National energy scenarios

This section reviews the national measures for the energy transition within the scope of this thesis. As a starting place, the Ministry of Employment and the Economic Affairs of Finland (MEAE) published the National Energy and Climate Strategy 2013 (MEAE, 2013a, 2013b).

Next, the Energy and Climate Roadmap 2050 (Energia- ja ilmastotiekartta 2050) MEAE (2014a) aims to guide at the strategic level towards a low-carbon society.

Energy and Climate Roadmap 2050 highlights various options for reducing emissions, the most important of which are the energy system transition to a nearly zero-emission system, energy self-sufficiency, and supply security. Finland is highly dependent on energy, and the energy consumption per capita is high.

Therefore, it has traditionally been invested in energy efficiency. Even though Finland is among the top countries in energy efficiency, its energy self-sufficiency is low. Finland is a pioneer in the development of energy technology in many areas.

Koljonen et al. (2014) presents the Low Carbon Finland 2050 platform research project outcome as the basis for the Energy and climate roadmap 2050. Four alternative development paths or scenarios were developed towards low-carbon Finland by 2050: Continuous Growth, Stagnation, Savings, and Change. This thesis focuses on following the development paths of the Continuous Growth and Change scenarios. In the Continuous Growth scenario, the Finnish industry operates based on higher value-added products and concepts. The introduction of new technologies is fast, and the development of services is rapid. Smart solutions are widely used. In the Change scenario, people’s values and attitudes create the conditions for change. The structural changes in society and the development of technology are very rapid.

The Climate Change Act (Ilmastolaki 609/2015, 2015; Climate Change Act 609/2015, 2015) was established to support the strategy work. The strategy work conducted further, and the climate and energy strategy was updated in 2016 with a Government report on the National Energy and Climate Strategy for 2030 (MEAE, 2017a, 2017b), with an extensive background report (Työ- ja elinkeinoministeriö, 2017). A review of a fully renewables-based energy system and identification of the possibilities and challenges in different sectors and the energy system-level challenges (MEAE, 2016) was giving the background information for the government’s strategy work.

The MEAE settled on a Smart Grid Working Group to research the potential of Smart Grids for the electricity market, resulting in the description of A Flexible and Customer-driven Electricity System (MEAE, 2018a). The Smart Grid vision

for Finland 2025 put the customer in the centre for giving them better opportunities to participate in the electricity market. The primary goals are improving the security of supply and creating new business opportunities for companies. The Smart Grid Working Group emphasises market-based demand flexibility, independent flexibility service providers, flexibility services, active customer, energy communities, ES services, cybersecurity, complementary energy system, and the regulatory and economic aspects, which are concluded in Figure 13 by the proposed implementing order. (MEAE, 2018c)

Figure 13. Order for implementing the Smart Grid working group’s proposals. Adapted from (MEAE, 2018a)

The MEAE has started preparing a new strategy in April 2020 (MEAE, 2020a), aiming to be presented to Parliament in autumn 2021 (MEAE, 2020b). It includes reviews under the five dimensions of the EU; low carbon (renewable energy, energy efficiency, energy markets, energy security, and RDI measures), adaptation to climate change, energy and greenhouse gas balances, and comprehensive impact assessments of selected policy mixes. Other current energy and climate policy themes can also be highlighted in the strategy, such as energy supply security. The strategy’s preparation will also consider the EC’s legislative proposals related to the Communication on the Green Deal to tighten the 2030 targets and sector inquiries in various ministries. (MEAE, 2020b)

The active climate actor groups have been recently identified and analysed (Järvelä

& Turunen, 2019), and the ongoing low carbon roadmap creation for 2035 aims for carbon-neutral Finland by 2035 (MEAE, 2020c).

In 2016, The Electricity Research Pool presented a vision and a road map of the Finnish power system: Vision for the future electricity network and electricity market 2035 & a road map 2025. The vision describes the Finnish electricity system in 2035, including a flexible power system, a resource-efficient city, lively countryside, and an active customer, as presented in Figure 14.

