FINLAND POWER MARKET OUTLOOK TO 2030, …Finland Power Market Outlook to 2030, Update 2014 – Market Trends, Regulations and Competitive Landscape FINLAND POWER MARKET OUTLOOK TO

REFERENCE CODE GDPE0748ICR | PUBLICATION DATE NOVEMBER 2014

FINLAND POWER MARKET OUTLOOK TO 2030, UPDATE 2014 – MARKET TRENDS, REGULATIONS

AND COMPETITIVE LANDSCAPE

Finland Power Market Outlook to 2030, Update 2014 – Market Trends, Regulations and Competitive Landscape 2 © GlobalData. This report is a licensed product and is not to be copied, reproduced, shared or resold in any form.

FINLAND POWER MARKET OUTLOOK TO 2030, UPDATE 2014 – MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

Executive Summary

Hydropower Capacity Dominates Electricity Generation in Finland

Hydropower accounted for a XX% share of the

total installed capacity of Finland in 2013, followed

by coal-based thermal power with XX%, and

nuclear power with XX%. Other renewable sources

such as biomass, biogas, solar PV, and onshore

and offshore wind accounted for a share of XX%,

followed by oil-based thermal capacity with XX%.

The remaining XX% was accounted for by gas-

based thermal power capacity.

Power Market, Finland, Cumulative Installed Capacity Breakdown by Fuel Type (%), 2013

Hydropower

Coal (thermal)

Nuclear

Oil (thermal)

Gas (thermal)

Other renewables: biomass, biogas,

onshore and offshore wind, solar PV

Source: GlobalData, Power Database [Accessed on October 28, 2014] PV: Photovoltaic

Increase in Power Consumption and Generation from 2000 to 2013

Electricity generation in Finland has varied over

recent years, depending on precipitation levels,

demand for electricity, Nordic spot prices, and

other conditions. Finland recorded an increase in

power consumption from 2000 to 2013. Annual

power consumption amounted to XX Terawatt

hours (TWh) in 2000, and increased at a

Compound Annual Growth Rate (CAGR) of XX%

to XX TWh in 2013. Annual electricity generation

also increased during the same period, from XX

TWh in 2000 to XX TWh in 2013, at a CAGR of

XX%. The industrial sector is the biggest user of

electricity in the country and is the key contributor

to the high growth in power consumption. The cold

climatic conditions prevailing in Finland is another

key factor contributing to the high growth of

electricity consumption.

Power Market, Finland, Annual Power Consumption and Generation (TWh), 2000–2013

2000 2007 2013

Annu

al p

ower

con

sum

ptio

n an

d ge

nera

tion

(TW

h)

Annual power consumption Annual power generation Source: GlobalData, Power Database [Accessed on October 28, 2014]


Table of Contents


1 Table of Contents

1 Table of Contents ....................................................................................................................... 4

1.1 List of Tables ...................................................................................................................... 7

1.2 List of Figures ..................................................................................................................... 9

2 Introduction ............................................................................................................................... 10

2.1 GlobalData Report Guidance ............................................................................................ 11

3 Finland, Power Market, Snapshot ............................................................................................. 12

3.1 Finland, Power Market, Macroeconomic Factors ............................................................... 12

3.2 Finland, Power Market, Supply Security ............................................................................ 15

3.3 Finland, Power Market, Generation Infrastructure ............................................................. 16

3.4 Finland, Power Market, Transmission Infrastructure.......................................................... 16

3.5 Finland, Power Market, Opportunities ............................................................................... 16

3.6 Finland, Power Market, Challenges ................................................................................... 17

4 Finland, Power Market, Market Analysis ................................................................................... 18

4.1 Finland, Power Market, Supply Structure .......................................................................... 18

4.2 Finland, Power Market, Key Market Players ...................................................................... 18

4.3 Finland, Power Market, Financial Deals ............................................................................ 19

4.3.1 Deal Volume and Value Analysis, 2004–2013 ............................................................... 19

4.3.2 Deals by Type, 2013 ..................................................................................................... 21

4.4 Finland, Power Market, Demand Structure ........................................................................ 22

4.4.1 Consumption by Sector, 2013 ....................................................................................... 25

