A carbon neutral vision for electricity and district heat 2050 in Finland

1. Turning challenges
into opportunities
A carbon-neutral vision for
electricity and district heat
2050
1

2. The future is decided
now
• Capital-intensive, long-term
operations
• Interaction with the rest of society
• Need for new capacity
• Costs of climate change mitigation
will grow, if actions are postponed
• A concrete model for the industry
and decision-makers
2

3. Capital-intensive
industry
Source: Confederation of Finnish
Industries EK
3

4. Investments and plans of various industries in
Finland 2004-2010 (MEUR)
Source: EK Investment Surveys 2006, 2007, 2008, 2009 and 2010
4

5. Phases of vision work
• Four research institutes co-operate
– Lappeenranta University of Technology
– Tampere University of Technology
– Finland Futures Research Centre of
Turku School of Economics
– Government Institute for Economic
Research
• Three future workshops
• Two internet surveys
5

6. Targets
• To support the well-being of citizens
and national competitiveness
• To reduce greenhouse gas emissions
• To increase energy efficiency
• To promote the utilisation of
domestic energy
• To find cost-efficient solutions
6

7. Angles of observation
• Climate challenge
• Citizens’ purchasing power and
prosperity, competitiveness of the
business sector
• Availability of energy and security
of supply
7

8. ET’s vision work
• The energy industry’s vision 2050:
– Turning challenges into opportunities – a carbon-neutral vision for
electricity and district heat for 2050
• Four future scenarios
– Finland as a piece of driftwood in the world in crises
– Ecological values dominate
– Ending oil dependency while securing prosperity
– Industrial growth
• Three background reports from
– Finland Futures Research Centre of Turku School of Economics
– Lappeenranta University of Technology
– Tampere University of Technology
8

9. Operating
environment
9

10. World 2050
• Population 9–10 (6.7) billion
• Mean temperature will have risen by 2
degrees
• Energy supply and climate issues on
government agendas, binding international
agreements
• Rapidly growing global need for energy
• Oil and natural gas will be concentrated in
the hands of a few, global consumption will
decline
• Coal will be commonly used
10

11. Finland 2050
• Population over 6 (5.3) million
• National economy grows, purchasing
power improves
• Service sector grows
• Traffic increases
• Average size of households decreases
and their number increases
• Technology plays a key role in energy
production and climate solutions
• The efficiency of energy use improves
11

12. Technological devopment
will create new
opportunities
• The efficiency of energy use will improve
• Smart grid
• Production technologies will evolve
– combined heat and power production
– renewables
– micro-generation
– 4th generation nuclear power
• Electrification of transport
• Heat pumps
• District cooling, utilisation of thermal energy from
cooling
• Carbon capture and storage (CCS)
12

13. Energy efficiency according
to the vision
• The building stock will grow, while the total need
for heating energy will decrease by 30 %
• The number of household appliances will
increase, but the potential for increasing
efficiency (23% 2020) will make up for the
increase in energy consumption
• In services, the potential for increasing efficiency
is almost 20%
• In industry, the potential for increasing efficiency
is about 20%
• In regular passenger services, the present
performance level can be reached by one third of
the present energy consumption.
13

14. Energy efficiency will improve also in
sectors outside the energy vision
• Heavy traffic, ship and air traffic
– engine technology
– features of vehicles
• Production machinery
– hybrid solutions
– electrification
• Industry
– optimisation of pumps, blowers and compressed-air
equipment
– frequency converters and high-efficiency engines
– increased recycling of materials
– optimisation and development of processes
14

15. Technology may open up
completely new possibilities
• DC electricity transmission
• Sharp increase in property and
building-specific energy production
• Solar energy breakthrough also in
the Nordic countries
• Room-temperature superconductivity
• Fusion power generation
15

