Amanda Björnberg
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Amanda Björnberg Renewable energy system in Finland -A Business case study in steel industries Master’s thesis submitted for inspection for the degree of Master of Science in Technology. Espoo, September 29th, 2017 Supervisor: Professor Sanna Syri Instructor: M. Sc. (Tech.) Tiina Koljonen Aalto-yliopisto, PL 11000, 00076 AALTO www.aalto.fi Diplomityön tiivistelmä Tekijä Amanda Björnberg Työn nimi Uusiutuva energiajärjestelmä Suomessa –uuden teknologian investoinnin anaysointi terästeollisuudessa Koulutusohjelma Energia- ja LVI-tekniikka Pääaine Energiatekniikka Koodi K3007 Työn valvoja Prof. Sanna Syri, Aalto-yliopisto Työn ohjaaja M. Sc. (Tech.) Tiina Koljonen, VTT Päivämäärä 29.09.2017 Sivumäärä 99 + 26 Kieli Englanti Tiivistelmä Neljän EU-maiden tutkimuslaitosten laatimat tulevaisuusskenaariot 100% uusiutuvista energiajärjestelmistä verrataan keskenään ja yhteistä kaikille on lisääntynyt sähköistä- minen sekä sähko- lämpö ja liikennesektoreiden kytkentä. Skenaarioiden tavoitteet vaihtelevat 100% uusiutuvan energiajärjestelmän suunnittelusta aina kasvihuonepääs- töneutraalin yhteiskunnan suunnitteluun, ja skenaarion tavoitteella havaittiin olevan vaikutus energiajärjestelmän suunnitteluun. Skenaarioien välillä on suuria eroja biomassan saatavuuden oletuksissa, oletuksissa CCS:än käytöstä sekä synteettisesti tuotettujen energiaintensiivisten kaasujen ja nestei- den (PtG, PtL) tärkeydessä ja roolissa. Myös ei-energiasektoreiden kytkentä energiasek- toreihin vaihtelee skenaarioiden välillä. Keskeisiä tuloksia ovat teollisuussektorin pääs- tövähennystavoitteiden sekä biomassan saatavuudesta tehtyjen oletusten vaikutus PtG/PtL teknologioiden tärkeyteen osana energiajärjestelmää. Tämän lisäksi se, että teollisuus ja liikenne ovat kaikista vaikeampia sektoreita päästöjen vähentämiseen on myös vertauksen tulos. Skenaarioiden vertailusta käy ilmi, että tulevaisuuden energiajärjestelmien suunnitte- luskenaarioihin sisältyy merkittävä määrä epävarmuutta; aina teknisistä ratkaisuista sosiaalisiin, poliittisiin ja taloudellisiin kysymyksiin. Suomailaiseen terästeollisuuteen ja PtL teknologiaan kytkeytyvä investointipäätös analysoidaan Robust Decision Making (RDM) –menetelmällä, jota on suunniteltu isojen epävarmuuksien alla tehtyjen päätös- ten tueksi. Tulokset osoittavat, että PtL –investointi ei ole yhtä robusti vaihtoehto kuin monet muut investointivaihtoehdot, mutta että RDM –menetelmän sovelluksesta vas- taavanlaisiin tapauksiin voi olla hyötyä. RDM voi antaa syvemmän ymmärryksen ris- keistä, mutta sen käyttäminen vaatii enemmän aikaa ja sitoutumista kuin perinteinen teknillis-taloudellinen mallintaminen. Avainsanat Renewable Energy, Robust Decision Making, Power-to-gas, Energy System, GHG neutral, Neo-Carbon Energy Aalto University, P.O. BOX 11000, 00076 AALTO www.aalto.fi Abstract of master's thesis Author Amanda Björnberg Title of thesis Renewable energy system in Finland -A Business case study in steel in- dustries Degree programme Energy Technology Major Energy engineering Code K3007 Thesis supervisor Prof. Sanna Syri, Aalto University Thesis advisor Ms. Sc. (Tech.) Tiina Koljonen, VTT Date 29.09.2017 Number of pages 99 + 26 Language English Abstract The comparison of four future renewable energy system scenarios yields that energy system design for futures with 100% renewable energy is greatly dependent on whether the objective is to design an energy system with 100% renewable energy or to reduce GHG emissions from society as a whole. The latter seems to increase the relevance of power-to-gas (PtG) and power-to-liquid (PtL) technologies as these have the capacity to abate emissions from some industrial processes. Common factors in the four scenarios compared are higher electrification of the energy system and deeper integration of the enery sectors transport, heating and electricity. Differences between scenarios include biomass availability assumptions, level of electri- fication of transport, the inclusion of CCS, and the role of PtG/PtL as well as the level of integration of non-energy sectors with the energy system. A main finding is that biomass availability assumptions vary greatly illustrating the uncertainty connected to future energy system research, and that these also seem to affect the role of PtG/PtL technolo- gies. In addition, the drivers for investment in PtG/PtL differ between countries, with the technology playing a larger role in balancing intermittent renewable electricity sources in the scenario that relies very little on bioenergy. Furthermore, the transport and industry sectors are found to be the two hardest sectors to decarbonise. A business case related to the integration of PtL technology in an existing steel mill in Raahe, Finland is studied with the decision