5 Finland, Power Market, Regulatory Scenario ............................................................................ 26


Table of Contents


5.1 Finland, Power Market, Key Electricity Policies ................................................................. 26

5.1.1 Finland, Power Market, Market Reforms ....................................................................... 26

5.1.2 Finland, Power Market, Renewable Energy Policy and Incentives................................. 26

5.1.3 Finland, Power Market, Energy Efficiency ..................................................................... 27

5.2 Finland, Power Market, Foreign Investment Scenario ....................................................... 28

6 Finland, Power Market, Capacity and Generation Overview ..................................................... 29

6.1 Finland, Power Market, Cumulative Installed Capacity by Power Plant Type, 2013 .......... 29

6.2 Finland, Power Market, Cumulative Installed Capacity and Annual Power Generation,

2000–2030 ........................................................................................................................ 30

6.2.1 Cumulative Installed Thermal Capacity and Annual Thermal Power Generation, 2000–

2030 ............................................................................................................................. 33

6.2.2 Cumulative Installed Hydropower Capacity and Annual Hydropower Generation, 2000–

2030 ............................................................................................................................. 37

6.2.3 Cumulative Installed Renewable Capacity and Annual Renewable Power Generation,

2000–2030 ................................................................................................................... 40

6.2.4 Cumulative Installed Nuclear Power Capacity and Annual Nuclear Power Generation,

2000–2030 ................................................................................................................... 45

7 Finland, Power Market, Transmission and Distribution Overview .............................................. 47

7.1 Finland, Power Market, Transmission Overview ................................................................ 47

7.2 Finland, Power Market, Distribution Overview ................................................................... 48

7.3 Finland, Power Market, Grid Interconnection .................................................................... 49

7.3.1 Electricity Import and Export Trends, 2000–2013 .......................................................... 50

7.4 Finland, Power Market, Electricity Trading ........................................................................ 51


Table of Contents


8 Finland, Power Market, Competitive Landscape: Snapshot of Top Power Generating

Companies ............................................................................................................................... 52

8.1 Key Company in Finland Power Market – Fortum Corporation .......................................... 52

8.1.1 Fortum Corporation, Company Overview ...................................................................... 52

8.1.2 Fortum Corporation, Business Description .................................................................... 52

8.1.3 Fortum Corporation, SWOT Overview ........................................................................... 53

8.2 Key Company in Finland Power Market – Pohjolan Voima Oy .......................................... 60

8.2.1 Pohjolan Voima Oy, Company Overview ....................................................................... 60

8.2.2 Pohjolan Voima Oy, Business Description ..................................................................... 60

8.2.3 Pohjolan Voima Oy, SWOT Overview ........................................................................... 61

9 Appendix................................................................................................................................... 67

9.1 Market Definitions ............................................................................................................. 67

9.1.1 Power ............................................................................................................................ 67

9.1.2 Installed Capacity .......................................................................................................... 67

9.1.3 Electricity Generation .................................................................................................... 67

9.1.4 Electricity Consumption ................................................................................................. 67

9.1.5 Thermal Power Plant ..................................................................................................... 67

9.1.6 Hydropower Plant .......................................................................................................... 67

9.1.7 Nuclear Power............................................................................................................... 67

9.1.8 Renewable Energy Resources ...................................................................................... 68

9.2 Abbreviations .................................................................................................................... 68

9.3 Bibliography ...................................................................................................................... 69

9.4 GlobalData’s Methodology ................................................................................................ 70


Table of Contents


9.4.1 Coverage ...................................................................................................................... 70

9.4.2 Secondary Research and Analysis ................................................................................ 70

9.4.3 Primary Research and Analysis..................................................................................... 71

9.5 Disclaimer ......................................................................................................................... 72

1.1 List of Tables

Table 1: Power Market, Finland, Gross Domestic Product ($bn), Population (million), and Annual Power

Consumption (TWh), 2000–2019 ................................................................................................. 15

Table 2: Power Market, Finland, Market Share of Leading Power Generation Companies (%), 2013 ......... 19

Table 3: Power Market, Finland, Deal Value ($bn) and Number of Deals, 2004–2013 ............................... 21

