BUSINESS REVIEW REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTS GOVERNANCE REMUNERATION REPORT CORPORATE RESPONSIBILITY
ANNUAL REPORT 2020 ANNUAL REPORT 2020
BUSINESS REVIEW 2020
Review by the President & CEO
Operating environment and business model
Strategy
Fingrid’s reputation, customers and other stakeholders Business Review Finance and treasury
Business operations
Personnel
Internal control and risk management
Research and development
Glossary
1 BUSINESS REVIEW REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTS GOVERNANCE REMUNERATION REPORT CORPORATE RESPONSIBILITY
6. FINANCE AND TREASURY 17 Financial result for 2020 19 ANNUAL REPORT 2020 CONTENTS 7. BUSINESS OPERATIONS 22 Main grid 22 Power system 28 Electricity market 33
8. PERSONNEL 39 ”Fingrid is 9. INTERNAL CONTROL AND responsible for RISK MANAGEMENT 41 BUSINESS REVIEW 2020 Risk management at Fingrid 41 the functioning Risk management governance 41 Proactive risk management 42 Review by the President & CEO of Finland’s Continuity management 43 1. FINGRID 2020 3 Contingency planning 45 Operating environment Corporate safety & security 45 and business model power system, 2. REVIEW BY THE PRESIDENT & CEO 4 Risk controls 45 Strategy which makes it 3. OPERATING ENVIRONMENT 10. RESEARCH AND DEVELOPMENT 46 Fingrid’s reputation, customers AND BUSINESS MODEL 5 fundamentally a 11. GLOSSARY 49 and other stakeholders Climate change 5 Security of supply and Finance and treasury risk management electricity dependency 5 Business operations company.” Globalisation and responsibility 5 Digitalisation 6 Personnel REVIEW BY THE PRESIDENT & CEO P. 4 4. STRATEGY 7 Internal control and risk management Business model 8 Our vision 9 Research and development Our values 9 Our way of working 9 Glossary Implementation of the strategy 9 Value creation 12
5. FINGRID’S REPUTATION, CUSTOMERS AND OTHER STAKEHOLDERS 13 Reputation 13 Customers 13 Fingrid’s stakeholders 15
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1. FINGRID 2020 ANNUAL REPORT 2020
Fingrid’s Annual Report for 2020 consists of six BUSINESS REVIEW REPORT OF THE BOARD OF DIRECTORS FINANCIAL STATEMENTS GOVERNANCE REMUNERATION REPORT CORPORATE RESPONSIBILITY
ANNUAL REPORT 2020 sub-reports: the Business Review, Report of the ANNUAL REPORT 2020 ANNUAL REPORT 2020 Board of Directors, Consolidated Group and parent
company’s Financial Statements and key figures, BUSINESS REVIEW 2020
Review by the President & CEO
Operating environment Corporate Governance Statement, Remuneration and business model
Strategy
Fingrid’s reputation, customers Statement, and Corporate Responsibility Report. and other stakeholders Business Review Report of the board Finance and treasury
Business operations BUSINESS REVIEW 2020 For the first time, the Financial Statements are Personnel of directors Internal control and risk management published in accordance with the European Single Research and development
Glossary Electronic Format (ESEF) reporting requirements. Review by the President & CEO The format is Extensible Hypertext Markup Lan- guage (XHTML), and the document is available on 1 Operating environment www.fingrid.fi/en and business model Fingrid draws up the Consolidated Financial State- Strategy ANNUAL REPORT 2020 ANNUAL REPORT 2020 ments and the half-year report in accordance with Fingrid’s reputation, customers the international IFRS reporting standards accept- and other stakeholders ed by the European Union and in accordance with the Finnish Securities Market Act. The Consolidat- Corporate Governance Finance and treasury Financial statements ed Financial Statements include the parent com- Statement Business operations pany Fingrid Oyj and its wholly owned subsidiaries Finextra Oy and Fingrid Datahub Oy. The Group Personnel additionally has a 25.0% holding in one associated company, eSett Oy. The Report of the Board of Di- Internal control and risk management rectors and the financial statements of the Group’s parent company and its subsidiaries are prepared Research and development in accordance with the Finnish Accounting Act and the guidelines and statements of the Finnish Ac- ANNUAL REPORT 2020 ANNUAL REPORT 2020 Glossary counting Board. Corporate responsibility and See all annual report Remuneration Report sustainable development publications online
FINGRID.FI/EN/ANNUALREPORT2020
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ANNUAL REPORT 2020 2. REVIEW BY THE PRESIDENT & CEO
Finland and the entire world are experi- winds and high production of wind power, Focus on the future: Fingrid faces its encing a genuine boom in the construc- led to very low electricity market prices in biggest challenge ever tion of a clean power system. In addition the Nordic countries and large regional We recognise our central role in the to the connection of the Olkiluoto 3 nucle- price disparities. Finland imported elec- implementation of the national ‘Cli- ar power plant, we are currently process- tricity from Sweden, using the full trans- mate-neutral Finland 2035’ vision. We ing enquiries related to additional wind mission capacity between the countries, will do everything in our power to ena- BUSINESS REVIEW 2020 power construction amounting to tens of but the existing transmission capacity did ble the ambitious objectives of the gov- thousands of megawatts. Clean electrici- not meet the actual market needs. Our ernment programme through our oper- ty requires well-functioning transmission cross-border transmission connections ations, which provide society with highly Review by the President & CEO connections. We built transmission lines functioned well, however, and we suc- impactful electricity market and grid ser- Operating environment and substations at dozens of worksites in ceeded in making all the existing capacity vices. Along with our grid investments, and business model 2020; in terms of number of investment available to the markets. we continue developing an electricity projects, it was a record year. The high market that balances out the supply and Strategy tempo of investments will continue at Due to the decrease in electricity con- demand of electricity at each moment in least throughout this decade. sumption, our grid service revenue fell time and creates flexibility in the power Fingrid’s reputation, customers and other stakeholders year-on-year. The market conditions also system on market terms. Managing the Despite the exceptional situation caused resulted in a decrease in the cross-bor- power system will in the future require Finance and treasury by the coronavirus pandemic, the invest- der transmission income for the capaci- shorter and shorter reaction times and ments progressed as planned. Even in ty imported from Russia. The exception- the capability to manage vast amounts of Business operations these unusual circumstances, Finland’s ally intensive spring floods increased data. Our response to these challenges Personnel main grid operated reliably, with excel- the prices for the reserves required for is to increase the degree of automation the day, our actions always speaks loud- lent transmission reliability. As a company balancing consumption and production in the processes linked with operating er than words. Along with maintaining Internal control and critical for the security of supply, we are for several weeks, resulting in increased the power system. our reputation, we have developed our risk management well prepared for a wide range of excep- costs for us. Due to the weather condi- corporate responsibility management tional circumstances and we actively par- tions, our result was significantly lower We fully understand that we cannot ac- and reporting. Achieving excellence in Research and development ticipate in Finland’s National Emergency than planned. Through cost-effective complish our crucial mission without our mission of key societal importance Glossary Supply Organisation. operations, we have managed to keep support from society and our stakehold- requires a high level of quality in all ar- our transmission tariffs at an affordable ers. The support we can expect from our eas of corporate responsibility and the Weather played the leading role in the level regardless of the intensive invest- stakeholders is directly dependent on ability to evolve along with the changing Nordic electricity market. An exception- ment tempo. We have been able to lower our reputation. On the other hand, the operating environment. ally mild winter and the resulting substan- our grid service fees by more than 10 per higher the trust in us, the better we are tial decrease in electricity consumption, cent since 2017, and they will remain un- equipped to serve Finnish society. We heavy rains and the consequent good changed also in 2021. have continued our efforts to build and Jukka Ruusunen availability of hydropower, as well as hard maintain a good reputation. At the end of the President & CEO
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3. OPERATING ENVIRONMENT AND BUSINESS MODEL ANNUAL REPORT 2020