Figure 14. The vision of the Finnish power system in 2035. (Kumpulainen et al., 2016)

Kumpulainen et al. (2016) examined the future electricity grid’s role and the electricity grid business by trends towards four boundary scenarios A, B, C and D illustrated in Figure 15 by considering the proportion of DER and the activity of customers and network.

The Scenario A network is active based on small-scale DER, microgrids, and energy communities, which operate locally but can also be aggregated into larger entities for sales in the electricity and flexibility markets. Scenario B has a more centralised solution with large wind farms and energy storages. In scenarios between A and B, “Active distribution network as a distributed energy resources (DER) marketplace” generation is centralised and decentralized appropriate. The customers and the network operators are active players in both. This combination is becoming common, and therefore the power balance of the entire power system must be managed centrally, utilising both large and small units. The Finnish TSO, Fingrid, actively develops a power system towards this combination scenario (Järventausta, 2021). (Kumpulainen et al., 2016)

In Scenario “Finland as the Nordic nuclear power country” (evolution towards C), electricity generation is centralised nuclear power, but elsewhere in the Nordic region, the main form is renewable energy. The Finnish regional price volatility is increasing. Customers optimise their consumption according to the spot price (the seller is the active operator). The distribution network is passive, and there is a need for investment, which the regulation model supports. The distribution network load peaks are growing. In the scenario “Customers disconnect from the grid into their own microgrids” (evolution towards D), small-scale renewable production and energy storage enables customers’ microgrids to disconnect from the utility grid into islands. The regulation does not allow an active role for the distribution network company, so the network remains a passive actor. The business of the electricity sales company is changing. This thesis relies on evolution paths within scenarios A and B and as highlighted in Figure 15. (Kumpulainen et al., 2016)

Figure 15. Four fields of future scenarios for the Finnish electricity networks.

Adapted from (Kumpulainen et al., 2016)

Finnish Energy, supporting the energy sector in Finland, published a Low carbon roadmap (Finnish Energy – Low Carbon Roadmap, 2020) presenting two scenarios, which are business as usual (BAU) and low carbon (LC) scenario for the year 2050. In the LC scenario, the demand for industrial electricity in Finland significantly increases compared with the BAU. The increasing electricity demand is achieved by nuclear and wind power generation, whose share of the total generation increases significantly. The share of combined heat and power (CHP) in district heating remains significant in the LC scenario compared to the BAU scenario. Total fuel consumption decreases, but wood-based fuel consumption increases in the LC scenario. Electricity and district heating production achieve near-zero emissions in both scenarios. In the LC scenario, industries’

decarbonisation causes a significant increase in electricity demand than the BAU.

The electricity network has to adapt to the increasing electricity flows and balancing of the system in different weather conditions. CHP and district heating have a vital role in ensuring the power system’s security of supply in the LC scenario’s flexibility requirements. CHP plants optimize the ratio of electricity and heat production, in which in high electricity price time, electricity production is increased. The flexibility is gained by utilizing the energy storages in district heating system. The heat pumps and electric boilers utilise low electricity prices and can offer flexibility on the demand side.

The review of the energy transition reflected in the EU. National level energy visions in sections 3.1 – 3.3 emphasise the key enablers, which coincide by (i) IES, (ii) the DER implementation and utilisation for systems flexibility via the enhanced markets, (iii) placing the active customer in a significant position, (iv) interconnection between various actors, and (v) active networks and microgrids.

Digitalisation is a prerequisite in energy transition, and the shared understanding of the development path is the cornerstone of the transition. Adoption of RESs is intended beneficial but puts also challenges to be solved. Therefore, new concepts are to be developed to satisfy the stakeholders' needs and resolve the challenges.

The following section describes the ADN and microgrid concepts, which adoption status can explain the socio-technical transition in the power system.