Table 4: Power Market, Finland, Deals by Type (%), 2013 ........................................................................ 22

Table 5: Power Market, Finland, Annual Power Consumption (TWh), 2000–2030 ...................................... 24

Table 6: Power Market, Finland, Power Consumption by Sector (%), 2013 ................................................ 25

Table 7: Power Market, Finland, Foreign Direct Investment ($bn), 2009–2013 .......................................... 28

Table 8: Power Market, Finland, Cumulative Installed Capacity by Fuel Type (%), 2013 ............................ 30

Table 9: Power Market, Finland, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh),

2000–2030 .................................................................................................................................. 32

Table 10: Power Market, Finland, Leading Active Thermal Power Units, 2013 ............................................. 34

Table 11: Power Market, Finland, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power

Generation (TWh), 2000–2030 .................................................................................................... 36

Table 12: Power Market, Finland, Active Hydropower Projects, 2013 .......................................................... 37

Table 13: Power Market, Finland, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower

Generation (TWh), 2000–2030 .................................................................................................... 39

Table 14: Power Market, Finland, Leading Active Renewable Power Plants, 2013 ...................................... 41

Table 15: Power Market, Finland, Upcoming Renewable Power Plants, 2014–2020 .................................... 42


Table of Contents


Table 16: Power Market, Finland, Cumulative Installed Renewable Power Capacity (GW) and Annual

Renewable Power Generation (TWh), 2000–2030 ....................................................................... 44

Table 17: Power Market, Finland, Active Nuclear Power Plants, 2013 ......................................................... 45

Table 18: Power Market, Finland, Upcoming Nuclear Power Plants, 2013 ................................................... 46

Table 19: Power Market, Finland, Transmission Line Length (Ckm), 2000–2020 ......................................... 48

Table 20: Power Market, Finland, Distribution Line Length (Ckm), 2000–2020 ............................................ 49

Table 21: Power Market, Finland, Annual Power Imports and Exports (TWh), 2000–2013 ........................... 51

Table 22: Power Market, Finland, Fortum Corporation, SWOT Analysis ...................................................... 54

Table 23: Power Market, Finland, Pohjolan Voima Oy, SWOT Analysis ....................................................... 62

Table 24: Abbreviations .............................................................................................................................. 68


Table of Contents


1.2 List of Figures

Figure 1: Power Market, Finland, Gross Domestic Product ($bn) and Population (million), 2000–2019 ....... 13

Figure 2: Power Market, Finland, Annual Power Consumption (TWh), 2000–2019 ...................................... 14

Figure 3: Power Market, Finland, Market Share of Leading Power Generation Companies (%), 2013 ......... 18

Figure 4: Power Market, Finland, Deal Value ($bn) and Number of Deals, 2004–2013 ............................... 20

Figure 5: Power Market, Finland, Deals by Type (%), 2013 ........................................................................ 21

Figure 6: Power Market, Finland, Annual Power Consumption (TWh), 2000–2030 ...................................... 23

Figure 7: Power Market, Finland, Power Consumption by Sector (%), 2013 ................................................ 25

Figure 8: Power Market, Finland, Cumulative Installed Capacity by Fuel Type (%), 2013 ............................ 29

Figure 9: Power Market, Finland, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh),

2000–2030 .................................................................................................................................. 31

Figure 10: Power Market, Finland, Cumulative Installed Thermal Power Capacity (GW) and Annual Thermal

Power Generation (TWh), 2000–2030 ......................................................................................... 35

Figure 11: Power Market, Finland, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower

Generation (TWh), 2000–2030 .................................................................................................... 38

Figure 12: Power Market, Finland, Cumulative Installed Renewable Power Capacity (GW) and Annual

Renewable Power Generation (TWh), 2000–2030 ....................................................................... 43

Figure 13: Power Market, Finland, Annual Power Imports and Exports (TWh), 2000–2013 ........................... 50



Introduction

2 Introduction

Finland, a highly developed market-based industrialized economy, had a per-capita output of $XX

in 2013, almost equivalent to other advanced European nations including the Netherlands,

Belgium, Sweden and Austria. It is primarily an export-oriented nation, and has a well-established

manufacturing sector specializing in engineering, metals, telecommunications and electronics.