CLIMATE CHANGE er system on market terms. We closely Renewable GLOBALISATION AND Finland’s goal is to be a climate-neutral collaborate with the market parties, our RESPONSIBILITY society in 2035. A key path to this goal customers, the authorities, and policy- energy will play Globalisation brings opportunities for is to eliminate emissions from industry, makers. We do our part in mitigating cli- service and equipment procurements, the heating and traffic by electrifying these mate change by building and maintaining an increasing labour markets and financing. Respon- activities. In the clean power system of the main grid, thus creating the platform sibility and increasing regulation will be BUSINESS REVIEW 2020 the future, electricity will be produced for a clean power system. role in power highlighted in a global economy. Com- without CO2 emissions. panies are expected to offer solutions Fingrid’s task is to connect the energy to society’s common challenges. Longer Review by the President & CEO generation. Renewable energy will play an increas- produced in a new way to the main grid procurement chains and increasingly in- Operating environment ing role in power generation. The share and prepare for the decrease of flexi- ternational activities mean challenges for and business model of emission-free, non-adjustable and de- ble production capacity. We develop the responsible business operations. centralised production is growing. The electricity market also for the needs of an Strategy European internal market in electricity emission-free power system. Increased workforce mobility is making will increase the efficiency and security energy companies more international. The Fingrid’s reputation, customers and other stakeholders of supply, while also contributing to in- SECURITY OF SUPPLY AND global financial market offers well-man- creasing weather-dependent, renewable ELECTRICITY DEPENDENCY aged companies with a high credit rating Finance and treasury electricity generation. Electricity consumption is increasing and a flexible and affordable way of procur- society demands a secure, uninterrupt- ing financing. Corporate responsibility is Business operations The structure of electricity production is ed supply of electricity. Security of supply a key component of Fingrid’s operations. Personnel changing: while the share of renewable must be guaranteed in a changing power The importance of openness is growing energy is increasing, the production of system with a lot of weather-dependent Fingrid’s investments in the electricity even further. Internal control and adjustable condensing power relying on production of renewables. network, grid maintenance, promoting risk management fossil fuels is on the decline. The capabil- the markets and developing grid oper- For Fingrid, globalisation means new op- ity for supply-side flexibility in response Severe disturbances in the power sup- ations improve the reliability of power portunities in the shape of international Research and development to changes in the demand will decrease ply are among the most serious security supply and our preparedness in the face suppliers and cooperation partners. We Glossary as the share of wind and solar power in- threats to a modern society. Electricity of crisis situations. In risk and continuity have for a long time made use of inter- creases. Fluctuations in electricity prices sector risks are being prepared for as management, continuous preparations national financing markets and were the will increase and create business oppor- part of the European Commission’s clean are made for serious disturbances to the first Finnish company to have issued a tunities for flexible production and con- energy Winter Package. The aim is to im- power system in different threat scenar- Green Bond. Fingrid’s task as a respon- sumption as well as energy storage tech- prove the security of electricity supply at ios. We are actively involved in interna- sible buyer of goods and services is to nologies. the EU level and reinforce regional coop- tional cooperation to develop European promote sustainable development and eration. Measures related to crises must network codes, and we prepare for power responsible practices worldwide. Fingrid plays an active role in this energy be compatible with the rules for the EU’s system disturbances in cooperation with transition by helping shape a clean pow- internal electricity market. the Baltic Sea region’s TSOs.
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ANNUAL REPORT 2020
DIGITALISATION Digitalisation promotes new practices and operational procedures in the power system and electricity market. It also ena- bles advanced power system operations, grid maintenance management, and au- BUSINESS REVIEW 2020 tomation. Digitalisation increases the im- portance of data, information technology and telecommunications while enabling Review by the President & CEO new business opportunities. The increas- Operating environment ing rate of automation will also change and business model ways of working. Effective management of intellectual capital and cybersecurity Strategy are more important than ever.
Fingrid’s reputation, customers and other stakeholders From Fingrid’s perspective, digitalisation enables even more productive operation- Finance and treasury al processes, better customer service, and more efficient sharing of market -in Business operations formation. It also provides new tools for Personnel managing a changing and increasingly complex power system. Smart grid tech- Internal control and nology opens up new business opportu- risk management nities for both current and new operators and, in turn, shapes Fingrid’s customer Research and development field. Glossary
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ANNUAL REPORT 2020 4. STRATEGY
Fingrid is Finland’s transmission system operator. Our owners are the State of Finland, and Finnish pension and insurance companies. Our mission is to secure a cost-effective and reliable supply of electricity in our society in all situations and to promote a clean, market-based power system of the future.
BUSINESS REVIEW 2020 MEGATRENDS OUR STRATEGIC GOAL OUR VISION
Climate change and trans- We create a platform for formation of the energy system a clean electricity system Review by the President & CEO • We build and maintain the electricity Security of energy supply and We are a forerunner dependency on electricity transmission grid with a long-term view Operating environment for the needs of a clean electricity system for electricity network and business model Globalisation and • We monitor the electricity system at all operations and we are responsibility times and handle disturbances eciently respected and influential Strategy so that society can rely on reliable electricity in energy matters. also in the future Digitalisation Fingrid’s reputation, customers • We reform the electricity market so that and other stakeholders production and consumption continue to find balance as eciently as possible
Finance and treasury
Business operations
Personnel
Internal control and risk management
Research and development
Glossary
OUR MISSION OUR VALUES We secure reliable electricity • Transparent for our customers and society and we shape clean, • Fair market-oriented power • Ecient system of the future. • Responsible Image. Fingrid’s role in society and our strategic targets.
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ANNUAL REPORT 2020
Fingrid’s business model
BUSINESS REVIEW 2020 RESOURCES BUSINESS PROCESS IMPACTS • Personnel and expertise • Enabling a climate- • Suppliers and business neutral energy system Review by the President & CEO partners ADEQUACY OF MANAGEMENT OF PROMOTING THE • Reliable electricity for • Income and debt financing THE ELECTRICITY ELECTRICITY SYSTEM ELECTRICITY MARKET society and business Operating environment TRANSMISSION OPERATION • Developing market • Efficiently functioning and business model • Electricity from power SYSTEM plants and neighbouring • Planning of the operation rules to enable a clean electricity market Strategy countries • Grid planning of the electricity system electricity system • Promoting Finland’s • Grid transmission lines, • Grid construction • Monitoring and control of • Promoting the regional competitiveness the electricity system electricity markets Fingrid’s reputation, customers substations and reserve • Grid maintenance • Developing the and other stakeholders power plants • Managing disturbances • Ensuring the continuity electricity sector and • Land required for and the continuity of the of the electricity market competence Finance and treasury transmission lines; natural electricity system • Financial benefits for resources and materials stakeholders Business operations • ICT structures • Employment impact and other local benefits from Personnel • Knowledge capital on electricity, markets large capex projects Internal control and and customers • Local changes in land risk management use and the environment and energy losses in Research and development electricity transmission
Glossary SERVICES FOR CUSTOMERS
Main grid services Electricity market services
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ANNUAL REPORT 2020
highly esteemed energy influencer. Fingrid’s role in the electricity system OUR VALUES Our values guide the work of our profes- sional community and lay a solid founda- tion for our corporate culture. Fingrid is BUSINESS REVIEW 2020 open, fair, efficient and responsible in all
PRODUCTION 400 kV 110 kV CONSUMPTION our operations. Electricity is Electricity is transmitted to consumers Review by the President & CEO generated in many through Fingrid’s transmission grid different ways and the distribution networks of other OUR WAY OF WORKING operators. Consumers can also produce Operating environment electricity. Our corporate culture is open, collabo- and business model rative and renewing, and complies with good governance practices. We are Strategy known for our expertise.
Fingrid’s reputation, customers and other stakeholders We develop our operations for the long term and in cooperation with our cus- Finance and treasury tomers and other stakeholders. We treat Cross-border connections Main grid services Electricity market services everyone impartially and with respect. Business operations to Sweden, Estonia,Russia and Norway We achieve the bold and ambitious goals Personnel set for our operations.
