Gasetti 2/2020 Gasum’s magazine for forerunners in the energy sector The Nordic Energy Market More flexible than ever Gasetti 2/2020 4 Feature Electrifying the future: Expecting ”We are in for a massive a massive surge in demand of electricity surge in demand for 8 Smart energy electricity.” A full-fledged energy company KARI MÄKI, RESEARCH PROFESSOR, VTT 4 10 Gallup Reliability with Guarantees of Origin 12 Point of view Replacing coal with a broad energy mix 16 3 x industry Business in an environmentally friendly way 20 LNG Value chain Smooth bunkering with Gasum´s supply chain 22 News 25 Market analysis 26 Column Gas industry welcomes strategic steps to reduce methane emissions 27 Local Product The Helsinki Distilling Company Publisher Editor-in-Chief Address source Gasum Anna-Sofia Malmi Gasum Ltd’s customers and PO Box 21 [email protected] stakeholders register FI-02100 Espoo, Finland Editorial Office Cancellation or order Otavamedia OMA Please contact The energy company Gasum is a Nordic Cover [email protected] gas sector and energy market expert. Anna-Kaisa Jormanainen Gasum offers cleaner energy and energy Print run market expert services for industry and 3500 copies Read online: www.gasum.com 4041 0428 for combined heat and power produc- Printed by Twitter: @GasumGlobal tion as well as cleaner fuel solutions for PunaMusta LinkedIn: Gasum road and maritime transport. PHOTO GASUM PHOTO 2 GASETTI 2/2020 EDITORIAL Kimmo Rahkamo Clean power for clean industry OUR GENERATION grew up with the concept of having uninterrup- tible power in ever-growing volumes. We as consumers are deeply distracted by a power cut, but for many industries even a very brief power cut may cause huge losses in production. Most of us have probably not really thought about where our po- wer comes from. Of course, we know that there are power plants here and there, but few people actually follow what is happening behind the scenes. Whenever there is discussion regarding further electrifying our so- ciety, someone reminds us that we should be concerned about power production emissions. This is a valid comment, but there are two things to remember. First, a good part of current power production is already carbon neutral such as hydro and nuclear. Second, wind po- wer production is gaining ground and becoming significant. New wind power projects are being developed on a market-driven basis without public subsidies. As production volumes have inc- reased, equipment prices have fallen. Wind power is an excellent example of how public policies were used to help start the business – which can now be expanded without public money. But the wind is not always blowing. What happens on a calm day? We need power then as well. Acquiring wind power from different geographical areas decreases availability risk. It is always windy somewhere. But it is also true that wind power requires other power generation to complement it. Natu- ral gas is a perfect option to fill the gaps in wind power production. Although gas is fossil-based, it reduces carbon emissions by 40% compared with coal. Gasum is committed to cleaner energy. We have expanded our energy portfolio to include power, specifically clean power. Gasum has sourced wind power by using long-term power purchase agree- ments (PPA) from wind farm developers, which enables us to sell emission-free power to our customers . Here’s wishing all our customers a cleaner-powered future. The author is responsible for Gasum’s gas and power sales business. 2/2020 GASETTI 3 FEATURE An electric future TEXT Matti Koskinen ILLUSTRATION Anna-Kaisa Jormanainen The energy system is in for a massive transformation, as societies move toward carbon neutrality. Based on renewable electricity, the future of the Nordic energy market is more complex, flexible, and green. 4 GASETTI 2/2020 FEATURE 2/2020 GASETTI 5 FEATURE limate change is a slow-moving FINLAND electric car is hardly carbon neutral if the batteries are crisis, but it is changing the world HAS SET THE filled by a coal-burning power plant. at a fast pace. Within a decade or MOST “We’re a long way from totally renewable energy, so the idea of carbon-neutrality AMBITIOUS but most industries’ carbon neutrality roadmaps de- has gone from a question of “if” EMISSIONS pend on available and affordable clean electricity. This TARGET: to a question of “when.” The EU will lean on massively scaling up wind power, comple- plans to be carbon neutral by TO BECOME mented by hydro, nuclear and to some extent solar 2050, China by 2060. CARBON power, biofuels and so on,” says Mäki. This means massive changes in the energy sector, NEUTRAL BY The market for green energy is already growing fast, which accounts for around 72% of global greenhouse at times outpacing the increase in production capacity. gas emissions, according to the Center for Climate and 2035. The Nordic region is leading the charge in rene- Energy Solutions. wables in Europe. Sweden and Finland top the EU As the industry shifts away from fossil fuels, it must charts in share of energy