Total emissions from energy production decreased by twenty percent during 2020. Emissions decreased by 24% for electricity and by 13% for district heating. Compared to the peak year for emissions, 2003, emissions from electricity and district heating have been reduced by as much as 72%.
Over the last ten years, emissions from electricity generation have fallen to below a quarter of the base level. The decline is due to the replacement of fossil production by wind power and the transition from peat to wood chips in combined heat and power generation.
“Energy consumption decreased due to an exceptionally warm year, but emissions have also decreased gratifyingly due to long-term investments made by companies in the field,” says Jukka Leskelä, CEO of Finnish Energy. “On the other hand, the year has been difficult for energy producers. Demand has fallen and prices have been low. Fortunately, the current year looks more normal,” Leskelä goes on.
Most of the emission-free electricity is still generated by nuclear power (34%) and hydropower (24%). The share of nuclear power remained at the same level as in 2019, while the share of hydropower increased by as much as 27% compared to the previous year due to good production conditions. Wind power production rose by almost 30% and its share of electricity production rose by more than ten percent for the first time. Of all electricity, 12% was generated by wind power in 2020.
Separate electricity production from fossil fuel power plants continued to decline. The share of solar power doubled, but the share is still modest (0.4%).
About 85% of electricity generation was emission-free in 2020. The share of zero-emission production increased by four percentage points compared to the previous year.
Emissions have also been reduced by replacing coal with lower-emission natural gas, the distribution infrastructure of which is also suitable for synthetic and biogases. Its share rose from eleven percent to fourteen during 2020. At the beginning of 2020, the gas market opened up when the Baltic Connector gas pipeline between Finland and Estonia became operational. The opening of the market lowered the price of natural gas in Finland and brought new players to the market.
“It is great that the gas market was immediately activated,” Leskelä says. “In the future, gases will play an important role in the transition to a climate-neutral energy system.”
The market balances the fluctuation of electricity generation and enables renewable production
Net imports of electricity fell to just over 18% of consumption. The previous year’s figure was 23%. Imports from Russia practically plummeted. The decrease was 63% and the level of imports from Russia was lower than at any time since 1990. At the same time, imports from the other Nordic countries increased by 17%. This means that imported electricity was also produced with fewer emissions than before. Imports from the Nordic countries consist particularly of electricity produced by hydropower.
In 2020, there was enough electricity for exports, too, with those to Estonia and the rest of the Baltic countries rising by 74%, due to the low price of Nordic electricity.
“The market functions well,” says Jukka Leskelä. “Prices drive demand and electricity is supplied to where it is needed. The electricity system is well able to integrate renewable modes of production and balance out changes in demand. Therefore, we have had enough electricity also for exporting to Estonia and the other Baltic countries.
Total electricity consumption fell by 6%. The decrease is mainly due to the 8% drop in industrial electricity consumption. The disruption of the world economy produced by the coronavirus affected the volume of industrial production to some extent, but the impact turned out to be smaller than feared.
The total electricity price including tax paid by households in Finland corresponded to the European average, but relative to purchasing power, electricity was the fourth cheapest in Europe after Iceland, Norway and the Netherlands. For example, relative to purchasing power, consumers in Germany pay almost double the price for their electricity compared to Finland.
The wholesale price of electricity fell by 36% due to the weather and market situation. The year 2020 was the mildest in history (Finnish Meteorological Institute 31 December 2020) and almost snow-free south of Oulu. The good availability of hydropower was spread over a longer period, aided by the rainy winter season. In the southern half of the country, there was no flood peak caused by the dissipation of the snow load, as the rains came as water. In the north, the snow load was exceptionally high, so the peak in hydropower production continued there until June.
District heating becomes cleaner For the first time, the share of climate-neutral production in district heating rose to more than half, now at 54%. At the same time, the emissions from district heating decreased by 13%. Over the past ten years, the emissions from district heating have fallen by 46%. The reduction in emissions is due to the shift from coal and peat to biomass and waste heat as energy sources. The share of natural gas also increased in 2020. The share of biomass, on the other hand, has grown steadily for more than a decade. Utilisation of waste heat has more than tripled in the 2010s and will continue to grow as new heat sources are identified and introduced.
“District heating companies have been reducing their emissions at a good pace over the past ten years, but I expect emissions to decrease even faster in the course of the current decade,” says Leskelä. “Based on what we hear from the companies, it would seem that major changes can be expected in the next few years,” Leskelä continues.
The exceptional winter affected both district heating demand and production conditions. A record warm year reduced the demand for heating. On the other hand, it also resulted in exceptionally poor availability of forest energy.
Due to the ground remaining unfrozen, forestry machines were difficult to operate, and in some places up to a third of the logging residue was used to strengthen the tracks. Work stoppages in the forest industry also affected the availability of wood fuels generated as a by-product.
The single biggest factor contributing to the reduction in fossil fuel use is emissions trading, which has proven to be an effective tool. The prices of emission allowances have increased fivefold since 2017, and the rise has made peat a much more expensive heat source than biomass.
Just under half of all properties are covered by district heating. Of new buildings, 56% select district heating as their heating method, so its popularity has remained high. The vast majority of new apartment buildings are connected to district heating; for single-family houses, geothermal heat and heat pumps are also popular.