Internal control and We provide high quality and efficiency by risk management combining our core expertise with that of BUSINESS MODEL Transmission System Operators of Elec- The business model describes the most the best players in the world. Research and development Our operations are based on Finnish and tricity, and also regionally within the Baltic important material and immaterial resourc- Glossary EU legislation. In accordance with the region, to improve the functioning of the es at Fingrid’s disposal that are necessary We always work responsibly, effectively, Finnish Electricity Market Act, we devel- internal market in electricity. Our task is for our business processes. The impact and through open interaction. This is how op the main grid, maintain a balance be- to participate in the drawing up and im- of Fingrid’s operations and the significant we earn the trust of our customers and tween electricity consumption and gener- plementation of the market, operating and added value they generate show in various stakeholders. ation, and promote the preconditions for connection codes and the proposals pre- ways throughout Finnish society. a well-functioning electricity market. The scribed in them. Fingrid’s operations are IMPLEMENTATION OF THE STRATEGY EU Regulation on the internal market for supervised and regulated by the Energy OUR VISION Fingrid’s strategy is implemented through electricity obligates us to cooperate with- Authority, which has granted the company Fingrid’s vision is to be an exempla- four perspectives: Personnel & Expertise, in ENTSO-E, the European Network of a licence for the main grid operations. ry transmission system operator and a Customers & Society, Finance, and Inter-
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ANNUAL REPORT 2020
nal Processes. According to the approach • Promoting the electricity market: We chosen by Fingrid for implementing its actively maintain and develop the elec- strategy, all four perspectives are equal tricity market. and are implemented and developed in a mutually balanced way in accordance The objective of the Finance perspective CUSTOMERS AND SOCIETY with the strategy framework described is to operate cost-effectively and create We secure reliable electricity and a well-functioning electricity market for BUSINESS REVIEW 2020 above. In the strategy house, everything value for shareholders. society. We offer affordable services that meet our customers’ needs. moves from the foundation all the way to the top: when personnel’s well-being The top of Fingrid’s strategy house is Review by the President & CEO and competence are in order, the inter- made up of the Customers & Society per- Operating environment nal processes can function optimally and spective, which aims at securing reliable and business model efficiently produce services and financial supply of electricity and a well-functioning benefits for the shareholders, customers electricity market for the society, as well Strategy and the whole of society. The strategic as meeting the customers’ needs with our FINANCE perspectives play a key role in the day- services at affordable prices. We operate cost-effectively and Fingrid’s reputation, customers bring value to our owners. and other stakeholders to-day management of the company. The preparation of the goals and oper- Finance and treasury Fingrid is a specialist organisation in which ations of each strategic perspective are
the objective of the Personnel & Expertise steered by a steering group appointed by INTERNAL PROCESSES Business operations perspective is to maintain and develop an the company’s Executive Management Personnel open, social, renewing and high-perform- Group, which ensures that matters are ing work community. prepared comprehensively and executed Adequacy of Promoting the transmission system System operation the electricity market Internal control and efficiently using the best expertise. Fin- risk management The Internal Processes perspective con- grid’s primary approach is to serve the We carry out investments We operate the national grid We actively maintain and develop and maintenance safely and proactively and reliably. the electricity market. sists of the company’s three basic func- best interests of both society and the efficiently at the right time. Research and development tions: company’s customers. Glossary • Ensuring transmission capacity: We carry out investments and mainte- The key choices in the company’s strat- nance safely and efficiently at the right egy work are approached through each PERSONNEL AND EXPERTISE time. of the perspectives to establish the kind An open, collaborative, renewing and result-driven work community. • System security management: We of measures that are required of each operate the main grid proactively and of them for the implementation of the
reliably. strategy. Image. Fingrid’s strategy.
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ANNUAL REPORT 2020
Our strategic choices are as follows: Security and responsibility Focusing on our core mission • During the energy sector transforma- • We excel in accomplishing our core tion, we will maintain the current good mission in a changing operating en- level of system security. Corporate re- Jukka Ruusunen, President & CEO vironment. We do not aim to expand sponsibility and safety are highlighted into new businesses or to participate in everything we do. BUSINESS REVIEW 2020 in competitive business. Fingrid operates according to a matrix Customer focus model that pairs the strategy and the or- Review by the President & CEO • We develop our business operations ganisation. The model pushes collective Grid services Asset Power Market Finance ICT HR and Legal and and operating models with our cus- efforts and shared goals to the forefront. and planning management system and Communi- administrative Operating environment operations treasury cations services and business model tomers in mind and for the benefit of A matrix organisation is challenging, but Asta Jussi Timo Reima Sihvonen- Jan Kari Tiina Marina the entire country. we have shaped the company into an ag- Jyrinsalo Kiiveri Päivinen Punkka Montell Suominen Miettinen Louhija Strategy ile and flexible player with a flat hierarchy. World-class efficiency The strategy is implemented as a matrix Fingrid’s reputation, customers Customers and other stakeholders • We innovatively utilise the best tech- organisation through the defined four Jussi Jyrinsalo nologies and opportunities enabled by perspectives. Finance and treasury digitalisation. We maintain the neces- Finance and business development sary core competence in-house. We The personnel resources are allocated Jan Montell Business operations cooperate with the best partners. according to the functions such that man- agers are in charge of the annual plan- Personnel Adequacy of the transmission system System operation Promoting the electricity market Market focus ning and budgeting of the tasks in their Timo Kiiveri Reima Päivinen Asta Sihvonen-Punkka Internal control and • We apply a market-oriented approach respective areas of responsibility and of risk management in all areas because we believe that implementing the action plans according Personnel and expertise well-functioning markets will produce to the business targets set forth in the Research and development Tiina Miettinen the best and most innovative solutions. strategy. Glossary Openness to integration The company’s management model as- • We actively promote the integration of signs a dual role to the managers as the electricity markets in Europe and heads of both operations and perspec- the Baltic Sea region while also taking tives. The management system is de- into account Finland’s best interests. scribed in more detail in the ‘Manage- Image. Fingrid’s matrix organisation. ment principles’ document.
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ANNUAL REPORT 2020
VALUE CREATION Through its business, Fingrid creates significant shared value for its customers, employees, shareholders and the whole of Finnish society.
Value created by Fingrid in 2020
BUSINESS REVIEW 2020 CREATION OF VALUE
Fingrid’s Electricity The wind power Top cost-effec- Personnel feel One of Finland’s Investments in the Direct CO2 nationwide main transmission connected to the tiveness in Eu- their work is mea- largest corporate main grid approx. emissions Review by the President & CEO grid creates reliability main grid, 296 ropean energy ningful and are income tax payers EUR 147 mill. and indirect a platform 99.99995%. megawatts, will regulators’ com- ready to recom- (EUR 30 mill.). Fingrid emissions due to Operating environment for a clean reduce future parison study. mend their emp- the company’s and business model Payments to pro- personnel’s powersystem. annual indirect Third cheapest loyer (eNPS 71). viders of capital person-years own electricity Around 10 emissions by in ENTSO-E’s LTIF 11.1. EUR 149 mill. 355 and service consumption and Strategy kilometres 72,000 CO European price losses 2 Absences from suppliers’ person- of new grid equivalent comparison. 114,000 CO work 1%. Number years 491. 2 Fingrid’s reputation, customers transmission tonnes. Customers per- of training days equivalent tonnes. lines and 12 new ceive that Fingrid and other stakeholders Reliability of on average 3/ Waste utilisation or expanded works for the be- cross-border employee. rate 95% and substations. nefit of the whole Finance and treasury transmission recycling rate of society (4.3/5). connections 62%. Business operations 99.67%
Personnel
Internal control and risk management Enabling a Reliable electricity Well-functioning Promoting Finland’s Developing the Financial benefits Employment impact Local changes in land climate-neutral for society and electricity market competitiveness electricity sector for stakeholders and other local use and the envi- ronment and energy Research and development energy system business and expertise benefits from large losses in electricity capex projects transmission Glossary IMPACTS
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ANNUAL REPORT 2020 5. FINGRID’S REPUTATION, CUSTOMERS AND OTHER STAKEHOLDERS
REPUTATION Fingrid’s achievements have received in- Transmission system operators play a ternational recognition: in 2018, we were special role in society, both in Finland awarded as the world’s Best Transmis- and elsewhere. They are entrusted with sion Brand in the international CHARGE a responsibility for the functioning of a vi- energy branding competition. During tal service for society, the power system. the period under review, Fingrid hosted BUSINESS REVIEW 2020 TSOs hold the role of closely regulated a TSO reputation webinar in the global natural monopolies. CHARGE conference.
