The purpose of EPV Energy is to ensure the energy supply of its shareholders. In 2016, the Group’s total power procurement was 4,429 GWh. This corresponds to 5.2 per cent of the total electricity consumed in Finland. Last year, a larger proportion of energy than ever was generated emission-free:
- Nuclear power 1202 GWh
- Coal 561.3 GWh
- Hydropower 1241.2 GWh
- Peat 286.8 GWh
- Biofuels 260.9 GWh
- Wind power 320.7 GWh
Pohjolan Voima increased hydropower
In September 2016, a new hydroelectric power station was opened in Harjavalta. This new plant increased the amount of hydropower generated annually by 40 GWh, which is the largest increase of hydropower generation in Finland in 15 years. The hydropower plant investment amounted to MEUR 40. The plant is owned by Länsi-Suomen Voima Oy, which is a partnership company of EPV’s associated company Pohjolan Voima.
The year saw more rain than normal, especially in the areas of the Rivers Iijoki and Kemijoki. In the River Kokemäenjoki, the currents remained slightly below normal. On the whole, Pohjolan Voima’s hydropower generation was larger than average.
The competitiveness of hydropower was thwarted in Finland – but boosted in Sweden
After years of work, Pohjolan Voima had to discontinue its preparation of the Kollaja hydropower project. Offering up to 100 MW of additional capacity, the project was suspended when the government decided that the prerequisites for repealing the Act on the Protection of Rapids were insufficient.
EPV Energy holds hydropower shares in Sweden through Voimapiha and in Norway through Rapid Power. The year in Sweden was drier than normal and in Norway rainier than normal. The annual output of Swedish plants was below the normal average, whereas in Norway it exceeded the normal average.
Swedish producers of hydropower received some good news in September. The Swedish government’s budget proposal for 2017 put forward a considerable decrease in the real estate taxes of power plants. This was extremely welcome news for the producers of Sweden’s hydropower, as the profitability of hydropower generation has been low there too, and real estate tax is one of the most significant cost factors for hydroelectric power plants. In Finland, however, the real estate taxes of power plants have continued to rise.
Operating licence expected for Olkiluoto 3 by the end of 2017
Olkiluoto 1 and Olkiluoto 2 had a good year of generation. The output of these nuclear power plants was the seventh highest in Olkiluoto’s history. Olkiluoto 1 suffered a week-long break in production when some damaged fuel elements in the plant’s reactor were replaced. The fault caused no environmental damage.
An application for the operating licence for Olkiluoto 3 was submitted to the Ministry of Economic Affairs and Employment in April 2016. The operating licence is expected to be granted at the end of 2017. Receiving the licence is a prerequisite for the loading of fuel and for nuclear-technical commissioning. According to the plant supplier’s schedule, the plant unit will start regular electricity generation at the end of 2018.
EPV Energy’s associated company Teollisuuden Voima Oyj (TVO) has received a transitional arbitration award in the arbitration proceedings concerning the delay of the Olkiluoto 3 nuclear power project and the resulting costs. The transitional arbitration award definitively resolved in TVO’s favour the majority of the issues heard and dismissed the majority of the plant supplier’s claims on these matters. The arbitration proceedings continue and more transitional arbitration awards will be given before the final award, in which the court of arbitration will determine the parties’ liability to payment of compensation.
The building of the LNG terminal in Tornio was begun
The building of the import terminal for LNG, or liquid natural gas, has continued according to plan in Tornio. The deliveries of gas have been estimated to begin in 2018. EPV Energy is a shareholder in Manga LNG Oy, whose subsidiary, Manga Terminal Oy, is in charge of building the terminal.
Decision-makers are responsible for ensuring sufficient electrical power in Finland – the generation of dispatchable domestic electricity must be profitable
More and more renewable energy that fluctuates with the weather is generated in Finland. This is raising the need for quickly adjustable power, and therefore there is usually a sufficient amount of electricity on the market, but not enough dispatchable power. However, the low market price of electricity does not enable investments in dispatchable generation capacity, which is why a new kind of system is needed where electrical power is given a monetary value.
One alternative for ensuring sufficient power is the capacity market, where power plants are paid compensation for maintaining power. The capacity payment is income on top of the normal revenue obtained from the electricity markets. The system would be market-determined, and power plants would function both in the capacity market and the current energy market.
Power procurement focused on emission-free forms of energy generation
In 2016, the average carbon dioxide emissions of the electricity supplied by EPV were 178.3 g CO2/kWh. The average use of nuclear fuels in the generation of the electricity supplied to EPV’s shareholders was 0.8 mg/kWh.
The average emissions of the electrical energy acquired through generation shares were:
- Nitrogen oxide emissions 238 mg/kWh
- Sulphur dioxide emissions 119 mg/kWh
- Particle emissions 5.4 mg/kWh