Invest in Finland

Guaranteed price for electricity produced using renewable energy

19/10/2009

The working group proposes that a market-based guaranteed price system be introduced in Finland. This proposal concerns electricity produced using wind power and biogas. Within the scheme, electricity producers would be electricity market actors. The scheme would almost totally eliminate producers’ price risk associated with electricity production for as long as the tariff scheme remains in force.

The level of the feed-in tariff would be determined by an administrative decision. During further preparation, the Ministry of Employment and the Economy will examine ways of determining the tariff level via competitive tendering.

The combined nominal output capacity of wind power plants or wind power parks admitted to the scheme should be at least 1 MVA and the nominal capacity of biogas plant generators at least 300 kVA. According to an evaluation performed by the working group, the feed-in tariff system would not be suitable for smaller plants: the system requires the daily submission of hourly data on power production to the national grid company.

The target price for the feed-in tariff would be EUR 83.5/MWh. Additional support for electricity generated from biogas would be EUR 50/MWh, when the plant in question is involved in the combined production of heat and electricity and its total efficiency is at least 50 per cent. The tariff would be paid for 12 years.

The construction of wind power plants must be initiated at a brisk pace. The working group therefore suggests a raised feed-in tariff target price of EUR 90.2/MWh for wind power plants introduced during the initial years of the feed-in tariff system.

The feed-in tariff would be financed from a fee to be collected directly from electricity end-users. If electricity consumption were 2,000 kWh per year in 2020, this fee would be approximately EUR 5 a year, the target price being EUR 83.5/MWh. Correspondingly, in a small house with electric heating and electricity consumption of 18,000 kWh, the fee in 2020 would be around EUR 44 per year.

The feed-in tariff system would promote investments in electricity produced from wind power and biogas and improve self-sufficiency in power production. This would help Finland attain the EU’s 20-20-20 objectives, i.e. the goal of reducing greenhouse gas emissions by 20 per cent from the level of 1990, and of increasing the share of renewable energy sources by 20 per cent while improving energy efficiency by the same proportion by 2020. At the same time, it will open up new opportunities for Finnish companies to develop technologies related to renewable energy and take advantage of the export potential associated with such technologies. Such investments would also have positive effects on employment.

Achieving the target set in the National Climate and Energy Strategy would require an increase of some 30 TWh in the exploitation of renewable energy by 2020, which would mean a rise of about a third compared to the current level. Wind power’s share of the required increase is estimated at approximately 24 per cent and that of biogas at about 1 per cent.

For more information, please contact

Petteri Kuuva, Industrial Counsellor, MEE, tel. +358 10 606 4819

Pekka Tervo, Senior Adviser, MEE, tel. +358 10 606 4796

Anja Liukko, Government Counsellor, MEE, tel. +358 10 606 2078

Source: Ministry of Employment and the Economy, Press release 260/2009