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

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

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Page 1: Turning Challenges Into Opportunities

Turning challenges into opportunities

A carbon-neutral vision for electricity and district heat

2050

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Page 2: Turning Challenges Into Opportunities

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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

Page 3: Turning Challenges Into Opportunities

Capital-intensive industry

3

Source: Confederation of Finnish Industries EK

Page 4: Turning Challenges Into Opportunities

Investments and plans of various industries in Finland 2004-2010 (MEUR)

Source: EK Investment Surveys 2006, 2007, 2008, 2009 and 2010 4

Page 5: Turning Challenges Into Opportunities

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

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Page 6: Turning Challenges Into Opportunities

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

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Page 7: Turning Challenges Into Opportunities

Angles of observation

•  Climate challenge •  Citizens’ purchasing power and

prosperity, competitiveness of the business sector

•  Availability of energy and security of supply

7 7

Page 8: Turning Challenges Into Opportunities

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

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Page 9: Turning Challenges Into Opportunities

Operating environment

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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

Page 11: Turning Challenges Into Opportunities

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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

Page 12: Turning Challenges Into Opportunities

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)

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Page 13: Turning Challenges Into Opportunities

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.

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Page 14: Turning Challenges Into Opportunities

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

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Page 15: Turning Challenges Into Opportunities

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

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Page 16: Turning Challenges Into Opportunities

National economic trends

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Source: VATT

Page 17: Turning Challenges Into Opportunities

Increase in transport

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Source: Finnish Transport Agency

Page 18: Turning Challenges Into Opportunities

Transport will go electric

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Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.

Page 19: Turning Challenges Into Opportunities

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

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Page 20: Turning Challenges Into Opportunities

Consumption of heating energy 2050

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Demand for district heat 25–33 TWh in 2050 (2007: 31 TWh).

Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.

Page 21: Turning Challenges Into Opportunities

Demand for electricity

Sector Electricity consumption (TWh/a)

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

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Impacts of the vision

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Page 23: Turning Challenges Into Opportunities

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

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Electricity generation 2050

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

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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.

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Page 26: Turning Challenges Into Opportunities

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.

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Page 27: Turning Challenges Into Opportunities

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•  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

Low-carbon generation

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Page 28: Turning Challenges Into Opportunities

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

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Page 29: Turning Challenges Into Opportunities

Estimated reduction in CO2 emissions

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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

Page 30: Turning Challenges Into Opportunities

Impacts on CO2 emissions

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Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.

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Page 31: Turning Challenges Into Opportunities

Energy consumption 2050

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•  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

Page 32: Turning Challenges Into Opportunities

Implementation of the vision will bolster the balance of

trade

32

Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.

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Page 33: Turning Challenges Into Opportunities

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

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Page 34: Turning Challenges Into Opportunities

Preconditions

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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

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Page 36: Turning Challenges Into Opportunities

Preconditions for the implementation of the vision in

Finland (1/2)

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•  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

Page 37: Turning Challenges Into Opportunities

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

Page 38: Turning Challenges Into Opportunities

Thank you!

•  Further information and research reports are available here: www.energia.fi

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Page 39: Turning Challenges Into Opportunities

Further illustration

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Page 40: Turning Challenges Into Opportunities

Energy-saving applications for electricity and district heat

•  The relative shares of various measures in increasing energy efficiency

40

Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.

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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

Page 42: Turning Challenges Into Opportunities

Contents of the presentation

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

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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

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Page 44: Turning Challenges Into Opportunities

Structural change in the national economy

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Source: VATT

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Macroeconomic development

45 Source: VATT

Page 46: Turning Challenges Into Opportunities

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

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Page 47: Turning Challenges Into Opportunities

Angles of observation

•  Climate challenge •  Citizens’ purchasing power and

prosperity, competitiveness of the business sector

•  Availability of energy and security of supply

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Page 48: Turning Challenges Into Opportunities

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

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Page 49: Turning Challenges Into Opportunities

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

Page 50: Turning Challenges Into Opportunities

Starting points and main themes

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Page 51: Turning Challenges Into Opportunities

Energy consumption today

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Source: Adato

Page 52: Turning Challenges Into Opportunities

Present greenhouse gas emissions

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Source: Statistics Finland

Page 53: Turning Challenges Into Opportunities

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

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Page 54: Turning Challenges Into Opportunities

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

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Page 55: Turning Challenges Into Opportunities

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

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Page 56: Turning Challenges Into Opportunities

Reduction of emissions from the electricity and district heat

sector: 12-18 Mt of CO2

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Page 57: Turning Challenges Into Opportunities

Self-sufficiency will reduce emissions

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•  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

Page 58: Turning Challenges Into Opportunities

Extra graphs

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Page 59: Turning Challenges Into Opportunities

Population forecast

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Source: Statistics Finland

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Decrease in family size

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Source: VTT

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Evolution of GDP

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Source: Statistics Finland 2006.

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Share of electricity in industrial energy use

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Source: Honkapuro, Jauhiainen, Partanen and Valkealahti.

Page 63: Turning Challenges Into Opportunities

Household electricity by appliance group

63

Source: Adato

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Turnover index of service industries

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Source: Statistics Finland

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Electricity consumption of the service and public

sectors

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Electricity consumption by branch in the service and public sectors

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Source: Statistics Finland

Page 67: Turning Challenges Into Opportunities

Estimate of net CO2emissions from power and heat generation 2050

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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 electricity exports - 4 MtCO2/year

– the emission reducing impact of electricity exports - 2 MtCO2/year

= net emissions according to the energy vision - 11— - 13 MtCO2/year

Page 68: Turning Challenges Into Opportunities

Estimate of the average thermal energy requirement of the entire housing stock in 2009, 2020 and 2050

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Type of building

Estimate of the average thermal energy requirement of each building type (kWh/m2,a)

2009 2020 2050

Detached houses 148 134 88—110

Terraced and linked houses

145 136 93—116

Apartment buildings 151 142 99—124

Commercial buildings 286 272 195—244

Office buildings 227 205 136—170

Transport and communications buildings

207 187 131—164

Buildings for institutional care

272 241 152—190

Assembly buildings 193 186 138—172

Educational buildings 158 146 98—122

Industrial buildings 353 338 241—301

Warehouses 166 153 103—129

Page 69: Turning Challenges Into Opportunities

Estimate of the efficiency rates and coefficients of performance of various heating systems

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Heating method Average efficiency rate (%) or coefficient of performance

2009 2020 2050

Oil 85 87 90

Direct electric heating 95 97 98

Electric storage heating

90 93 95

Wood-burning stove 60 65 70

Pellet heating + water circulation

75 78 80

Ground source heat pump

3 3,5 4

Air source heat pump 2.7 3.0 3.3

Page 70: Turning Challenges Into Opportunities

Energy consumption by equipment group

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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 electronics 1,076 860 80%

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%

Total 10,931 8,412 77%

Page 71: Turning Challenges Into Opportunities

Estimate of electricity consumption in Finland in 2030 and 2050 (year of comparison 2007)

Sector Electricity

consumption in 2007 (TWh/a)

Electricity consumption in 2030

(TWh/a)

Electricity consumption in 2050

(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

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