Finland imports raw materials, energy and some manufacturing items. Agriculture and forestry

provide a source of occupation for the rural population.

Finland was not greatly affected by the global financial recession in 2008. However, the Eurozone

crisis in 2009 resulted in a drastic decline in exports and domestic demand. The economy was

negatively affected and the real Gross Domestic Product (GDP) growth for 2009 was a negative

XX%. The economy recovered in 2010, as a result of increased exports, domestic trade and

household consumption, but in the following year the European financial recession resulted in a

reduced export growth rate of XX%. This continued to affect the country’s GDP growth in 2012 and

2013, when rates of negative XX% and negative XX% were recorded, respectively. The challenge

facing policymakers is to mitigate the possible impact of recession in 2014 through the adoption of

measures to promote growth and development.

With an estimated GDP (at current prices) of $XX billion in 2013, the economy registered a

negative GDP growth rate of XX% in that year. The services sector contributed the highest share of

the country’s GDP with XX% in 2013, followed by the industrial sector with XX%. The remaining

XX% was contributed by the agriculture sector. The country’s main trading partners include

Sweden, Germany, Russia, the Netherlands, the UK, the US and China (CIA, 2013).

The Ministry of Employment and the Economy is responsible for policy making in the Finnish

energy sector. The Energy Market Authority (EMA) works under the direct supervision of the

Ministry and monitors activities related to the electricity and natural gas markets. The government

is focusing on the development of renewable energy plants in order to reduce its increasing

dependence on thermal power sources. In line with the EU objective relating to renewable energy,

the government set a target to achieve a XX% renewable energy share in the country’s total energy

consumption by 2020. In 2011, the government implemented the Production Subsidy Act, to ensure

that Feed-in Tariffs (FiT) and a fixed subsidy were made available to all renewable energy plants.



Introduction

2.1 GlobalData Report Guidance

The executive summary captures the key growth trends in the Finnish power market.

Chapter three provides a snapshot of the key parameters that affect Finland’s power sector, as

well as key points about the country’s power market.

Chapter four provides a power market analysis for Finland.

Chapter five provides details of the regulatory scenario for the power market, and the inward

foreign investment scenario in Finland.

Chapter six provides information regarding Finland’s cumulative installed capacity and annual

generation trends, as a whole and also by individual generation source.

Chapter seven describes the power Transmission and Distribution (T&D) infrastructure in

Finland, and includes information on interconnections with neighboring countries. The section

also covers electricity imports and exports, and upcoming grid-related projects in Finland.

Chapter eight provides complete descriptions and SWOT analyses of the leading power

generating companies.

Note: all 2013 market numbers provided in the report are estimates, except where actual data were

available.


Snapshot


3 Finland, Power Market, Snapshot

3.1 Finland, Power Market, Macroeconomic Factors

The Finnish economy registered steady growth until 2008. In 2009, the Eurozone crisis impacted

the economy, resulting in a drastic decline in exports and domestic demand. Finland’s GDP (at

constant prices) declined XX% in 2009 and XX% in 2010. Although the economy picked up by

XX% in 2011, growth declined again in 2012 by XX%. The economy picked up in 2013 with

marginal growth of XX%, primarily due to a stimulus package from the government, and is

expected to continue to grow during the 2014–2019 forecast period at a Compound Annual Growth

Rate (CAGR) of XX%.

In Finland, the residential sector is one of the largest consumers of electricity. The population

registered negligible growth from 2000 to 2013, from XX million in 2000 to XX million in 2013. The

economy was turbulent from 2008 to 2011, and this affected the industrial and construction sector,

which is larger than the residential sector in terms of electricity consumption. In light of this, it is

easy to understand why electricity consumption declined by a negative average annual rate of

XX% between 2008 and 2011, and by a negative average annual rate of XX% between 2008 and

2013.

Finland’s electricity consumption amounted to XX Terawatt hours (TWh) in 2000, and increased to

XX TWh in 2013 at a CAGR of XX%. With the economy coming out of the recessionary phase in

2014, power consumption is expected to continue to increase and, by 2019, is expected to reach

XX TWh, increasing from XX TWh in 2014 at a CAGR of XX%.


