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Energy Year 2016:  Increase in electricity consumption

After several lean years, 2016 marked a turn in electricity consumption, which increased by 3.1 per cent. This can be estimated to indicate a pick-up in Finland’s economic development. Electricity consumption has always reflected economic activity and it is still doing so, even if industry as a driver is no longer necessarily working. This is the verdict of Jukka Leskelä, CEO of Finnish Energy, of the statistical data on Energy Year 2016.

“Electricity consumption by housing and agriculture, as well as by services and construction, increased by 4.6 per cent last year. About half of the growth in overall electricity consumption is explained by a higher heating demand than in the previous year. Regardless of this, the figures clearly indicate a pick-up in the economy.

Industrial electricity consumption grew by 1.6 per cent. However, consumption by the biggest electricity user of the industrial sectors, the forest industry, fell by 1.5 per cent, which is due to a structural change in production. On the other hand, the chemical industry and the metal industry registered a growth of just over 4 per cent, and other industry over 6 per cent.

Industrial electricity consumption last year totalled just under 40 TWh, about 47 per cent of total consumption. Just before the recession in 2007, industrial electricity consumption amounted to 48 TWh, which was 53 per cent of total consumption.

Net imports at record levels – positive and negative aspects in electricity imports

Finland consumed 85.1 terawatt-hours (TWh) of electricity last year. Net electricity imports covered 22.3 per cent and Finland’s own production 77.7 per cent of consumption.

Net electricity imports (19 TWh) accounted for over one-fifth of total electricity consumption. This is the highest amount of imported electricity ever used for meeting the electricity demand. Net imports grew by 16 per cent on the previous year. In practical terms, the growth in total electricity consumption was met with imports.

The increase in net imports was driven especially by the very low wholesale market prices of electricity on the Nordic electricity exchange in the early part of the year. There was an abundance of inexpensive electricity available from the Nordic countries throughout the year. In early autumn, the water supply situation deteriorated slightly and the price level of electricity rose, after which the imported volumes from the west were reduced for a while.

The highest amount of electricity came from Sweden (15 TWh) although imports fell slightly on the previous year. On the other hand, imports from Russia (5.9 TWh) grew by almost 50 per cent.

Jukka Leskelä can see both positive and negative aspects in extensive importing of electricity. It is positive that the Nordic electricity market is operating as it should: electricity with low production costs is transmitted to areas where it is cheaper to buy than to produce. The imports would have been even higher without transmission congestions. Luckily, Fingrid in Finland and Svenska Kraftnät in Sweden have already agreed on increasing the transmission connection between the two countries.

– The negative side of high electricity imports is that our own power plant stock will diminish and we will be less able to ensure sufficient electricity supply in all situations. There are no quick, cost-effective solutions to the situation, but the forthcoming nuclear power plant unit will bring considerable relief to the situation.

However, according to Leskelä it is essential that the competitiveness of domestic electricity generation is taken into account in all energy policy decision-making. This applies to both taxation and the authorisation and regulatory procedures.

Wind power also reached record levels as the number of turbines increased. However, they were not the kind of records that were predicted. The lower than expected results were mainly due to a poor wind year in all the Nordic countries in 2016.

At the end of 2016, the installed wind power capacity totalled 1,533 MW and production amounted to just over 3 TWh.

– A considerable amount of new wind power will be completed this year, and the annual production will more or less double over the next couple of years, Leskelä estimates.

A record January

The highest electricity consumption peak ever, 15,177 megawatts, took place in early January, between 5 p.m. and 6 p.m. on 7 January 2016, when the domestic electricity generation capacity (10,889 MW) was almost in full use and imports totalled 4,328 MW. The momentary level of electricity imports was also an all-time record, although it was broken at the start of 2017.

In 2016, there was a fairly long period of sub-zero temperatures, which contributed to reaching the monthly record in electricity consumption (9.3 TWh) that month. However, it is also worth noting that, in December of the current winter, electricity consumption grew by 5 per cent to 8.1 TWh although the month was considerably warm.

The highest recorded peak output of the current winter to date, 14,273 megawatts, was reached at 3 p.m. on Thursday, 5 January 2017.

Carbon dioxide emissions increased slightly

The emissions from power generation with coal, natural gas and peat totalled 6.9 million tonnes of carbon dioxide last year, 8 per cent more than in the previous year. The increase was due to slightly higher use of coal in both combined heat and power generation and in separate electricity generation.

– However, the use of coal was at the second-lowest level in recent history, as were the greenhouse gas emissions from electricity generation. The trend is clearly downward in both coal use and greenhouse gas emissions although there is some variation in individual years.

Last year,78 per cent of electricity produced in Finland was greenhouse gas emission-free. The share of renewable energy sources in electricity generation was 45 per cent, and domestic energy sources accounted for 50 per cent.

– In future, it is important that the role of emissions trading in the EU can be strengthened to enable the continued good trend in emissions reduction without aid schemes that are expensive to taxpayers. The European Commission has put forward good initiatives on this issue. I am confident that the markets will steer electricity generation in a climate-neutral direction, Leskelä says.

Market prices grew

In the early part of 2016, the electricity market prices remained at a similar low level as in the previous year due to a good water supply situation. However, after that they rose clearly, but levelled off again towards the end of the year. The average price of market electricity in Finland last year was 3.25 c/kWh, which is over 9 per cent higher than in 2015 on average.

As always, Finland’s area price on the Nord Pool Spot electricity exchange was occasionally clearly higher than the system price. The average Finland area price in 2016 exceeded the system price by more than 0.5 c/kWh.

Further information:

Jukka Leskelä, CEO, tel. +358 50 593 7233

Taina Wilhelms, Senior Adviser, tel.
+358 40 5487 145″

Our experts on this topic

Jukka Leskelä

Managing Director

Finnish Energy

Jukka Leskelä

Managing Director

Finnish Energy

+358 50 593 7233

Taina Wilhelms

Senior Advisor

Energy Production

Taina Wilhelms

Senior Advisor

Energy Production

+358 40 5487 145

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