Finland report: Political schism over energy path

FINLAND: A split has surfaced within Finnish Prime Minister Matti Vanhanen's coalition government over the country's future energy mix. At stake is whether the Centre Party's ambitious renewable energy programme can withstand pressure from an initiative by the conservative National Coalition Party (NCP) to build three nuclear reactors. Finland targets 2GW of wind capacity by 2020, but some wind proponents worry that political support for nuclear energy threatens that for wind.

Construction of the Oikiluoto 3 reactor has suffered delays
Construction of the Oikiluoto 3 reactor has suffered delays

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Finance minister Jyrki Katainen of the NCP holds that wind power is less attractive than nuclear, both in terms of capital and electricity generation cost. "Wind-generated power is less reliable than nuclear and, unlike nuclear power, it does not guarantee continuous output due to fluctuations in wind velocity," he says. Finland already has four nuclear reactors and a fifth is under construction. "Three new reactors would improve the competitiveness of Finnish industry, secure production and supply, as well as help us control consumer prices," says Katainen. His views broadly represent those of the NCP.

Both the Centre Party and the Green Party, who are coalition partners with the NCP, have resisted the NCP's push for more nuclear. The government's existing energy policy does not call for licensing more than one nuclear reactor, says economic affairs minister Mauri Pekkarinen of the Centre Party. "We have no agreement in this government to licence three projects," he says. The Centre Party wants to add 6GW of new generating capacity by 2020, including about 2GW from wind, 1.6GW from nuclear and 2.4GW from hydro and other renewables, such as biofuels.

Green Party chair Anni Sinnemaki has slammed Katainen's views, saying parts of Finland can support wind farms that will produce near-continuous wind power. She adds: "Wind-generated power is not the full answer but must be part of the overall solution." Janne Bjorklund is an energy expert at the Finnish Association for Nature, an environmentalist group. He says Finland lost much of its appeal to investors in renewable energy after deciding in 2002 to pursue its Olkiluoto 3 nuclear reactor, the first new nuclear reactor in Europe in years. Despite severe delays and budget overruns at the plant, Finland has been typecast as preferring to rely on nuclear, he says. "After Olkiluoto 3 was decided upon, this is not a good country for investing in renewable energy." Wind power capacity grew by only 4MW in 2009, to 147MW.


Hannele Holttinen, a senior research scientist with expertise in wind at VTT Technical Research Centre of Finland, says that nuclear generation has been an extremely reliable source of power for Finland. But this is not to say that variability in wind need destabilise Finland's power grid, she adds. With wind power still occupying a small portion of the country's total power supply, in the near term there will be little impact on the national power system from fluctuating output due to varying wind speeds, says Holttinen. "In increasing wind power to, say, 10% (of total electricity supply), balancing costs will still stay moderate and issues of generation reliability with wind power will not be very pronounced in the power system," she adds. Balancing costs arise when alternative sources of energy must step in to cover shortfalls in wind.

A research note co-authored in 2009 by VTT and the International Energy Agency wind research group says variability of wind supply can be mitigated, assuming that wind turbines are spread out geographically and at least some of the change in wind speed is forecast. "Because of spatial variations of wind from turbine to turbine in a wind power plant - and to a greater degree from wind power plant to wind power plant - a sudden loss of all wind power on a system simultaneously due to a loss of wind is not credible," states the report, titled Design and Operation of Power Systems with Large Amounts of Wind Power. It also points out that sudden loss of large amounts of wind power due to voltage dips in the grid can be prevented by requiring ride-through technology used to keep generators online at such times.

VTT estimates that meeting the 2GW target for installed wind capacity would require 240-320MW of increased backup capacity from other types of plant. The country's system operator used a different methodology to arrive at 300-350MW, Holttinen says. The cost of managing the variability of output from lots of new wind generation in Finland will be managable. One analysis cited in the report estimates that if wind were to supply 10% of Finnish electricity, increased cost would be EUR2/MWh. An estimate by research project Green Net is lower: EUR0.5/MWh if wind were to meet just above 12% of demand.

One reason these costs would be low is that Finland's grid is linked to those of Sweden, Norway and Denmark, and can rely on those countries to fill the gap if wind falls short, explains Holttinen. "Any increase in wind variability and wind prediction errors will be seen in the Nordic balancing market, where the cost of balancing has been quite reasonable due to the fact that we have a lot of hydropower in our system," she says. The Green Net analysis assumes no new reserve capacity was built and the balancing power was solely from the Nordic balancing market.

Exact comparison of costs from wind and nuclear facilities is notoriously difficult, due in part to a lack of publicly available information and the small number of nuclear plants built in recent years. But a broad sample of data from across both industries indicates that capital costs for onshore wind come in at EUR1200-1800/kW of installed capacity, compared to EUR2200-3100/kW for nuclear. Annual operation and maintenance (O&M) costs are EUR22-42/kW for onshore wind and EUR65-108/kW for nuclear. Offshore wind's capital costs of EUR2800-4000/kW and annual O&M costs of EUR62-100/kW compare more closely to those of nuclear. Data supporting these findings is supplied by the US Energy Information Administration, UK regulator Office of Gas and Electricity Markets, the European Union and others (Windpower Monthly, January 2010).

On a global scale, onshore wind power generation from plants installed at EUR1500/kW at wind speeds of about 7 metres per second (m/s) is more expensive than nuclear power, whose generation costs EUR54-69/MWh. But such wind generation becomes competitive with nuclear from around 8m/s. The range for generation costs for wind plants installed at EUR1200/kW in wind regimes of 7-8.5m/s - the most common range - falls below that of nuclear.

The risk of nuclear costing much more than projected is greater than for wind, however. Take the Olkiluoto 3 reactor: According to the World Nuclear Industry Status Report 2009, commissioned by the German ministry of environment, the plant is more than three years behind schedule and at least 55% over budget, with total cost estimated at nearly EUR3100/kW.

Still, Holttinen says Finnish nuclear generation costs are, on the whole, below those for wind, partly because plentiful supply of cold sea water negates the need for cooling towers at reactors. Finland is considering mandated power purchase prices for wind - a cost to be borne by ratepayers. Holtinnen, though, says at the 2GW wind target, this would "not be very much when divided among all consumers".

Bjorklund believes the tide will turn against nuclear if cost overruns persist and wind costs continue to fall. "I think that around 2020, there will be no point building nuclear power any more, just considering the economics," he says. "This is the last possibility for the nuclear industry in Finland to get those permits."


With parliamentary elections looming next year, the government is expected to grant one licence by year-end and pass a decision on the other two reactors to the next government. Industry leaders back the conservatives' nuclear push. "We find it difficult to understand minister Pekkarinen's position on this, and his view that one licence is enough," says Martti Maenpaa, CEO of the Federation of Finnish Technology Industries. "Electricity consumption will grow over the next 30 years and industry needs to have certainty that there will be sufficient supply of reasonably priced electricity in the long term. This would not happen with an emphasis on renewable energy alone, but it can happen if the three licences are granted."

To achieve the 2GW wind target, Finland would need to add about 200MW of new wind capacity every year until 2020. In 2008, a record year for wind development, Finland managed to add only 40MW. Vanhanen has the support of the Greens, but this may not be enough to save the plan.

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