Review by the President & CEO In Fingrid’s point of view, the trust and CUSTOMERS Operating environment support of stakeholders is a vital issue. A Fingrid provides grid services and elec- and business model company with a good reputation can at- tricity market services to its customers: tract better employees, has more satis- utility companies, electricity-consuming Strategy fied customers, can get more affordable industry and electricity market operators. financing and enjoys the support of soci- Fingrid’s operations are largely based on Fingrid’s reputation, customers and other stakeholders ety. Furthermore, society can intervene in performing statutory duties. We conduct the operations of a TSO by changing regu- our duties with a maximum customer fo- Finance and treasury lation, if the company does not accomplish cus, impartially and on equal terms. the duties assigned to it. Reputation man- Business operations agement is a part of our strategic manage- We develop our services in cooperation Personnel ment. We regularly gauge our reputation with our customers. We take into account among our key stakeholders and develop our customers’ needs and their business Internal control and our operations according to the feedback challenges. The foundation for our cus- risk management we receive. tomer work is listening and clear com- munication. Our aim is to be impartial Research and development In 2019 and 2020, T-Media studied Fin- and have due consideration for the var- Glossary grid’s reputation and the respondents’ ying needs of different industry players. awareness of Fingrid’s activities among We aim to maintain our grid service fees decision-makers, media, technology stu- among the most affordable in Europe. dents and professionals, and the general We have been able to lower our grid ser- public. According to the survey, the more vice fees by more than 10 per cent since aware the respondent was of Fingrid, the 2017, and they will remain at the previous more satisfied they were with the compa- year’s level in 2021. ny. However, as a company, Fingrid is not well known.
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In addition to being able to offer servic- The key functionalities launched in 2020 We value In 2020, we were successful in accom- es that meet customer needs, we val- include power quality metrics, a docu- plishing our value proposition of reliable ue openness, trust and active interac- mentation library, and support for the openness, trust and affordable electricity transmission. tion with our customers. We engage our English language. The user interface was The reliability of electricity transmission customers in developing our operations additionally modified to meet the require- and active hit an all-time record and our grid service through, for example, the Advisory Com- ments of the EU Accessibility Directive. A fees were among the most affordable in BUSINESS REVIEW 2020 mittee, customer committees, and refer- My Fingrid development team composed interaction with Europe. Significant amounts of wind pow- ence groups. Furthermore, we make our of customers also started its activities er capacity are currently being planned plans public for customers’ comments in 2020. In the future, the development and under construction. We received Review by the President & CEO our customers. and meet our customers one-on-one for team will participate in the steering and around 160 inquiries about main grid Operating environment feedback dialogue. We carry out exten- brainstorming of My Fingrid system de- connections, totalling tens of thousands and business model sive annual customer surveys to measure velopment. megawatts in capacity. The connection customers’ satisfaction with Fingrid and agreements signed during the year ena- Strategy to collect feedback for developing our op- During the year, we organised two major ble the grid connection of roughly 1,800 erations. According to the 2020 customer customer events and several info ses- utility companies and energy intensive in- MW of new wind power capacity. We also Fingrid’s reputation, customers and other stakeholders satisfaction survey, our customers’ trust sions and webinars targeted at smaller dustry. Our value proposition is to offer received enquiries about the grid connec- in Fingrid remains strong and our work for audiences, concerning topics such as the reliable and affordable electricity trans- tion of new types of consumption. Finance and treasury the benefit of society at large is consid- datahub project and the 15-minute im- mission. Our grid services consist of con- ered a particular strength. Our customers balance settlement project. The Fingrid nection into the main grid and develop- Our electricity market services offer all Business operations gave us a a Net Promoter Score of 45, a Current event in March focused on the ing, operating and maintaining the grid industry players a unified price area for Personnel good result for a monopoly company in a Baltic Sea region as a forerunner in the according to the customer’s transmis- electricity trade in Finland and the bene- business-to-business industry. European electricity market. Exception- sion needs. We implement the grid con- fits of open European electricity markets. Internal control and ally, the autumn event took place online nections the customer needs, we ensure According to Fingrid’s value proposition, risk management Digitalisation will empower us to of- and focused on the major changes in compatibility between the main grid and we are the most market favourable trans- fer even better customer service. We the electricity market, ranging from the the customer’s networks and guarantee mission company. By maintaining a strong Research and development launched My Fingrid service portal for go-live of the centralised information the transmission capability and quality of main grid, we make sure that Finland Glossary our customers in 2019. In My Fingrid, cus- exchange system for the retail market, electricity at the connection points. We forms a unified price area for electricity. tomers can view various metrics such as i.e. datahub, to the major changes faced make sure that Finland’s power system By means of our cross-border transmis- transmission metering, invoicing and re- by the wholesale electricity market. The operates reliably 24/7 and also prepare sion connections, we offer access to the active power, as well as disturbance and event attracted as many as 400 partici- for any unusual contingencies. We care- European electricity markets. We pro- unavailability data. The service was de- pants interested in the electricity market. fully plan our maintenance activities and vide the market with the highest pos- veloped further in 2020, and new func- transmission outages in advance to min- sible transmission capacity at all times. tionalities have been added continuously Our grid services secure reliable trans- imise any disturbance they may cause to We develop the market rules and publish based on customers’ needs and wishes. mission, capable of meeting the needs of our customers. electricity market data openly and free
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of charge. In addition, we maintain and also from our customers, in their own IT develop the marketplaces for reserve and systems. Fingrid’s key stakeholders and channels balancing power. We take care of balance of engagement settlement and deliver imbalance pow- FINGRID’S STAKEHOLDERS er to the balance responsible parties. Fingrid’s operations have a major impact Fingrid Datahub Oy, our subsidiary, will on the surrounding society. In addition to BUSINESS REVIEW 2020 offer an effective information exchange the customers, the company also has sev- platform for retail market parties in the eral other key stakeholders that we iden- near future. Finextra Oy issues guaran- tify using a materiality analysis, for exam- Review by the President & CEO tee-of-origin certificates for renewable ple. The starting point for identifying key CUSTOMERS LANDOWNERS AND NEIGHBOURS Operating environment energy. stakeholders is to describe the expecta- and business model tions of stakeholders and Fingrid’s ac- In 2020, the full cross-border transmis- tivities that respond to the expectations. Strategy sion capacity was utilised for Finland’s Being open to the stakeholders’ expecta- electricity imports from Sweden. Our tions is an essential part of our reputation Fingrid’s reputation, customers and other stakeholders transmission capacity did not meet the management and sustainable business. PERSONNEL CONTRACTORS AND needs of the market, but our cross-bor- We offer our stakeholders information SERVICE PROVIDERS Finance and treasury der transmission connections functioned about corporate responsibility work in very well nevertheless and we succeed- more detail in the Corporate Responsibil- Business operations ed in making the existing transmission ity and Sustainable Development Report Personnel capacity available to the market. More included in our Annual Report. transmission capacity will become avail- Internal control and able between the countries in 2025. We Advisory Committee risk management have also made preparations to signifi- The Advisory Committee and the two SHAREHOLDERS AND POLICYMAKERS cantly increase the transmission capacity other customer committees (Grid Com- FINANCERS Research and development between northern and southern Finland mittee and Market Committee) play an Glossary in order to keep Finland as a single price important role in ensuring interaction and area. Another area of the electricity mar- that the customer’s voice is heard. ket services visible to the customers are The Advisory Committee deals with the the various power market development company’s entire field of operations and projects we have carried forward in coop- its success in its duties. The information AUTHORITIES AND OTHER PARTNERS ORGANISATIONS eration with other TSOs and customers. addressed by the Advisory Committee is Along with international projects, a more openly available to all stakeholders. The concrete national initiative was the data- Advisory Committee convened four times hub, which has required significant inputs during the year. The topics addressed in