Snapshot


Figure 1: Power Market, Finland, Gross Domestic Product ($bn) and Population (million), 2000–2019

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Pop

ulat

ion

(mill

ion)

GD

P ($

bn)

GDP (constant prices) Population

Source: GlobalData; IMF, 2014



Market Analysis

4.4.1 Consumption by Sector, 2013

The industrial and construction sector is the largest power-consuming sector in Finland. In 2013, it

accounted for an estimated XX% of total power consumption. This was followed by the residential

and agricultural sector with XX%, and services and other smaller sectors, which accounted for

XX%.

Figure 7: Power Market, Finland, Power Consumption by Sector (%), 2013

Industrial and construction

Residential and agricultural

Services and others

Source: GlobalData

Table 6: Power Market, Finland, Power Consumption by Sector (%), 2013 Sector Share

Industrial and construction

Residential and agricultural

Services and others

Source: GlobalData


Appendix


9 Appendix

9.1 Market Definitions

9.1.1 Power

Power refers to the rate of production, transfer or energy use, usually related to electricity. It is

measured in Watts (W) and often expressed in kilowatts (kW) or Megawatts (MW). It is also known

as real power or active power.

9.1.2 Installed Capacity

Installed capacity refers to the generator’s nameplate capacity as stated by the manufacturer, or

the maximum rated output of a generator under given conditions. It is given in Megawatts (MW) on

a nameplate affixed to the generator.

9.1.3 Electricity Generation

Electricity generation refers to the process of generating electricity from other forms of energy. It

also refers to the amount of electricity produced, expressed in Gigawatt hours (GWh).

9.1.4 Electricity Consumption

Electricity consumption is the sum of electricity generated, plus imports, minus exports and

transmission and distribution losses. It is measured in Gigawatt hours (GWh).

9.1.5 Thermal Power Plant

This refers to a plant in which turbine generators are driven by burning fossil fuels.

9.1.6 Hydropower Plant

This refers to a plant in which the turbine generators are driven by falling water.

9.1.7 Nuclear Power

This refers to the electricity generated by the use of thermal energy, released from the fission of

nuclear fuel in a reactor.


Appendix


9.1.8 Renewable Energy Resources

Renewable energy resources are those that provide energy that is naturally replenished but limited

in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydro and

wind are examples of renewable resources.

9.2 Abbreviations

Table 24: Abbreviations BWR Boiling Water Reactor

CAGR Cumulative Average Growth Rate

CCGT Combined-Cycle Gas Turbine

Ckm Circuit kilometers

DC Direct Current

EMA Energy Market Authority

FDI Foreign Direct Investment

FiT Feed-in Tariff

Fortum Fortum Corporation

GDP Gross Domestic Product

GHG Greenhouse Gas

GW Gigawatt

kV kilovolt

kW kilowatt

MW Megawatt

PV Photovoltaic

TVO Teollisuuden Voima Oyj

TWh Terawatt hours

T&D Transmission and Distribution

Source: GlobalData


Appendix


9.3 Bibliography

CIA (2013). Europe: Finland. Central Intelligence Agency. Available from:

https://www.cia.gov/library/publications/the-world-factbook/geos/fi.html [Accessed on October

22, 2014]

EC (2012). Electricity interconnection Finland - Estonia (Estlink-02). European Commission.

Available from: http://ec.europa.eu/energy/eepr/projects/files/electricity-

interconnectors/estlink2_en.pdf

EMA (2011a). Renewable Energy. Energy Market Authority. Available from:

http://www.energiamarkkinavirasto.fi/alasivu.asp?gid=445&languageid=826 [Accessed on

October 22, 2014]

EMA (2011b). Annual Report to the European Commission Finland. Energy Market Authority.