from renewable sources, with find cost-effective and reliable ways to produce cleaner, Denmark coming in fourth. Outside of the EU, Norway more sustainable energy. already produces 98% of its electricity from renewable Thus the current energy transformation is shaped sources, mainly hydropower. by two major trends: electrification and renewables. The market for wind power is also booming, and “Heavy industry, transportation, heating and cool- SWEDEN wind now rivals or even surpasses fossil fuels in af- ing – those are all major consumers of energy and TARGETS fordability, after decades of public subsidies. According that’s where we’re looking to make the biggest cuts in NET-ZERO to Mäki there is massive potential, especially for a carbon emissions. Some of the biggest gains can be EMISSIONS BY sparsely populated country like Finland. There is made by using electricity to power many of these pro- plenty of available land for wind farms from the coastal cesses,” says Research Professor Kari Mäki, who studies 2045. flats to the open ranges of Lapland. A recent survey by smart energy systems at the Finnish state-owned re- Gasum found that potentially up to 30TWhs (terawatt search company VTT. hours) of wind power could be introduced in the cur- Burning coal or oil to power engines, heat houses rent Finnish electricity system. Meanwhile, Norway and fire-up blast furnaces is becoming increasingly un- and Denmark are focusing on offshore wind farms. DENMARK tenable. Switching to natural gas can reduce emissions AIMS TO CUT EMISSIONS BY Ramping up investments Still, further investments are needed to increase the 70% share of wind and other renewables in the Nordic en- (FROM 1990 ergy mix. According to the Oslo-based institute Nordic LEVELS) Energy Research, which works under the auspices of We are in for a massive BY the Nordic Council of Ministers, Nordic countries saw a 9% increase in overall share of renewables in their . surge in demand for 2030 final energy consumption in the decade between 2008 electricity. and 2018. Industries and individual companies can help spur on the necessary investments by purchasing renewable NORWAY energy and partnering up with energy producers, says AIMS TO CUT Ville Pesonen, Head of Energy Market Services, from EMISSIONS BY Gasum in many processes from ship engines to furnaces; bio- – “Companies can commit to buying wind power gas can bring the net emissions to zero. The bigger rev- 50 from a prospective wind farm over a long period of olution, however, is that electric cars, geothermal heat 55% time, for example. As end users of electricity, they have pumps, electric arc furnaces, and a multitude of other (FROM 1990 an important role in funding the transition,” says Peso- technologies are becoming more and more widespread. LEVELS) nen. “We are in for a massive surge in demand for elec- BY When companies seek to achieve their stated emis- tricity,” says Mäki. sion goals, Energy Market Services can help them to . 2030 assess their entire value chain and consider where they The Nordics lead the way in renewables SOURCE: NORDIC can most efficiently reduce their carbon footprint. The second part of the equation is renewable electricity COUNCIL OF “Energy is a huge part of the equation, as it is neces- generation. Emission reductions from electrification MINISTERS sary for every step in the value chain. Some companies hinge upon how the power is generated. Driving an are fine with buying certified clean energy. Others may 6 GASETTI 2/2020 FEATURE want to take a more active role and support the energy transformation,” explains Pesonen. Renewable energy sources in Flexibility from market integration Rebuilding the energy system around renewable the Nordic region’s sources and electricity requires flexibility from the market. Solar power is notoriously abundant in the summer, when consumption is low, and wind patterns Share of renewable energy sources in hardly obey our fluctuating energy needs. Flexibility the Nordic region’s total energy consumption: can also boost efficiency, using and storing energy increase of when it is cheap and conserving it when momentary demand exceeds supply. Flexibility can be increased by a variety of technolo- 40% 9% gies as well as market innovations. One advantage for in 2018 from 2008 the Nordic region is its highly integrated energy mar- ket. Share of renewable energy sources in the EU27 overall: 15% The Nordic countries could facilitate energy transition elsewhere in Europe. Denmark’s percentages of renewable energy in: • gross final energy consumption:35.7 % • transport: 6.6% • electricity: 62.4% • heating and cooling: 46.7% All of the Nordic countries have deregulated and Finland’s percentage of renewable energy in: opened up their electricity markets and invested in cross-border transfer capacity since the 1990s, and the • gross final energy consumption:41.2 % region now has the most harmonised cross-border • transport: 14.9% power market in the world, encompassing the Nordic • electricity: 36.8% and Baltic countries.