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Finland Energy Market

Industry Sector

Energy and Utilities

Published

13 February 2012

Author

Paul Chapman

Type of News

Market

Energy consumption per capita is relatively high in Finland due to its energy intensive industry, the cold climate, good standard of living and the size of the country which necessarily mean long travelling distances. Finland does not have its own fossil fuels - coal, oil or natural gas - but does have bio fuels, rich reserves of peat, and extensive wood resources. Also, as an indigenous fuel, peat has a considerable effect on regional policy. It increases employment and security of the energy supply.

According to Statistics Finland's preliminary data, in the first two quarters of 2011, total energy consumption amounted to about 712 PJ, which was 2 percent less than in the corresponding period of 2010. Total electricity consumption amounted to 44.6 TWh, which was 0.3 percent less than a year earlier. Carbon dioxide emissions from energy production and use went down by 3 percent.

The efficient use of energy is one of the keys to the success of Finland. Finland's own energy resources are limited, major industries are energy-intensive, and a significant share of all energy must be imported. Finnish industry has always exploited an exceptionally diverse range of energy sources. These include timber and byproducts of the forest industry, bio-fuels, peat and hydroelectric power. The country's nuclear reactors are among the most efficient in the world. Wind power made its debut in the 1990s.

Imported energy sources include oil, coal and electricity from neighboring countries. Import of natural gas will increase, especially if it can be used to replace heavily polluting coal. Solar power has a more limited range of application in this climate compared to southern European countries. However, its use in summer cottages has increased substantially.

The Electricity Market Act and the point-access tariff of 1995 opened the Finnish electricity market to competition. A modification of the law in 1998 allowed customers to choose a supplier freely and at no additional cost. During the 1990s, the Nordic countries created a framework for a common electric power market based on open competition. The Nordic countries are the leaders in deregulating the electric power sector and in conducting international trade in electricity. In 1996, Nord Pool became the first international commodity exchange for trading electric power.

Nordic energy cooperation is carried out as part of the activities of the Nordic Council of Ministers, with a view toward promoting efficient and environmentally acceptable energy in the Nordic countries, the Baltic Sea region, and neighboring areas. The most significant outcome of such cooperation has been the development of the Nordic electricity market. The Nordic electricity trading system has been used as a model for market reform in other countries.

Finland has four nuclear power plants and is currently building a fifth. In December 2003, the power utility Teollisuuden Voima Oy placed an order for a new nuclear power plant - Finland's fifth commercial reactor - from the French-German company Framatome ANP and a turbine plant from German Siemens. The Framatome ANP-Siemens consortium will supply the nuclear power plant unit as a turnkey delivery. The new nuclear power plant will cost about 3 billion Euros, which makes it the largest single investment ever in Finland.The location of the power plant is in Olkiluoto, located at Eurajoki, some 150 miles northwest of Helsinki. Its power output will be about 1,600 megawatts (MW). Building of the plant began in the beginning of 2004.

Additional nuclear capacity will be used to meet increased electricity demand, to replace aging and decommissioned production capacity, and to accommodate growing electricity imports.The new power plant was originally expected to start up in 2009. However, construction delays have pushed back the date of expected commercial launch to 2013, or even 2014. This means that in the interim, Finland will be more dependent on electricity imports. When it is completed, the new power plant will supply about ten percent of Finland's energy output. The power plant's nuclear reactor will be a third generation EPR (Evolutionary Power Reactor) Pressurized Water Reactor, and it is being constructed by a consortium formed by Areva and Siemens.

Finland has no domestic oil reserves. Neste Oil owns and operates two oil refineries in Finland, located in Porvoo on the southern coast and in Naantali on the southwestern coast of Finland. The Naantali and Porvoo refineries have an annual refining capacity of three million and eleven million tons respectively. The refineries have excellent locations for accessing crude flows from Russia.Neste Oil has developed a premium quality NExBTL renewable diesel production technology. Neste Oil has two plants producing NExBTL, its renewable diesel, at Porvoo in Finland, with a combined capacity of 380,000 metric tons per year. In addition, Neste Oil is producing NExBTL at its plants in Singapore and Rotterdam. Both of these plants have a capacity of 800,000 t/a.In addition to the refinery located in Finland, Neste Oil has production plants in Portugal, Belgium, Sweden and Canada. Most of the oil products are sold in the domestic market.Oil Imports and Exports - Neste Oil Corporation, a leading independent northern European oil refining and marketing company, is the market leader in its field in Finland. It markets and sells oil products through its service stations and network of automated stations and directly to consumers.

Neste Oil trades crude oil, feed stocks, petroleum products, and components worldwide. The company's sales and trading function sources the crude oil and other feed stocks used by Neste Oil's refineries, sells petroleum products to customers primarily outside the home market, and handles trading operations. In 2010, Neste Oil imported a total of 14.5 million tons (14.7 million tons) of crude oil and other feed stocks into Finland during 2010. 80% of this flow came from Russia, while most of the remainder came from the North Sea. The sales and trading operations are based in Geneva, Switzerland.The company's oil product range consist of gasoline, diesel oils, light and heavy fuel oils, aviation fuels, gasoline components, base oils, lubricants, solvents and special purpose liquid fuels. Neste Oil is a specialist in refining crude oil to produce high-grade traffic fuels and special-purpose products. The company's main market area is in the Nordic and Baltic Rim countries. However, Neste Oil also exports oil products to other European countries and countries outside Europe.

See other reports on Finland's Energy Market

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