Report on the potential and prospects of distributed energy production in Finland
Property-specific energy production increases, solar power for in-house use already profitable at many sites

The report released today examines the potential and market prospects of distributed energy production in Finland up to the year 2030. The report analyses the potential for electricity and heat generation for in-house use, for example in residential and business properties or farms, and estimates the cost and profitability of optional technologies and future profitability prospects. Electricity generation is examined in terms of solar power and small-scale wind power, and thermal production in terms of solar power, geothermal energy and other heat pump concepts. A specific analysis is made of biogas production for electricity and heat generation and for use as a motor fuel. The analysis is limited to renewable distributed energy production and solutions that could have significant potential in Finland by the year 2030 and would have primarily positive implications for the environment.

As far as property-specific electricity generation is concerned, the greatest potential seems to be offered by solar power produced at the property for in-house use. Solar power generation is already profitable on many sites even at the present price level, provided that the panels are of the correct size and the electricity produced can be used to compensate for other electricity consumption, which also makes it possible to avoid power transmission charges and electricity taxes. Most of the profitable production potential will probably be realised on a significant scale during the next decade. If future transmission charges are based on output and are thus less dependent on the level of consumption, this will erode profitability and slow the growth of distributed production, but not stop investments completely.

In the heating sector, the greatest potential is offered by heat pump solutions that can replace existing oil, gas and electric heating systems on individual properties. Solar energy may complement a range of heating systems in new and existing buildings. Oil-fired heating systems are still widely used in properties in Finland. At the current oil prices, it may not be profitable to replace these systems with other forms of heating. It is unlikely that oil heating systems will be totally discarded in Finland over the next ten years.

Biogas can be used as a motor fuel and to produce electricity and heat profitably on sites where biogas is produced from biowaste, wastewater and fractions subject to a ‘gate fee’. A price is payable for processing these fractions, which makes biogas production profitable. At present, small-scale biogas production based on just the income or benefit obtained from the generated energy is often unprofitable. It is estimated that approximately half of the total potential of biogas sources subject to a gate fee is already being harnessed in Finland. For example, field biomasses offer much greater potential, but the operations would require massive subsidies or other incentives to make financial sense.

Distributed energy production cannot be examined exclusively in terms of financial profitability or the existing market model. In the context of distributed production, a large number of new business models are being developed to utilise other value generated for customers or adopt logics that differ from the conventions of the energy market. Distributed production would make it possible for private consumers, organisations and small firms to engage in active energy generation. At the same time, consumers are looking for ways in which to easily produce energy for their own use. This creates opportunities for new and existing energy market operators to introduce new products and service concepts.

The report was prepared by Pöyry Management Consulting Oy for use as background material for the national energy and climate strategy up to 2030 and as part of the implementation of the Government Plan for Analysis, Assessment and Research for 2016.

Final report (in Finnish)

For more information on the Government’s analysis, assessment and research activities, see tietokayttoon.fi

Inquiries: Jenni Patronen, Pöyry Management Consulting Oy, tel. +358 (0)103 324 330, jenni.patronen (at) poyry.com

Contact at the Ministry: Senior Government Adviser Päivi Janka, Ministry of Economic Affairs and Employment, tel. +358 (0)295 064 833 paivi.janka (at) tem.fi