16. National economic
trends
Source: VATT
16

17. Increase in transport
Source: Finnish Transport Agency
17

18. Transport will go
electric
Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.
18

19. Smart grid
• Two-way electricity transmission and
communication
• Distributed micro-generation included
– Solar, wind power, biofuels
• Flexibility for the system
– Demand yields according to production
– Enables storage of energy
 Growing efficiency and functioning of
markets
19

20. Consumption of
heating energy 2050
Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.
Demand for district heat 25–33 TWh in 2050 (2007: 31 TWh).
20

21. Demand for electricity
Electricity consumption (TWh/a)
Sector
2007 2030 2050
Housing 23 24-26 24-27
Household electricity 11 13 13-14
Heating of buildings 12 11 9-11
Cooling of buildings 0,2 1 2
Industry 48 49-56 48-58
Services & Public sector 15,5 22 30-40
Transport 0,5 3 8-10
Losses 3 3 4
Total 90 100-111 113-138
21

22. Impacts of the vision
22

23. Energy production in
Finland 2050
• Share of emission-free generation increases
– Use of wood increases significantly
– More regulating power from hydropower
– Nuclear power is probably used for district heating as
well
– Sharp increase in wind power generation
• Distributed micro-generation increases
– Production integrated into buildings, small-scale co-
generation will soon be a reality (solar, wind, bio)
• Fossils less important
– Carbon capture in operation – some multi-fuel power
plants are carbon sinks
– Natural gas is used in cities and industry
• Peat is still used
23

24. Electricity generation
2050
Carbon capture will cover a good third of all fuels in 2050.
24

25. District heating 2050
Carbon capture is commonly used in power plants fired by
coal and natural gas, as well as in the biggest power plants
fired by peat and wood in 2050. The oil used by heating
plants is bio-oil.
25

26. Electricity generation capacity
2050
Generation capacity 24,000–32,000 MW in 2050 – we
will need a total of19,000—27,000 MW of new capacity.
26

27. Low-carbon generation
• There will be a 50% increase in
combined heat and power generation
• Emissions from electricity generation
280 g/kWh  30–40 g/kWh
• Emissions from district heat generation
220 g/kWh 25 g/kWh
• Overall emsissions from electricity
and heat generation 5–7 Mt of CO2,
today 30 Mt
– Emission reduction 25 Mt
27

28. Electricity and district heat
will replace fossil fuels
• Electricity and district heat will replace
fossil fuels and reduce emissions
– Transport: -8 million tonnes
– Heating: -3 million tonnes
– Industry: -1 million tonne
– Electricity imports will be counterbalanced
by some small-scale exports
– Emissions impact -6 million tonnes
• A total emission reduction of 12-18 Mt
of CO2
28

29. Estimated reduction in
CO2 emissions
With electricity and district heat,
- the CO2 emissions covered by the vision will decrease by 85-90 per cent
- GHG emissions from Finland will decrease by a good 50 per cent
In operations excluded from the vision, enegy efficiency can be increased, biofuels can be introduced and
other corresponding measures can be taken, and thanks to these measures, the goal of reducing
emissions by a total of 80% can be reached
29

30. Impacts on
CO2 emissions
Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.
30

31. Energy consumption
2050
• Energy consumption will decrease
• The share of electricity in end-use of energy will increase from the present 28% to approx. 46%
• The share of district heat will incease sligthly (11%), even though the heat requirement of buildings
will decrease
• The CO2 emissions from electricity and district heat generation will decrease by approx. 80%, while
the consumption of electricity and district heat will increase by about a half
• As a result of the increase in energy efficiency, the end-use of energy will be 30% lower than on the
baseline (in which case energy efficiency and the generation of electricity and district heat, as well as
the fuels, would be the same as today, and no additional nuclear or hydro power could be
constructed). 31

32. Implementation of the vision
will bolster the balance of
trade
Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.
32

33. Completely possible
• Carbon-neutral energy production
• Self-sufficiency will improve
• Energy efficiency will increase
• Use of renewable and domestic energy
sources will increase
• The national economy will strengthen;
prosperity and the volume of gross
domestic product will increase
• Purchasing power will increase more
quickly than the prices of electricity and
district heat
33

