Finland takes concrete steps to promote renewable energy
A new feed-in tariff scheme has been established in Finland to promote the production of electricity based on wind power, biogas and wood-based fuel. In addition, the biofuel distribution obligation will increase from the current four to six percent for 2011-2014, followed by a phased increase to 20 percent by 2020. |
 © Markku Vitikainen |
The key purpose of the feed-in tariff scheme is to implement the national objective set by the European Union on increasing the utilization of renewable energy sources.
In the case of Finland's national objective, as a share of the final consumption of energy, renewable energy must attain a share of 38 percent by 2020.
This would require an estimated increase in renewable energy of 38 terawatt hours. The feed-in tariff scheme seeks to increase electricity production based on wind power up to six terawatt hours, and electricity and heat production based on forest chips utilized as fuel up to 22 terawatt hours.
Through the feed-in tariff scheme, electricity producers receive support for a period of twelve years. This support covers the difference between the actual production costs of electricity and the market price of the energy source in question, or the costs of alternative fuel.
Wind power plants will be accepted within the scheme until the total output of generators exceeds 2,500 megavolt amperes. The corresponding limit for biogas power plants, utilising biogas as the primary fuel, is 19 megavolt amperes.
On the other hand, wood-fuel powered plants will be accepted into the scheme until the total generator output exceeds 150 megavolt amperes and the number of power plants, 50. As concerns forest chip power plants, no corresponding restriction is in force.
The feed-in tariff scheme will be financed from funds within the state budget. In the 2011 budget, an appropriation of EUR55 million has been approved for production subsidies under the feed-in tariff scheme.
Increasing biofuel use gradually to 20 percent
 © Louise Roach |
The new act promoting the use of biofuels in traffic also entered into force at the turn of the year. In connection with the renewable energy obligation package outlined in spring 2010, the Government set a higher target, raising the share of renewable energy in traffic to 20 percent by 2020. The key measure for achieving this target is a distribution obligation regarding biofuels. |
Finland aims to meet this target mainly through so-called double-counted biofuels, meaning an actual quantity of biofuels of 365,000 tonnes.
Double counting can be applied when a biofuel is derived from food waste, other waste, or inedible cellulose or lignocelluloses, i.e. wood-based raw material. The aim is to establish two or three of these second-generation production units, which refine biodiesel from forestry by-products.
An increased distribution obligation will not necessarily require any changes to vehicles, because the 20 percent share is attainable with stock of the current type, provided that the use of biofuels is mainly focussed on diesel vehicles.
The increase in costs due to the use of biofuels will amount to around EUR110-130 million in 2010, depending on the proportion of double counted biofuels.
If, as estimated, the price of crude oil rises by 50 percent from current levels by 2020, while taxation on biofuels falls in accordance with the Government's proposal regarding energy taxation, no major additional consumer costs will be imposed by the obligation.
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