Plenty of renewables and nuclear power in Finland, yet wintertime challenges ahead

Aalto University School of Engineering is studying current challenges of Finland’s electricity market as part of the RealSolar project. Our research collaborates with national authorities to analyse the outlook of the electricity market. We have developed a model of the Nordic and Baltic electricity market with the PLEXOS tool. The model was used to study with the ENTSO-E ERAA weather data covering years 1982–2016, whether the potential wintertime scarcity situations will become more common in Finland and the Nordic countries by 2030.

The energy landscape of Finland changed significantly after Russia’s invasion to Ukraine. As part of the EU sanctions and national measures, a 1300 MW electricity import connection from St. Petersburg area was disconnected in Spring 2022, as well as natural gas pipeline imports from Russia.

Wind power has been built in Finland in recent years without economic subsidies, such as feed-in-tariffs. The European energy crisis of 2022 speeded up also solar PV installations both on domestic and industrial scales. With the Olkiluoto 3 nuclear power plant entering normal production in 2023, Finland has currently 4300 MW of nuclear capacity and 8400 MW of wind power and a typical total wintertime demand of 10 000–14 000 MW. With the rapid increase of wind power and low average spot market prices, Finland’s district heat systems are being electrified: combined heat and power plants are being retired and replaced with large heat pumps and electric boilers together with large heat storages. Condensing power plants have been retired; the last one Meri-Pori was moved to emergency reserve in Spring 2024.

These are positive news for electricity consumers, as average electricity prices are low. However, the loss of conventional power plants means that during typical winter cold spells with very low winds, there isn’t sufficient capacity anymore, and any disturbance in import connections might cause a severe scarcity situation. The first week of January in 2024 was exceptionally cold in Finland, with temperatures in Helsinki region being -15 °C to -25 °C and down to -40 °C in Lapland for a week. Import connections worked normally, yet the spot market price peaked at about 2000 €/MWh.

With the projected strong growth of wind and solar capacity, the average electricity market prices would remain low until 2030. However, using the 35 years weather data as input for our modelling clearly shows that during severe winters the scarcity situations are becoming more serious.

This study assumed demand management of maximum 10 percent of the annual peak demand, activated based on market price levels. It should be noted that typical challenging winter weather situations are long, more than individual days. There are significant risks for large damages due to freezing of for example water pipes or industrial equipment. Comprehensive measures both in supply and demand are needed to secure the wintertime capacity adequacy.

Read more:

T. Koivunen, S. Syri. Analysis of Severe Scarcity Situations in Finland’s Low Carbon Electricity System Until 2030, Energies, Volume 17, 2024
D. Heenatigala Kankanamge, J. Jääskeläinen, S. Syri. The Impacts of Large-Scale Implementation of Solar Power in the Nordic Power Market. EU PVSEC 2024, 5DV.3.9, 2024
I. Malmipuro, Recent stress situations on the Finnish electricity market, Aalto University, 2024