34. Preconditions
34

35. International preconditions
for the implementation of
the vision
• A global price for carbon dioxide
• Directing carbon dioxide costs to
emission-producing operations
• Open and integrated European
electricity market
35

36. Preconditions for the
implementation of the vision in
Finland (1/2)
• A stable and predictable operating environment
must be ensured for energy investments
• Far-sighted and and consistent energy policy
• All operators commit to the climate target in the
long run
• Functioning fuel market
• A wide selection of technologies and fuels available
for operators
– Social steering is directed to the climate targets
instead of the means
36

37. Preconditions for the
implementation of the vision in
Finland (2/2)
• Emission prices are determined by the market
• No steering methods that overlap or contradict
with those of emissions trading
• Regional planning, EIA and permit systems will be
accelerated
• All operators commit to the European electricity
market
• Energy technology should be developed into a
cornerstone of exports
– Sufficient investments in technological
develpment
• Solutions supporting the electrification of
transport
37

38. Thank you!
• Further information and research
reports are available here:
www.energia.fi
38

39. Further illustration
39

40. Energy-saving applications for
electricity and district heat
• The relative shares of various measures
in increasing energy efficiency
Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.
40

41. Electricity and district
heat as solutions:
• Carbon-neutral energy production
• Self-sufficiency will improve
• Energy efficiency will increase
• Use of renewable and domestic energy
sources will increase
• Purchasing power will increase more
quickly than the prices of electricity and
district heat
• The national economy will be
strengthened 41

42. Contents of the
presentation
• Objectives and angle
• Vision work
• Megatrends
• The starting points and main themes
• Impacts of the vision
42

43. Target world
• Fair global distribution of economic
growth
• Implementation of sustainable
development
 Common targets for solving climate
change and energy poverty problems
• Strong co-operation at the international
and regional levels
• WEC’s Lion scenario as a background
43

44. Structural change in
the national economy
Source: VATT
44

45. Macroeconomic
development
Source: VATT
45

46. Issues to be
investigated
• Alternative prospects for energy and
the economy
• Development of energy production and
operating technologies, along with
energy efficiency
– impact on energy production and consumption
• The goal state of energy consumption
and production
– in view of climate change and energy security
• Preconditions and measures for
achieving the goal state
46

47. Angles of observation
• Climate challenge
• Citizens’ purchasing power and
prosperity, competitiveness of the
business sector
• Availability of energy and security of
supply
47

48. International trends:
• Climate change
• Population growth
• Fossil energy resources are in short
supply and concentrated in the hands
of a few
– Availability?
– Price?
– Conflicts?
• Increase in global energy consumption
• European electricity market integration
48

49. Opportunities provided by
technological development:
• Energy use will become more
efficient
• Electricity and district heat will
replace fossil fuels
• Energy efficiency to be enhanced in
the construction sector
• Transport will increase and become
electrified
• Cooling will be more common 49

50. Starting points and
main themes
50

51. Energy consumption
today
Source: Adato
51

52. Present greenhouse gas
emissions
Source: Statistics Finland
52

53. Carbon-neutral
electricity and district
heat
• Production structure will be reformed
• Emissions from own production will
decrease
• Will replace fossil fuels
• From energy imports to small-scale
exports
53

54. Energy requirements
of buildings
• Building regulations will reduce the
specific heat requirements of
buildings
• Total heat requirement will decrease
by 30 per cent
• Oil heating will be replaced by district
heating in urban areas
• District cooling will become more
common in urban areas
54

55. Combined heat and
power generation
• The amount of CHP electricity: 25–30 TWh, today: 27
TWh
– Follows the consumption of district heat and industrial
steam
• The share of CHP heat will rise to 85%, today 75%
• Technological development and the markets will
promote cogeneration
– The share of CHP electricity will grow
– Will be profitable on a smaller scale
• Flexible in terms of fuels and generation
– The share of biofuels will increase significantly
– Will produce condensate electricity, and provide markets
with some regulation
55