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the meetings included the management of tomer committees were renewed start- Hannu Parkkonen, Kuopion Energia Oy sion capacity, and supervision of reserve system security in Finland and other Nor- ing from 2020, to correspond with the Jyri Tiuraniemi, Rovakaira Oy markets. The customers additionally took dic countries, the continuously increasing renewed services. The committees are Mikko Rintamäki, Kokkolan Energia Oy turns in presenting their operations and need for more transmission capacity due advisory bodies that offer insights into Timo Torvela, Tuike Finland Oy their views on the development of the to renewable energy, and the develop- Fingrid’s operations and the services of- Katja Virkkunen, Oulun Energia Siirto electricity market. ment of electricity markets. Customers’ fered to customers. ja Jakelu Oy (chair) BUSINESS REVIEW 2020 presentations on current topics were also Jarno Virtanen, Nivos Energia Oy Members on the agenda in each meeting. Grid Committee: Peter Fabritius, Valio Oy The purpose of the Grid Committee is to Members from Fingrid: Hannu Jokinen, Hansen Technologies Review by the President & CEO Members participate in developing the service to Jussi Jyrinsalo Finland Oy Operating environment Timo Jokinen, Inergia Oy ensure we can offer reliable transmission Jonne Jäppinen Marja Kaitaniemi, Neoen Renewables and business model Elina Kivioja, Vattenfall Oy (chair) of electricity in the main grid according to Timo Kiiveri Finland Oy Jarkko Kohtala, Elenia Oy the needs of utility companies and energy Petri Parviainen Tero Karhumäki, Kuoreveden Sähkö Oy Strategy Mika Lehtimäki, Boliden Kokkola Oy intensive industry. Reima Päivinen Juha Keski-Karhu, Väre Energia Oy Markus Lehtonen, Katariina Saarinen (secretary) Elina Lehtomäki, Caruna Fingrid’s reputation, customers and other stakeholders Helen Sähköverkko Oy During 2020, the Grid Committee’s meet- Tomi Pesonen, Metsä Group Mikko Lepistö, SSAB Europe Oy ings focused on the various subareas in Market Committee Ville Pesonen, Gasum Oy Finance and treasury Simon-Erik Ollus, Fortum Oyj grid services. The participants prepared The Market Committee brings together Ilkka Tykkyläinen, Pohjolan Voima Oyj Jouni Pylvänäinen, their own statements on the topics to be Fingrid and the electricity market parties Jan Segerstam, Enerim Oy Business operations Kymenlaakson Sähköverkko Oy addressed in the meetings. The meetings active in Finland. The committee is an Sebastian Sundberg, Fortum Oyj (chair) Personnel Jukka Toivonen, Vantaan Energia Oy additionally included industry-specific advisory discussion forum, which helps Kimmo Tyni, AXPO Oy Ilkka Tykkyläinen, Pohjolan Voima Oyj presentations by customers. Fingrid to develop the Nordic and Euro- Ville Väre, Liikennevirta Oy/Virta Internal control and Antti Vilkuna, Suomen Voima Oy pean electricity markets. Fingrid informs risk management Mikko Vuori, UPM Communication Members: the committee on the development in the Members from Fingrid Papers Oy Tuomas Candelin-Palmqvist, electricity market and on European coop- Asta Sihvonen-Punkka Research and development Tuuliwatti Oy eration, and in return receives feedback Maria Joki-Pesola (secretary) Glossary Members from Fingrid Hannu Halminen, on any development plans topical at the Jukka Ruusunen Sallila Sähkönsiirto Oy time from the committee. Jussi Jyrinsalo Mikael Heikkilä, Fortum Oyj Rami Saajoranta (secretary) Sakari Kauppinen, The meetings held in 2020 addressed Alva Sähköverkko Oy topics such as the development of open Service-specific committees Petri Kopi, Kemira Chemicals Oy data services, comparisons between Nor- The customer committees deal with mat- Anne Kärki, Outokumpu Stainless Oy dic transmission tariffs, the Nordic Bal- ters in their respective sectors. The cus- Heikki Paananen, Elenia Oy ancing Model, calculation of transmis-
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ANNUAL REPORT 2020 6. FINANCE AND TREASURY
Fingrid’s business activities and the from transmission system operations is calculated by adjusting the parent regulation of transmission system calculated by multiplying the total adjusted Cost-effective company’s operating profit according operations capital invested in the transmission to the Energy Authority’s regulation Fingrid constitutes a natural monopoly network operations (transmission operations methods and by adding the impact, either as referred to in the Finnish Electricity network assets valued at the regulatory positive or negative, of the incentives. Market Act (588/2013), with duties value in use) with the reasonable rate of ensure The incentives include capex, quality, BUSINESS REVIEW 2020 defined in legislation. The company’s return defined by the Energy Authority. efficiency improvement and innovations operations, reasonableness in pricing The reasonable financial result allowed affordable incentives (R&D). and financial result are regulated and by the regulation forms the basis of Review by the President & CEO grid service overseen by the Energy Authority. The Fingrid’s financial planning and pricing. Any realised regulatory profit over a Operating environment Energy Authority determines Fingrid’s The required amount of turnover can be fees. regulatory period that exceeds the and business model allowable financial income over four- calculated by adding up the operating allowed return constitutes a surplus that year regulatory periods (2020–2023). expenses and the result. must be returned to the customers in the Strategy Transmission system operations, form of lower future prices. If the realised in other words the transmission of Fingrid’s turnover mainly constitutes regulatory profit over a regulatory period Fingrid’s reputation, customers and other stakeholders electricity in the nationwide grid owned from the pricing of the transmitted is below the allowed return, this leads by the company, constitutes the bulk of electricity, based on both the production to a deficit which Fingrid may recover Finance and treasury Fingrid’s turnover, profit and balance and consumption by Fingrid’s customers. from the customers in the form of higher sheet. The allowed financial result Fingrid additionally charges fees for future prices. No regulatory surplus or Business operations output from and input into the main grid, deficit income is recorded in the financial Personnel consumption fees, and power-based statements. The aim of Fingrid’s business tariff. Most of the overall invoicing is operations is to achieve the allowable • The company’s transmission Internal control and linked to the consumption of electricity. financial income over the regulatory system operations are third risk management The company determines in advance period. most affordably priced in Eu- for the next year the unit prices for the Research and development rope. transmission of electricity necessary to Goals for financial steering • In 2019, we were Finland’s 17th Glossary recover the required turnover. Fingrid’s The key long-term goals for Fingrid’s largest corporate income tax total costs consist of the operating financial steering are as follows: payer. expenses and finance costs and taxes, • Good cost-effectiveness, responsible • In 2020, Fingrid paid its own- which are excluded from the regulatory operations, and continuous improve ers, the State of Finland and calculations. ment of productivity in order to maintain Finnish pension and insurance service pricing on a moderate level. companies, a total of EUR 148 The so-called adjusted profit, realised The company’s goal is to be among million in dividends. in compliance with the regulation, is the most cost-effective TSOs in Europe
