Figures in 2007-2008 (Eurelectric Power Statistics 2010) Poland Denmark Sloveni a Hungary Spain Belgium France Sweden Romania Germany UK Italy 31.1.2012

31. Emissions trading is the main tool for decarbonisation in EU Gives a cap for CO2 emissions at EU level –Existing branches covered: energy, electricity, industrial, air traffic Requires monitoring and verification of emissions from each installation Each ton of emissions must be surrended by an emission allowance unit (EAU) –A market has developed for emissions allowances –Market price is reflected as a cost in all generation which causes greenhouse gas emissions under the emissions trading scheme Uniform cost / emission across the EU 31.1.2012 JUL 31

32. 31.1.2012 JUL 32 Main support scheme for renewable electricity in EU member states Feed-in-tariffs Feed-in-tariff or premium Price premium Green certificates Investment aid Investment aid + premium

33. 31.1.2012 JUL 33 *Nordic and Baltic countries, Poland, Germany, Belgium, The Netherlands, UK Source:Pöyry, NREAPs Generation of renewable electricity in Northern Europe* Increase 360 TWh*) Total volume of market in same area appr. 1700 TWh Others Wind Hydro Biogas Solid biomass

34. 31.1.2012 JUL 34 Belgium: 7 units operating No new planned units Conditional phase-out by 2025 Bulgaria: 2 units operating 2 units under construction Czech Republic : 6 units operating 2 units planned Netherlands: 1 unit operating 1 planned unit Finland: 4 units operating 1 unit under construction 2 units planned France: 58 units operating 1 unit under construction 1 planned unit Germany: 9 units operating Nuclear phase-out by 2023 Hungary: 4 units operating Doubling of generation capacity planned Italy: No operational units Cancelled 10 planned units in referendum United Kingdom: 18 units operating 10 units planned Romania: 2 units operating 2 units planned Slovakia: 4 units operating 2 units under construction Slovenia: 1 unit operating No new planned units Spain: 8 units operating No new planned units Sweden: 10 units operating Approval for replace current units at the end of commercial lifespan Switzerland: 5 units operating Nuclear Phase out by 2035 Ukraine (ei EU): 15 units operating 2 units under construction Nuclear Power in the EU: 127 units operating (28 % electricity) 6 units under construction C. 30-40 units planned Poland: 6 units planned Lithuania: 1 planned unit

35. 31.1.2012 JUL 35 Status of nuclear energy in Finland Two existing nuclear power plants (4 reactors) –Capacity 2700 MW, generation 22 TWh/a –2 BWR reactors in Olkiluoto (TVO) (1979 and 1982) –2 PWR reactors in Loviisa (Fortum) (1977 and 1981) –Older reactors to be phased out around 2030 One new plant under construction, Olkiluoto 3 –EPR / Areva-Siemens 1600 MW –Expected generation 12 TWh/a –Estimated commercial operation in 2014 Extremely good operational experience from current fleet Plans for final disposal of spent fuel scheduled, funded and widely accepted –High level waste storage facility under construction –Low and intermediate level waste storage in use since 1992 Nuclear power faces growing and relatively high public acceptance

36. 31.1.2012 JUL 36 Poll on nuclear attitudes since 1982 What is your general attitude towards nuclear power as energy source in Finnish conditions? 13.6.2016 1982-2004 Gallup omnibus, 2006- telephone survey Source Finnish Energy Industries and TNS Gallup Oy Positive 48% Negative 17%

37. 31.1.2012 JUL 37 Nuclear energy – two new projects in Finland Government’s decision in May 2010 –Positive decisions of principle for 2 reactors TVO: Olkiluoto 4 (1000…1800 MW) –5 alternative plant suppliers Fennovoima: one reactor (max 1800 MW) –2 alternative plant suppliers –Ratification by parliament in July 2010 Supplier selection under process The new units in operation in 2020´s

38. 31.1.2012 JUL 38 Attitudes towards different energy sources in electricity production in Finland Data from 2009 (%) Usage... Lähde: Energia-asenteet 2009 increase is good now no opinion decrease Wind power Bio/other.. Hydro power Nuclear power Natural gas Peat Import Oil Coal

39. 31.1.2012 JUL 39 Thank you for your attention! For more information, please contact Jukka Leskelä Finnish Energy Industries Association of electricity and district heating companies Add. Fredrikinkatu 51-53 B FI-00100 Helsinki P.O.Box 100, FI-00101 Helsinki Tel. +358 9 530 520 http://www.energia.fi