Operating environment

One of the world’s largest nuclear power plants will be connected to Finland’s power system in 2021. Wind power has become profitable on market terms, and the amount of electricity produced with wind energy is growing strongly. The use of coal as a fuel for electricity or heat generation will be banned as of 1 May 2029, the European clean energy package has been adopted and the “sector coupling” poised to renew the sector will integrate electricity, heating and electricity-powered transportation more efficiently than before. As the sector changes, Fingrid has gained new customers as a result of, among other things, restructuring and new players.

The power system is undergoing a major transformation and is at the heart of mitigating climate change. The energy transition has a growing impact on all of our daily lives. Tomorrow’s clean power system will be based on nuclear power, hydropower, wind power and solar power. Electricity production will be more decentralised and weather conditions will dictate how much electricity will be produced and when. Society will be increasingly powered by electricity, with electricity being used to reduce emissions from transportation and heating. 

In this major energy transition, Fingrid plays an active role in shaping a clean market-based power system. We work in close collaboration with the market participants, authorities and political decision-makers.

Our task in battling climate change is to create a platform for a clean power system. First of all, this entails taking care of Finland’s main grid and developing it to meet future needs. We have invested in the development of the main grid for several years to enable the connection of clean energy to the grid and make it accessible to consumers and industry.

Secondly, the transformation of the power system also calls for major changes in the structures of the electricity markets. The inflexibility and increasing unpredictability of electricity production must, in future, be balanced by more extensive demand-side management and expanding electricity markets.

In summer 2019, Finland’s Government Programme set forth a framework for the energy sector development goals, but also incentives to develop the sector towards the new goals. The measures will contribute towards reducing emissions from heating and transportation by using electricity. The goals set forth in the Government Programme will also promote the transition to a smart power system, improve the position of consumers and create conditions for a flexible power system, which will contribute towards an increasing use of renewables. The Government Programme sets forth goals for more extensive planning of the siting of wind power plants, which makes it possible for Finland to improve its self-sufficiency in electricity. Revised tax solutions, the development of demand-side management and seasonal storage of electricity, as well as the goals concerning electricity, heating, transport and Nordic co-operation will take Finland towards climate-friendly solutions.

When working on its strategy, Fingrid identified the following four megatrends that have a direct or indirect impact on our operations: climate change and the transformation of the energy system; security of energy supply and electricity dependency; globalisation and responsibility; and digitalisation.

Climate change and transformation of the energy system

Finland’s goal is to be a carbon-neutral society in 2035. The energy sector offers solutions for climate change mitigation. Clean, unbalanced and decentralised production is growing. Use of electricity in the heating and transport sectors is growing. The single European electricity market is increasing efficiency and the reliability of electricity supply, while also contributing to increasing the weather-dependent, renewable electricity generation.

The energy sector plays a key role in combating climate change. The structure of electricity production is changing: while the share of renewable energy is increasing, the production of adjustable fossil-fuel condensing power is on the decline. However, an increase in wind and solar power will result in a scarcity of flexibility and system inertia. Electricity price fluctuations will increase, which will create business opportunities for flexible production and consumption and energy storage technologies.

Fingrid does its part to combat climate change by building and maintaining the main grid. Fingrid’s task is to connect the energy produced in a new way to the main grid and prepare for the decrease of flexible production capacity. The company develops the electricity market also for the needs of a low-carbon power system. Around 2,000 megawatts worth of connection agreements related to wind power were concluded in 2019.In 2019, Fingrid connected to the main grid 132 megawatts of wind power and finished the grid construction work that will enable the connection of the Olkiluoto 3 nuclear power plant to the grid. 

Security of energy supply and electricity dependency

Electricity consumption is increasing and society is demanding a secure and uninterrupted supply of electricity. Security of supply must be guaranteed in a changing power system that involves a lot of weather-dependent production. Security of energy supply and energy self-sufficiency are key themes.

Severe disturbances in the power supply are among the most serious security threats to a modern society. Electricity sector risks are being prepared for as part of the European Commission’s clean energy Winter Package. The aim is to improve the security of electricity supply at the EU level and reinforce regional co-operation. Measures related to crises must be compatible with the rules for the EU’s internal electricity market.

Fingrid’s investments in the electricity network, promoting the markets and developing grid operations improve the reliability of the electricity supply and our preparedness in the face of crisis situations. In risk and continuity management, continuous preparations are made for serious disturbances to the power system in different threat scenarios. The company is actively involved in international co-operation to develop European network codes and preparing for power system disturbances in co-operation with the Baltic Sea region’s TSOs.

Globalisation and responsibility

Globalisation brings opportunities for service and equipment procurements, the labour markets and financing. Responsibility and increasing regulation will be highlighted in a global economy. Companies are providing solutions for society’s challenges. Longer procurement chains and a global focus are posing challenges on responsible operations.

Increased workforce mobility is making energy companies more international. The global financial market offers a well-managed company with a high credit rating a flexible and affordable way of procuring financing. Responsibility is a key component of Fingrid’s operations. The importance of openness is growing.

For Fingrid, globalisation brings new opportunities through an international offering and co-operation. The company has long been making use of international financing markets and is the first Finnish company to have issued a Green Bond. Fingrid’s task as a responsible procurer of goods and services is to promote sustainable development and responsible practices worldwide.

Digitalisation

Digitalisation will renew the power system’s and electricity market’s practices and ways of operating. Digitalisation will increase the importance of information, information technology and telecommunications while enabling new kinds of business. Along with the growth in automation, the ways in which work is performed are also changing. It is increasingly important to manage knowledge capital and ensure cybersecurity.

From Fingrid’s perspective, digitalisation enables even more productive operational processes, better customer service and more efficient sharing of market information. It also provides new tools for managing a changing and increasingly complex power system. Smart grid technology opens up new business opportunities for both current and new operators and, in turn, shapes Fingrid’s customer field.