Itämeren alueen energiahaasteet yhteinen etu vai riesa?

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1 Itämeren alueen energiahaasteet yhteinen etu vai riesa? Itämeri-foorumi 2012 Turku Harro Pitkänen 13 JUNE 2012

2 NIB - Basic information Founded by the Nordic countries in 1975 (active since 1976) The Baltic countries joined in 2005 Headquarters in Helsinki Lending in both member countries and non-member countries Funds acquired on the international capital markets AAA/Aaa credit rating In 2009, NIB Headquarters joined the WWF Green Office network. NIB Headquarters in Helsinki, Finland. 13 JUNE 2012

3 Mission and mandate NIB promotes sustainable growth of its member countries by providing long-term complementary financing to projects that strengthen competitiveness projects that enhance the environment 13 JUNE 2012

4 Loans on market terms Various currencies used Long maturities: 5 25 years - Co-financing: up to 50% of project costs Grace period, up to 5 years 13 JUNE 2012

5 Recent activity Highlights 2011 Loans agreed totalled EUR 2.6 billion NIB's largest-ever single loan signed: EUR 240 million for renewable energy Authorised capital increased by EUR 2 billion as of 16 Feb 2011 Highest mandate fulfilment ever 13 JUNE 2012

6 The energy sector in the BSR The indispensable need of Power Heat Transport 13/06/2012

7 Energy Sector trends EU 3rd Legislative Package EU 2020 targets (incl. Norway and Iceland) are progressing well Many NIB s member countries have unilaterally committed to stricter targets and faster change. National legislation (NIB s member countries and Poland) in conformity with EU legislation A number of risk factors, in particular: Slow progress in International Climate Mitigation, in particular CO2 pricing Are support schemes for renewables satisfactory or not? Will planned investments be implemented? Nuclear future?

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10 Wind Power in BSR/NSR 2010/2020 Country Capacity 2010 Target 2020 Denmark 3,752 MW 6,752 MW Estonia 78 MW (08) 500 MW Finland 197 MW 2,500 MW Latvia 27 MW (08) 250 MW Lithuania 54 MW (08) 1,000 MW Norway 441 MW 5,700 MW Poland 472 MW (08) 10,000 MW Sweden 2,163 MW 13,200 MW Germany 7,214 MW 45,750 MW UK 3,241 MW (08) 30,000 MW Ireland 1,000 MW (08) 7,000 MW If all planned wind power will be built by 2020 balancing of wind production will be challenging.

11 Electricity Transmission - Grid Development By 2022 the net generating capacity is expected to increase by about 25%. Primarily RES power! Massive relocation of generation. Supply far from consumption needs transmission. More volatile production due to new large wind and solar capacities Regional and pan-european perspectives are built together in an integrated process 10-Year Network Development Plan TYNDP 2012 (dated March 1, 2012) Binding European Network Code in order to secure free flow of electricity

12 Electricity transmission - Grid Development EU level: EUR 104 billion investment, 51,500 km transmission lines Despite huge costs only 2% of the bulk power price or less than 1 % of total electricity bill Baltic Sea Region: EUR 45 billion. North Sea Region: EUR 75 billion

13 Substantial Grid development in Baltic Sea Region/North Sea Region until 2022 (Based on TYNDP 2012) New Capacity MW! 2,800 MW between Nordic countries 1,350 MW between Baltics/Nordic 1,000 MW between Baltics/Poland 2,500 MW between Norway/Denmark to Germany 800 MW (Fennoscan 2) 2011/12 in operation 700 MW Finland/Sweden 2020? 1,400 MW between Norway/England? 200 MW between Norway/Russia? 1,350 MW from Finland to Russia. Inter country strenghtening is vital TYNDP 2012 will increase cross-border capacity to/from Norway from 5,400 to 10,300

14 Power Exchanges Patterns in 2020 Source TYNDP 2012 Country balances importer rather balanced exporter Exchanges < 1 TWh < 5 TWh < 10 TWh > 10 TWh

15 Whether we like it or not, the electricity market will be more and more regionally integrated ONE SINGLE MARKET Interdependence will increase and the price will be uniform 13/06/2012

16 BSR Energy Market Substantial Excess Capacity of Electricity by 2020? Subject to realization of committed National Renewable Energy Action Plans (NREAPs) substantial excess capacity of electricity for Baltic Sea Region and North Sea Region will be established by 2020 If there is excess capacity High marginal cost base load production will not be used, i.e. coal or gas investments will not be made Lacking and more expensive balancing capacity is a challenge Coal and gas-power more expensive due to quota price for CO2. Most important to develop more flexibility in thermal power, through smart grids and energy storage Big fluctuations in hydro power from rainy to dry years. Variations in Norway only are 50 TWh ( TWh). Housing, thanks to smart grids, may be an important balancing source Balancing power based on national or regional viability Nuclear Future?

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18 Security of Energy Supply Connection of Gas Networks in BSR and NSR Gas supply is important to balance wind variations and shortage of biogas Baltic Energy Market Integration - Finland and the three Baltic countries - Poland - Denmark and Sweden - Includes connection via Germany, Poland and from Russia - Pipeline connections, gas storages and LNG terminals

19 Security of Energy Supply Biofuel and biogas production Biomass from forests primarily in N, S and F. From agriculture in DK, Baltics and Poland Role of algae and straw from sea. Hugh potential. Technical solutions to be developed Sustainability issues related to more intensive biomass use are still to be explored more in detail. i.e. dialogue between Ministries of Energy and Agriculture! Biomass is suitable, in particular, for balancing of renewable power and combined heat and power production. Viability for electricity production only is questionable due to low efficiency. Biogas production of waste offers opportunities to reduce emissions to water

20 Energy crops potential in Europe Hugh potential in southern Baltic Sea Region Sustainability (growth of intensity of agriculture), monocultures Food supply security (land use competitiveness) Unknown risks of large scale development of plantations

21 The question if energy sector cooperation in the BSR is a benefit or curse is academic. It is an inevitable fact that we have to learn to live with and manage! 13/06/2012