Industrial electrification and new investments are increasing electricity consumption, creating a growing need for both new electricity generation and flexibility. According to Renewables Finland, flexibility in the power system should primarily be developed on market terms through flexible electricity consumption, energy storage, electricity generation and well-functioning transmission connections. If new balancing capacity is supported with public funding, for example through the winter energy support scheme currently under preparation, the support should be directed towards investments that promote new clean solutions.
Industrial electrification, new industrial investments and the replacement of fossil energy, which poses a range of challenges, with renewable electricity are increasing electricity consumption in Finland. Significant amounts of new electricity generation will be needed in the future. Wind and solar power are the lowest-cost forms of new electricity generation in Finland, and substantial additional capacity is expected to be built over the coming decade. At the same time, the temporal variability of electricity generation will increase, along with the need for balancing capacity.
According to Renewables Finland, flexibility in the power system should primarily develop on market terms. As electricity prices fluctuate, it becomes more profitable to invest in generation that produces electricity particularly when supply is scarce. However, the solution does not lie in any single balancing technology, but in increasing the flexibility of the power system as a whole. The Finnish Government is currently preparing a winter energy support scheme aimed at strengthening security of electricity supply by supporting dispatchable electricity generation capacity. According to Renewables Finland, any such support should be directed towards investments that introduce new clean solutions into the power system and help develop technological expertise.
“If public funding is used to support balancing capacity, it should also bring something new to the energy system. For example, requiring the use of biogas or e-methane could help create a market for new synthetic fuels. Technologies that convert stored heat back into electricity may also need incentives to become commercially viable,” says Anni Mikkonen, CEO of Renewables Finland.
A more even geographical distribution of wind and solar power across Finland would also help balance electricity generation.
“Where electricity is generated also matters. Enabling wind power development in Eastern Finland and offshore areas would create a more balanced geographical distribution of renewable electricity generation, strengthen the power system and help reduce electricity price fluctuations. Wind conditions in Eastern Finland differ from those in the Ostrobothnian regions, where most of Finland’s wind power capacity is currently located. This is why it is important to systematically address the barriers to new development,” Mikkonen continues.
The growing need for flexibility is already reflected in investment activity. According to Renewables Finland’s project data, nearly 12 gigawatts (GW) of battery storage capacity is planned in Finland, with almost one gigawatt currently under construction. Most of the planned battery storage projects are located alongside wind and solar power generation.
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