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and maintain its grid pricing among the Cost-effective operational activities production resources in a scalable manner. for an average of 2.4 per cent of the total three most affordable in its peer group Our cost-effectiveness is based on an The monitoring and control of the main grid bill (in a calculation where the household (companies with a similar grid). operating model where we focus on takes place in a centralised system. More consumer’s consumption is approximately • High credit rating to ensure the long- our basic mission and merge our core and more, we make use of the possibilities 5,000 kWh/year). term availability of diversified funding competence with the best players in the created by digitalisation in areas such and affordable funding costs. The industry. We actively plan our operations as grid maintenance and optimising Fingrid’s grid service prices generally BUSINESS REVIEW 2020 company aims to maintain a credit in cooperation with our customers and the power system. Good examples apply one year at a time. The aim of the rating of at least ‘A-’. invite external parties to participate in our include the Load Frequency Control to pricing is to secure as stable development • Creating shareholder value and high innovation processes. This produces better support the implementation of the new as possible, despite market-term Review by the President & CEO debt service capacity, which is achieved and more efficient solutions in areas such balancing model and the progress made uncertainties. However, major volatility Operating environment by maintaining the company’s adjusted as grid investments and development. in the digital maintenance management on the market may necessitate upward or and business model income on the level allowed by regulation project. Fingrid’s management system downward price adjustments even within and paying dividends that correspond to Fingrid has outsourced operations such is based on a matrix organisation and a single year. The pricing of imbalance Strategy shareholders’ profit targets and ensure as grid construction and maintenance specialists’ mandates to participate in the settlement and cross-border transmission continuing operations. to help optimise the use of financial and company’s activities across organisational services is more dynamic, generally on a Fingrid’s reputation, customers and other stakeholders boundaries. This increases the efficiency quarterly basis, reflecting the nature of of operational activities. these services and the need to respond Finance and treasury Fingrid’s world-class efficiency to changes more quickly. Grid pricing Business operations Fingrid aims to guarantee the stable The company’s consistently high rankings Personnel pricing development of its services. in the annual international comparison CENTRALISED POWER CLEAR STRATEGY AND COMPETENT AND Neither investment decisions nor any studies on the cost-effectiveness and SYSTEM MANAGEMENT MANAGEMENT SYSTEM MOTIVATED PERSONNEL Internal control and • quality and efficiency • no frills • results and quality of work other decisions are dictated by our short- quality of TSOs (ITOMS and ITAMS), risk management term financial targets. Our transmission and the international certification for fees have an impact particularly on the the management of physical assets Research and development CUSTOMERS competitiveness of electricity-intensive (ISO 55001) granted to Fingrid are Glossary • active collaboration industries. While Fingrid does not sell indications of the cost-effectiveness electricity directly to consumers, the of the company’s operations and of its small size of the grid service fee portion effective management of cost and other SENSIBLE INVESTMENT OUTSOURCING DIGITALISATION STRATEGY • the best partners • significant productivity in an electricity bill makes our cost- risks related to grid assets. The Council • no unnecessary boost effectiveness evident also to consumers. of European Energy Regulators’ (CEER) investments Sales, transmission and taxes each make benchmarking study placed Fingrid up a third of consumer electricity prices. among the most cost-effective TSOs in In 2020, the transmission tariff accounted Europe in 2019.
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Capital management Financing Programme (ECP Programme) totalling Green financing is Equity and liabilities as shown in the The company takes advantage of the EUR 600 million. balance sheet are managed by Fingrid as opportunities offered by credit ratings • Fingrid additionally has a domestic an important part of capital. The balance sheet according to the at any given time on the international commercial paper programme totalling company’s accounting is smaller than the and domestic financial markets. Market- EUR 150 million. Fingrid’s financing balance sheet under the Energy Authority’s based and diversified financing is sought BUSINESS REVIEW 2020 regulations, in which grid assets have from several sources. Fingrid’s existing Furthermore, Fingrid has bilateral loan strategy and responsible been measured at the regulatory present loan agreements as well as debt and agreements with commercial banks and value in use. The company’s borrowings commercial paper programmes are both the European Investment Bank (EIB) Review by the President & CEO operating model. are presented at their carrying amount unsecured and do not include any financial and the Nordic Investment Bank (NIB). Operating environment also on the regulatory balance sheet. covenants based on financial ratios. To secure liquidity, the company has a and business model Equity on the accounting balance sheet revolving credit facility and overdraft is, of course, smaller than equity on the The company is exposed to various facilities at its disposal. Strategy regulatory balance sheet, which balances financing risks such as market risks, out the difference in the grid asset carrying liquidity risks, counterparty risks and Green financing Fingrid’s reputation, customers and other stakeholders amount and the actual present value in use. credit risks. The aim of financing risk Green financing is an important part management is to protect shareholder of Fingrid’s financing strategy and Finance and treasury The company has not set specific key value by securing the financing required responsible operating model. Fingrid was figure targets for accounting balance for the company’s business operations, by the first Finnish company to issue a Green Business operations sheet or regulatory balance sheet capital hedging against the main financial risks Bond in 2017. More detailed information Personnel management, but instead monitors and and by minimising financial costs within on green financing is available in the controls the overall situation, for which the risk limits. Corporate Responsibility and Sustainable Internal control and credit ratings and their underlying risk Development Report contained in our risk management analyses and other parameters create Fingrid operates in the debt capital, Annual Report. a foundation. The company must have commercial paper and loan markets as Research and development a solid capital structure to support follows: FINANCIAL RESULT FOR 2020 Glossary consistently strong credit ratings and to • For long-term financing (more than Fingrid’s financial result for 2020 secure reasonable cost of capital and 12 months), the company has an was weaker than planned, mainly due adequate dividend pay-out capability. international Medium Term Note to exceptionally warm weather. We The principal aim of Fingrid’s capital Programme (EMTN Programme), lowered our transmission tariffs by an management and grid asset management totalling EUR 1.5 billion. average of eight per cent starting from 1 is to ensure uninterrupted operations and • For short-term financing (less than January 2019, and we are keeping them value retention as well as rapid recovery 12 months), the company has an unchanged for 2020 and 2021. Fingrid’s from any exceptional circumstances. international Euro Commercial Paper own calculations indicate a roughly EUR
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30 million deficit for 2020 compared to is a key success factor for uninterrupted totalled 80.9 (86.1) terawatt hours in the result allowed by the regulation. Our and continuously developing grid 2020. Imbalance power sales also Data is a critically important credit ratings remained high, reflecting operations, and that will remain in our decreased year-on-year, to EUR 260.8 form of capital, the foundation our strong overall financial situation and focus. Overall, the company’s finances (346.7) million, due to the low electricity of digitalisation and a prereq- debt service capacity. and financing are on a stable footing, prices. Cross-border transmission income uisite for high-quality expert which enables a controlled transition to from the connection between Finland work. The energy revolution calls BUSINESS REVIEW 2020 Fingrid is still one of the TSOs with lowest a clean power system. and Russia decreased, to EUR 6.9 (11.6) for investments to be made in prices in Europe, while the company’s million, due to a lower transmission data centralisation, refinement transmission reliability is among the best The Group’s turnover was EUR 682.5 volume, affected by Finland’s low area Review by the President & CEO and dissemination. Cost-effi- in the world. The company’s long- and (789.4) million. Grid service income price compared with north-western ciency and time-savings can short-term debt management and hedging decreased to EUR 373.6 (385.0) million, Russia. As a result of the transmission Operating environment be realised by automating pro- and business model against financing risks in the international due to the low energy consumption situation in the Baltic Sea region, ITC cesses with the help of data. capital markets continued according to during the unseasonably warm winter income increased to EUR 17.1 (14.4) million.