56. Reduction of emissions from
the electricity and district heat
sector: 12-18 Mt of CO2
56

57. Self-sufficiency will
reduce emissions
• Significant electricity imports (10–15
TWh) will turn into small-scale exports
(0–10 TWh):
– Mainly exported to EU countries
– Emission reduction approx. 6.2 million
tonnes of CO2
• Emissions from current imports: 4.2 Mt of CO2
• Exports will make up for 2 Mt of CO2 emissions
from production in other EU countries
57

58. Extra graphs
58

59. Population forecast
Source: Statistics Finland
59

60. Decrease in family size
Source: VTT
60

61. Evolution of GDP
Source: Statistics Finland 2006.
61

62. Share of electricity in
industrial energy use
Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.
62

63. Household electricity
by appliance group
Source: Adato
63

64. Turnover index of
service industries
Source: Statistics Finland
64

65. Electricity consumption of
the service and public
sectors
65

66. Electricity consumption by branch
in the service and public sectors
Source: Statistics Finland
66

67. Estimate of net CO2emissions from power and heat
generation 2050
Direct emissions from energy production + 5—7 Mt CO2/year
Fossil fuels will be replaced by electricity and district heat
– transport -8 MtCO2/year
– heating -3 MtCO2/year
– industry -1 MtCO2/year
Decrease in emissions from electricity generation in other countries
– electricity imports will be counterbalanced by
-4 MtCO2/year
electricity exports
– the emission reducing impact of electricity
-2 MtCO2/year
exports
= net emissions according to the energy vision - 11— - 13 MtCO2/year
67

68. Estimate of the average thermal energy requirement of
the entire housing stock in 2009, 2020 and 2050
Estimate of the average thermal energy requirement of each building
Type of building type (kWh/m2,a)
2009 2020 2050
Detached houses 148 134 88—110
Terraced and linked
145 136 93—116
houses
Apartment buildings 151 142 99—124
Commercial buildings 286 272 195—244
Office buildings 227 205 136—170
Transport and
communications 207 187 131—164
buildings
Buildings for institutional
272 241 152—190
care
Assembly buildings 193 186 138—172
Educational buildings 158 146 98—122
Industrial buildings 353 338 241—301
Warehouses 166 153 103—129
68

69. Estimate of the efficiency rates and coefficients of
performance of various heating systems
Average efficiency rate (%) or coefficient of performance
Heating method
2009 2020 2050
Oil 85 87 90
Direct electric heating 95 97 98
Electric storage
90 93 95
heating
Wood-burning stove 60 65 70
Pellet heating + water
75 78 80
circulation
Ground source heat
3 3,5 4
pump
Air source heat pump 2.7 3.0 3.3
69

70. Energy consumption by equipment group
Energy consumption by equipment group 2020 (GWh/a)
Equipment group BAU BAT BAT/BAU
Cold storage equipment 1,227 767 63%
Cooking 693 577 83%
Dish washer 290 268 92%
Laundering and drying 423 347 82%
Entertainment
1,076 860 80%
electronics
IT equipment 240 87 36%
Electric sauna heater 971 971 100%
HVAC equipment 809 566 70%
Floor heating 227 227 100%
Car heating 225 225 100%
Indoor lighting 2,002 845 42%
Outdoor lighting 99 22 22%
Other 2,650 2,650 100%
70
Total 10,931 8,412 77%

71. Estimate of electricity consumption in Finland in 2030
and 2050 (year of comparison 2007)
Electricity Electricity Electricity
Sector consumption in 2007 consumption in 2030 consumption in 2050
(TWh/a) (TWh/a) (TWh/a)
Households 11 13 13–14
Heating of buildings 12 11 9–11
Cooling of buildings 0,2 1 2
Industry 48 49–56 48–58
Services & Public sector 15,5 22 30–40
Transport 0,5 3 8–10
Losses 3 3 4
Total 90 100–111 113–138
71