supporting Robust Decision Making (RDM) method. Results indicate that other investment options are more robust to future uncer- tainties than the PtL option is, but that RDM can be a useful tool when evaluating deci- sions made under conditions of deep uncertainty. RDM can offer a deeper understand- ing of the risks in far-reaching decisions and offer new perspectives in energy system analysis. Simultanoeusly, it also requires more time and commitment than a normal cost-benefit analysis. Keywords Renewable Energy, Robust Decision Making, Power-to-gas , Energy System, GHG neutral, Neo-Carbon Energy 4 Preface This thesis is part of the Neo-Carbon Energy (NCE) project and the premis was to ex- amine if the application of Robust Decision Making sheds new light on investments in the technologies related to the NCE project. In addition to this, a comparison of similar projects in other countries was added to provide a broader context; are other countries projecting similar future energy systems or not? The answer to this question can shed light on the robustness of the assumptions that are part of the NCE project. The research for the NCE project is conducted by the Technical Research Centre of Finland VTT Ltd, Lappeenranta University of Technology (LUT) and Finland Future Research Centre (FFRC) at the University of Turku, and it is funded by the Finnish Funding Agency for Innovation (Tekes). The author wishes to thank the instructor Tiina Koljonen, the supervisor Sanna Syri as well as research scientists Juha Forsström and Eemeli Tsupari for their contributions to the research presented in this thesis as well as for their valuable support and comments. A sincere thank you also to all colleagues in the Energy Systems research group at VTT for their comments and support. Helsinki, 29.09.2017 Amanda Björnberg Amanda Björnberg 5 Table of contents Tiivistelmä Abstract Preword Table of contents .......................................................................................................... 5 Symbols and abbreviations............................................................................................ 7 1 Introduction .......................................................................................................... 8 2 Background ......................................................................................................... 11 2.1 Energy systems in transition ......................................................................... 11 2.2 An uncertain future ....................................................................................... 15 2.3 Decision making under uncertainty ............................................................... 16 2.3.1 “Agree-on-assumptions” – approach ...................................................... 18 2.3.2 “Agree-on-Decisions” –approach: Robust Decision Making .................. 18 3 Renewable energy system in Finland ................................................................... 20 3.1 The Finnish energy system today .................................................................. 20 3.2 Political backdrop and agreed upon policies and targets ................................ 21 3.3 Future energy system: Neo-Carbon Energy ................................................... 22 4 Current and future energy systems elsewhere ...................................................... 28 4.1 Sweden ......................................................................................................... 30 4.1.1 The Swedish energy system today ......................................................... 30 4.1.2 Political backdrop and agreed upon policies ........................................... 30 4.1.3 Future energy system: Fyra framtider ..................................................... 31 4.2 Denmark ....................................................................................................... 35 4.2.1 The Danish energy system today ............................................................ 35 4.2.2 Political backdrop and agreed upon policies ........................................... 36 4.2.3 Future energy system: IDA Climate Plan and Energy Vision ................. 37 4.3 Germany ....................................................................................................... 44 4.3.1 The German energy system today .......................................................... 44 4.3.2 Political backdrop and agreed upon policies ........................................... 45 4.3.3 Future energy system: THGND 2050 Scenario ...................................... 46 5 Comparison of future renewable energy system scenarios ................................... 51 5.1 Overview .....................................................................................................