Strategy plan. The effective use of capital employed months. Finland’s electricity consumption Other operating income declined to EUR Watch Fingrid’s Data manage- 2.4 (4.2) million. The Group’s total costs Fingrid’s reputation, customers ment video and other stakeholders amounted to EUR 569.3 (651.6) million. Imbalance power costs decreased, due Finance and treasury Turnover and profit from operations Total costs (without imbalance to low electricity prices, and totalled EUR the higher headcount in response to a 2016–2020, MEUR power) 2016-2020, MEUR 234.4 (323.5) million. Loss power costs growing workload, both domestically and Business operations M€ M€ amounted to EUR 52.6 (53.9) million. in international cooperation. The volume of loss power grew slightly, Personnel 1,000 500 while the price of loss power procurement The Group’s net financial costs were EUR
Internal control and 800 decreased. The realised average price of 4.0 (10.1) million, including EUR 0.7 million risk management 400 loss power procurement was EUR 38.03 in interest expenses on the lease liabilities 600 (39.57) per megawatt hour. The cost of booked into the balance sheet. Fingrid’s Research and development 300 400 reserves to safeguard the transmission financial capital consists of equity and Glossary 200 system security increased to EUR liabilities, in other words debt financing. 200 63.5 (55.9) million, mainly due to the In 2020, equity amounted to 27.4% and 100 0 increased hours procured for frequency liabilities amounted to 72.6% of the 2016 2017 2018 2019 2020 0 restoration reserves (FRR). Depreciation consolidated balance sheet total. Equity Turnover 2016 2017 2018 2019 2020 amounted to EUR 98.5 (97.8) million according to the regulatory balance sheet Profit from operations (Operating profit) and grid maintenance costs to EUR 23.6 as required by the Energy Authority was Profit before taxes (21.6) million. Personnel costs increased 60.2% and the corresponding liabilities to EUR 31.2 (26.4) million because of 39.8% in 2020.
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Debt maturity profile, MEUR CASE
M€
350 STANDARDISED SUBSTATIONS BUSINESS REVIEW 2020 300 INCREASE COST-EFFECTIVENESS 250 Fingrid improves the cost-effectiveness Review by the President & CEO 200 of the substations in its transmission sys- 150 Operating environment tem through standardisation, meaning 100 and business model that the long-term construction solutions 50 of the stations always follow the same Strategy 0 proven design types. This shortens the 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031- lead times of construction projects and Fingrid’s reputation, customers and other stakeholders Long-term debt makes maintenance easier, which in turn Short-term debt leads to better quality and cost savings. Finance and treasury The earlier standard solutions in Fingrid facilities include using slab foundations Business operations for reactors, which leaves more degrees of freedom for reactor suppliers in the Personnel Interest-bearing borrowings totalled and a total of EUR 225 million in external dimensions of reactors and en- EUR 1,174.9 (1,120.0) million, of which committed and uncommitted bilateral Internal control and ables more efficient and safer mainte- non-current borrowings accounted for facility arrangements with banks. The risk management nance work. A standardisation process is EUR 1,032.8 (884.7) million and current counterparty risk arising from derivative currently underway in the secondary sys- Research and development borrowings for EUR 142.1 (235.3) million. contracts relating to financing was EUR tems, with the related system tests having 26.2 (22.4) million. Fingrid’s foreign Glossary gone on intensively for around two years. The company’s liquidity remained good. exchange and commodity price risks Due to the coronavirus pandemic, some Cash and other financial assets totalled were hedged. tests originally planned to be carried out EUR 125.9 (82.8) million on 31 December onsite in the UK had to be done online. 2020. The company additionally has an We provide more information on our undrawn committed revolving credit tax obligations and tax footprint in facility of EUR 300 million to secure our Corporate Responsibility and liquidity (until 11 December 2022) Sustainable Development Report.
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ANNUAL REPORT 2020 7. BUSINESS OPERATIONS
MAIN GRID The starting points for Fingrid’s capital Fingrid’s capital expenditure in the main grid expenditure include the needs of society and the customers, developments on the M€ European internal market in electricity, securing the preconditions for the compa- 250 BUSINESS REVIEW 2020 ny’s business operations, and the financial 200 and business targets set by the owners. The investments must be cost-effective Review by the President & CEO 150 and financially profitable. The long-term Operating environment planning of the main grid and the related 100 and business model investment programme support the im- plementation of the national climate and 50 Strategy energy strategy, maintain system security, increase transmission capacity, and pro- 0 Fingrid’s reputation, customers 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 and other stakeholders mote the electricity market.
Finance and treasury In this decade, Fingrid will make record investments of two billion euros in Finnish We are now experiencing the second customers’ grid connections, or the trans- agement going on simultaneously with Business operations electricity networks and substations. The wave of wind power construction, which mission capacity may be inadequate. The grid construction projects; new operat- Personnel main grid will be substantially reinforced, can be seen in the larger sizes of the pro- sufficiency of north–south transmission ing models have been developed to ad- as the goal of a climate-neutral Finland by jects. In 2020, we built transmission lines capacity (so-called Cross-section Central dress them. In the local control measures Internal control and 2035 means that the generation and con- and substations extensively throughout Finland) has been bolstered with exten- of capex projects, increasing use is made risk management sumption of emission-free electricity will Finland. Roughly ten kilometers of new sive investments, such as by building the of remote control techniques and coop- increase significantly. The foundation for transmission lines and 12 substations Forest Line, a roughly 300-kilometre-long eration with external supervision consult- Research and development investments is laid by long-term planning, were completed. Around 570 kilometres transmission connection consisting of ants. We have also successfully met chal- Glossary cost-effectiveness, and by meeting the of transmission line and 22 substation are several subsystems. Individual local grid lenges related to the grid maintenance needs of society and the customers. In- under construction. Fingrid currently has reinforcement needs have been taken backlog throughout this process. Invest- vestments will be required especially due around 250 kilometres of new transmis- into account by starting a record number ment projects have been streamlined by to the stronger than forecasted growth sion lines in the general planning phase. of investment projects throughout Fin- eliminating work that can be classified as of wind energy production. Grid planning For Fingrid, the expansion of construction land. Also earlier capex plans have been maintenance. In our new improvement takes place in close cooperation with the activities increases the risk of not being brought forward. The challenges involved maintenance model, this type of work is customers and the other TSOs in Europe able to meet the higher expectations at an include securing the adequacy of resourc- compiled into sensible maintenance pack- and the Baltic Sea region. adequate speed. Delays may occur in the es, and maintenance and outage man- ages.
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During a busy stage of construction work, cides with the deadline set for Finland’s CASE we make sure that all the related parties carbon-neutrality goal. are equally aware of all the necessary connections. We design and build the grid Construction projects all across as flexibly as we can and using solutions Finland. Fingrid’s ongoing major that match several different future sce- electricity transmission projects during BUSINESS REVIEW 2020 narios. It is also our duty to communicate the period under review include the actively and to influence the development construction of a transmission line needs of our operating environment. from Oulu to Petäjävesi, the so-called Review by the President & CEO Any required changes must be initiated ‘Forest Line’. The construction of a third Operating environment quickly, which means Fingrid must have AC connection to Sweden is under and business model the capability to adapt, be flexible and preparation, to boost the functioning to prioritise as needed. The work related of the international electricity markets. Strategy to construction and maintenance is pro- Another project currently in the HISTORIC GRID SYSTEMS UNDER MODERNISATION cured by making use of both the compa- planning phase is the upgrading of the Fingrid’s reputation, customers and other stakeholders ny’s in-house and outsourced resources Oulu–Lappeenranta connection, or The first substation of Finland’s main the Environment, and the City of Imatra, in a flexible combination. ‘Lake Line’. These projects constitute grid, the Imatra substation completed honouring the historic Imatra rapids Finance and treasury a part of the electricity infrastructure in 1929, continues to be an important landscape, including its protected sites. Increasing wind power production requires necessary for a climate-neutral Finland. component of the transmission grid Modernisation and foundation work Business operations capability to connect decentralised gener- in South Karelia. Due to the extensive also started on the Imatra–Huutokoski Personnel ation capacity into the main grid. We pro- Forest Line – an enabler of many ben- industrial activity still present in South transmission line, originally built in the actively build so-called power collection efits. The Forest Line will substantially in- Karelia, Lappeenranta ranks third in 1930s, during the summer. The project Internal control and substations and implement any necessary crease the north–south transmission ca- the volume of electricity consumed in is due for completion in the autumn of risk management upgrades in the surrounding network. pacity necessary for the Finnish electricity Finland’s municipalities, behind Helsinki 2022 and will consist of modernising system. The roughly 300 kilometres long, and Tornio. 130 kilometres of transmission line and Research and development In 2020, we started up work on a grid vi- 400-kilovolt transmission link is being and replacing the wooden towers with Glossary sion aiming to create an understanding built in place of or next to the current pow- The original switching substation, steel ones. of the development needs in the main er lines, running from Petäjävesi through which had reached the end of its life- transmission grid (400 kV and 220 kV) Haapavesi and to Muhos. The project cycle, was replaced with a new station Read more: and proposed solutions for the long term. progressed well, despite the exceptional completed in the summer of 2020. Renovation of Imatra substation The selected review years of the grid vi- circumstances, and is due for completion The substation has been designed in completed sion are 2035 and 2045 to enable a suf- in 2022. We additionally carried out mod- cooperation with the Finnish Heritage ficiently long-term approach in terms of ifications related to the Forest Line at the Agency, the regional Centre for See a drone video to enjoy an the grid planning. In particular 2035 will Petäjävesi and Toivila substations. Economic Development, Transport and aerial view of the new substation be an interesting review year as it coin- Watch the video on Metsälinja.