Available from:

http://www.energiamarkkinavirasto.fi/files/Annual_Report_2011_Finland_15072011.pdf

Fingrid (2012). Nordic power system and interconnections with other systems. Finnish Power

Grid. Available from:

http://www.fingrid.fi/en/powersystem/general%20description/Nordic%20power%20system%20a

nd%20interconnections%20with%20other%20systems/Pages/default.aspx [Accessed on

October 22, 2014]

IMF (2014). World Economic Outlook Database. International Monitory Fund. Available from:

http://www.imf.org/external/pubs/ft/weo/2014/02/weodata/index.aspx [Accessed on October 22,

2014].

OECD (2014). OECD FDI in Figures, 2014. Organisation for Economic Co-operation and

Development. Available from: http://www.oecd.org/investment/FDI-in-Figures-April-2014.pdf

Prusila J and Puikkonen I (2012), via Comisión Nacional de Energía. Energy Law in Finland.

In: European Energy Review. Herbert Smith. Available from: http://www.cne.es/cgi-

bin/BRSCGI.exe?CMD=VEROBJ&MLKOB=609743965757 [Accessed on October 22, 2014]

Reuters (2012). Finland plans windfall tax on nuclear, hydro plants in 2014, Reuters, Available

from: http://in.reuters.com/article/2012/09/11/hold-finland-utilities-windfall-

idINL5E8KB63L20120911 [accessed on October 22, 2014]


Appendix


Statistics Finland (2011). Appendix figure 6: Electricity consumption by sector 1970–2010.

Statistics Finland. Available from: http://www.stat.fi/til/ekul/2010/ekul_2010_2011-12-

13_kuv_006_en.html [Accessed on October 22, 2014]

9.4 GlobalData’s Methodology

GlobalData’s dedicated research and analysis teams consist of experienced professionals with

advanced statistical expertise and marketing, market research and consulting backgrounds in the

energy industry.

GlobalData adheres to the codes of practice of the Market Research Society (www.mrs.org.uk) and

Strategic and Competitive Intelligence Professionals (www.scip.org).

All of GlobalData’s databases are continuously updated and revised. The following methodology

has been followed for the collection and analysis of data presented in this report.

9.4.1 Coverage

This report gives detailed information on Finland’s power market. It examines the market structure

and provides historical and forecast numbers for generation, capacity and consumption up to 2030.

The report provides insights on the market’s regulatory structure, import and export trends,

competitive landscape, and leading active and upcoming power projects.

9.4.2 Secondary Research and Analysis

The research process begins with extensive secondary research using GlobalData's proprietary

databases and external sources.

The capacity, generation and consumption data is collected and validated using a number of

secondary resources, including, but not limited to:

Government agencies, ministerial websites, industry associations, the World Bank, statistical

databases

Company websites, annual reports, financial reports, broker reports and investor presentations

Industry trade journals, market reports and other literature

GlobalData’s proprietary databases, including the Capacity and Generation Database, the

Power Plant Database and the Transmission and Distribution Database.


Appendix


Further to this, the following secondary information is collected and analyzed to project Finland’s

power market scenario through to 2030, analyzing factors such as the following:

Finland’s macro-economic scenario

Government regulations, policies and targets

Government and private sector investments

Contract and deal announcements

Utility expansion plans

The sector’s historic track record

Other qualitative insights built through secondary research and analysis of company websites,

annual reports, investor presentations, industry and trade journals, and data from industry

associations.

9.4.3 Primary Research and Analysis

GlobalData conducts extensive primary interviews with industry participants and commentators in

order to validate its data and analysis.

A typical research interview fulfills the following functions:

Obtains the interviewee’s perspective on the market size, growth trends, competitive landscape

and future outlook

Validates secondary research findings

Further develop the analysis team’s expertise and market understanding

The participants are drawn from a diverse set of backgrounds, including equipment manufacturers,

industry associations, government bodies, utilities, distributors, and academia. The participants

include, but are not limited to, C-level executives, industry consultants, academic experts, business

development and sales managers, purchasing managers, plant managers, government officials,

and industry spokespeople.


Appendix


9.5 Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior

permission of the publisher, GlobalData.

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FINLAND POWER MARKET OUTLOOK TO 2030, …Finland Power Market Outlook to 2030, Update 2014 – Market Trends, Regulations and Competitive Landscape FINLAND POWER MARKET OUTLOOK TO