New support scheme discussed at the Vaasa Energy Week

Fortrum Norway

In Finland, the regulation concerning the support schemes for renewable energy are going through significant changes. A new legislative proposal presents a technology-neutral subsidy scheme based on a competitive bidding process with premiums. The topic was discussed by market players and industry at Energy Regulation Workshop (March 21st, Vaasa City hall).

In 2010 Finland introduced feed-in tariff as economic support mechanism for wind, biogas and wood fuel based combined heat and power. The mechanism has been effective in creating wind power capacity from below 1% market share to about 5.7%. However, the scheme has been also expensive as the electricity market price has been lower than expected. The feed-in tariff for wind, biogas and wood fuel power plants comprises the target price less than the three-month mean market price of electricity. The target price is €83.50/MWh. At the beginning of the scheme the market price varied €45 to €55/MWh but at the end of the support period it has been €30 to €35MWh.

In Vaasa Energy Week preparation of the support scheme based on a competitive bidding process with premiums was discussed. Total of 2 TWh of renewable energy would be generated through the scheme. However, details of the scheme, definitions concerning technological neutrality and schedule of the scheme remained open. Several presentations, representing the industry and market players, forecasted significant increase of the wind power capacity in Finland – despite the details of the new support scheme. For instance one major market player, OX2 informed about their own objectives for Finland being 500-600 MW of wind power, which is about the same as the 2TWh objective. This major market growth would be based on:

  • large number of projects prepared during the feed-in tariff system
  • interest among investors
  • fast technological development (bigger turbines, rotors, towers)
  • competitive procurement processes, and
  • large base of experienced and internationally active project developer

In addition, PPA’s i.e. Power Purchase Agreements, were seen as growing business model with customer being larger-scale companies with RE commitments. Also the length of those agreements can be over 10 year periods. The forecasted future was that 5-10 market players would dominate the market, and scale of the wind power systems could be divided into large-scale market based systems and smaller systems more dependent on the economic supports. As Finland is much dependent on the imported energy (share 23.9%) the growth potential is evident. At the same time the grid imbalances and volatility are increasing.

The support scheme preparation was considered still as uncertain and delays investment decisions. In addition, market players considered that the system might not be equal but favoring more large-scale projects. As the technological neutrality is still undefined, it remains open how the support treats different technologies and introduction of new innovations. The policy advocacy activities are part of the GREBE project, and in Finland the focus will be on informing the project stakeholders about the current transition of the national and regional energy system and related policies.

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