Wind Energy in Finland

finland.jpgFinland’s 15-GW winter-peaking power system had 85 TWh of electrical demand in 2016. Renewables provided about 35% of the country’s electricity consumption in 2016: 18.4% by hydropower, 12.6% by biomass, and 3.6% by wind power. Installed wind power capacity was 1,533 MW at the end of 2016, generating 3.1 TWh. The target set for 2020 is to generate 6 TWh/yr.

Construction of wind power started growing in Finland in 2012, following 2011 legislation guaranteeing prices for renewable generation. The quota under the guaranteed price scheme—2,500 mega-volt amperes (MVA) of wind power—has been filled, and the projects accepted into the scheme must be built by 1 November 2017.

In 2016, the government published a new National Energy and Climate Strategy for 2030 that introduces a tendering-based subsidy scheme and fulfills the new European Union (EU) guidelines for technology neutrality. Between 2018-2020, production capacity able to generate a total of 2 TWh will be put out to tender. The wind power sector in Finland is estimated to employ 2,000–3,000 people in wind power industry and 2,200 in project development, construction, and operation and maintenance (O&M).

Policies Supporting Development

Finland implemented a market based feed-in system with guaranteed pricing, managed by the Energy Authority, in 2011. The guaranteed price for wind power was set at 83.50 EUR/MWh (87.93 USD/MWh) for 12 years. A higher guaranteed price of 105.3 EUR/MWh (110.88 USD/MWh) was available until the end of 2015 to encourage early projects. Producers are paid the guaranteed price minus the three-month average spot price as a premium every three months. The average spot price in the electricity market Nordpool remained low in 2016, at 32 EUR/MWh (34 USD/MWh), versus 30 EUR/MWh (32 USD/MWh) in 2015.

If the average spot price rises above the guaranteed price, no premium will be paid. Should the average spot price drop below 30 EUR/MWh (32 USD/MWh), producers will only get production premiums based on 30 EUR/MWh (32 USD/MWh). During the hours when the spot price is 0 EUR/MWh or less, producers will not get premium payments for that hour—this incentivizes turbines shutting down to help the power system in cases of surplus power production. So far, zero price events have not been seen in Finland. Wind power producers are responsible for paying the imbalance fees from their forecast errors. This adds an estimated 2.0–3.0 EUR/MWh (2.1–3.2 USD/MWh) to the producers, if they use a weather forecast-based prediction system for the day-ahead bids to the electricity market.

In 2016, wind power producers received about 130 million EUR (137 million USD) in premiums, or 50 EUR/MWh (53 USD/MWh) produced by wind turbines in the system. This high premium was due to low level electricity spot prices. If the emission trading of fossil fuel prices raises electricity market prices, this will reduce the payments for this subsidy. There is no special subsidy for offshore wind power. However, an offshore wind power plant demonstration subsidy of 20 million EUR (21 million USD) was given to the Hyötytuuli project
in Pori (about 50 MW) in 2014. The project will also receive the guaranteed price system premium.

The Ministry of Economic Affairs and Employment will commission an independent and comprehensive report on the negative health and environmental impacts of wind power before the new operating aid scheme is drafted.

Renewable Energy Targets

As part of the EU’s 20% target, Finland’s renewable energy source (RES) goal is 38% of the final energy consumption in 2020. This goal has been achieved with the share of RES in 2016 exceeding 40%. The 2008 Climate and Energy Strategy set a wind power goal of 6 TWh/yr for the year 2020 (6–7% of the total electricity consumption) and the 2013 energy strategy increased the wind power target to 9 TWh/yr by 2025.

In 2016, the National Energy and Climate Strategy for 2030 was published with the following goals:
  • Renewables will cover 50% of energy end use
  • Energy self-sufficiency will be 55%
  • Oil will be reduced by 50% compared to 2005
  • Biofuels will cover 30% of transportation
  • Coal will be phased out.
Production capacity able to generate a total of 2 TWh of electricity per year will be acquired through a technology neutral tendering process in 2018–2020. The model for operating aid and associated tendering process will be specified in greater detail before tendering. The government will carefully consider societal impacts, including those on businesses, the environment, and human health in these guidelines.