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Substation projects, ongoing
New transfer connection to Sweden will principles to be applied to this capex pro- 1 Modernisation of the 110-kV Heinola switching station de-bottleneck the power system. We are ject. The estimated capital expenditure is 2 Switched busbar circuit-breaker at Puumala preparing, in cooperation with the Swedish EUR 250 to 300 million. 3 Modernisation of the 110-kV Isohaara switching station 4 Expansion of the 220/110/20-kV Isoniemi substation TSO Svenska kraftnät, a new transmission 5 The 110-kV Julmala substation 4 connection from Pyhänselkä at Muhos via Grid upgrade in North Karelia to in- 6 Third transformer at Jylkkä 7 Refurbishment of the 400/110-kV Kangasala switching station Keminmaa to Messaure in Sweden. Due crease system security. The transmis- 3 8 BUSINESS REVIEW 2020 for completion in 2025, the transmission sion line being built in the municipality The new 400/110-kV Kärppiö transformer substation 20 9 Modernisation of the 110-kV Leväsuo switching station 9 16 line will even out the price differences be- of Kontiolahti and the city of Joensuu to 10 Modernisation of the 110-kV Luukkala switching station 17 tween the countries and improve the avail- reinforce the grid in North Karelia is pro- 11 Hoikansalmi series capacitor station 6 12 15 Review by the President & CEO ability of electricity in Finland. Fingrid’s and ceeding as planned. The project will be 12 Pihlajaranta series capacitor station 19 13 400/110-kV transformer at Petäjävesi 8 11 18 Operating environment Svenska kraftnät’s joint project has been completed in the spring of 2022. 14 Relocation of a 110-kV transmission line at Toivila and business model included in the European Commission’s 15 The new 110-kV Nuojuankangas switching station 5 13 14 16 Expansion of the 400/220/110/20-kV Pyhänselkä substation 2 list of Projects of Common Interest (PCI). Lake Line to reinforce north–south 7 1 Strategy 17 The new 110-kV Utanen switching station 10 In March, the Finnish and Swedish energy transmission capacity. The planning for 18 The new 110-kV Palojärvi substation 21 22 authorities decided on the cost-sharing Lake Line from Oulu to Lappeenranta, a 19 The new 400/110-kV Pysäysperä transformer substation Fingrid’s reputation, customers 20 The new 110-kV Simojoki switching station and other stakeholders 21 Modernisation of the 110-kV Tammisto switching station 22 Expansion of the 110-kV Virkkala switching station Finance and treasury Substation projects, completed
Business operations 1 Refurbishment of the 110-kV Pikkarala switching station Transmission line projects, ongoing 2 The new 110-kV Tehtaanmäki substation (in total approx. 570 km under construction) 3 Expansion and refurbishment of the 110-kV Kontiolahti switching station Personnel 23 Modernisation of the 110-kV Imatra–Juva–Huutokoski transmission line 4 Expansion of the 110-kV Isokangas switching station (approx. 130 km) 5 Expansion of the 110-kV Kymi switching station 24 Transmission line modifications at Jylkkä (approx. 1.6 km) Internal control and 6 Expansion of the 110-kV Vuolijoki switching station 25 400-kV Petäjävesi–Pyhänselkä transmission line (approx. 296 km) 31 risk management 7 The new 110-kV Raahe substation and the expansion 26 Transmission line modifications at the Petäjävesi, Jämsä and Toivila substations of the 110-kV Siikajoki station 33 4 27 8 The new 400+110-kV Pyhänselkä–Nuojuankangas transmission line (approx. 47 km) Research and development Modernisation of the 110-kV Imatra substation 28 27 1 28 Transmission line modifications between Pyhäkoski and Pyhänselkä 9 Expansion of the 110-kV Koivisto switching station 24 7 29 Modernisation of the 110-kV Kontiolahti–Pamilo transmission line 10 Connection of the Kristiina reserve power plant 6 Glossary (approx. 40 km) 11 Modernisation of the 110-kV Ruotsinkylä switching station 30 Modernisation of the 110-kV Kontiolahti–Uimaharju transmission line 29 12 Refurbishment of the 110-kV Pernoonkoski switching station (approx. 53 km) 26 32 30 9 3 31 Relocation of the 110-kV Isohaara–Raasakka transmission line 25 Transmission line projects, completed 10 26 13 to the Simojoki substation (approx. 1.6 km) 14 13 26 23 Lentola–Lahdesjärvi 110 kV (10 km) 8 Under general planning (approx. 252 km) 5 14 Modifications to the transmission lines at Imatra 32 12 2 Hämeenlahti–Hännilä (98 km) 440 kV transmission line 11 33 Aurora Line (154 km) 220 kV transmission line 110 kV transmission line
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transmission connection almost equal planned commissioning dates for the in length to the Forest Line, consisted of substations are in the summer of 2022. CASE environmental assessments during the period under review. The targeted start • A 400/110-kilovolt substation will be of construction is in 2024 and the trans- modernised at Tammisto in Vantaa. The NEW LIGHTWEIGHT CONNECTION STATIONS mission line is due for completion in 2026. investment will improve the system se- IMPROVE THE QUALITY OF ELECTRICITY BUSINESS REVIEW 2020 curity of electricity supply in the Helsinki Record number of substation projects. region. The Tammisto substation is one There is some variation in the transmission reliability in Fin- In 2020, we had more than 30 substation of the stations supplying electricity to Review by the President & CEO land’s main grid, depending on the connection method. The projects in the implementation phase. the capital region and a key node of the system security is at its weakest when customers are con- Twelve of them were completed during main grid. The construction work on this Operating environment nected to long transmission lines on the main grid by branch and business model the year, Nine more will be completed in project will start in June 2021. The new lines. These customers can be affected by downtimes if any 2021 and twenty in 2022. Several invest- substation will be commissioned in late faults or maintenance outages occur on the trunk line and Strategy ment decisions were made during the pe- 2022. the lines connecting to it. riod. Wind power interconnections have Fingrid’s reputation, customers in particular increased the capex needs. • The 110-kilovolt Luukkala substation in and other stakeholders North Karelia is one area with these types of connection lines Lappeenranta, which plays an impor- vulnerable to outages, and Fingrid decided to improve the Finance and treasury • New wind power stations with a total tant role for electricity transmission in situation by building new connection stations in coopera- capacity of roughly 4,000 megawatts the South Karelia and Lappeenranta tion with the local companies Outokummun Energia and PKS Business operations are planned in the area between Kris- area, will be modernised. The station Sähkönsiirto. Fingrid will build 110-kV connection stations tinestad, Vaasa and Seinäjoki. Haapa- is the starting point of several grid ring Personnel on the Kontiolahti–Alapitkä and Kontiolahti–Varkaus grid järvi and the neighbouring municipal- connections and also supplies the city sections, to divide the long transmission lines into shorter Internal control and ities, in central Finland, are planning of Lappeenranta as well as local indus- sections. The stations are expected to be completed in 2022. risk management new wind power projects totalling more tries with electricity. The project will be than 1,000 megawatts. We made in- completed in the autumn of 2023. Research and development A connection station is a reliable, simplified switching sub- vestment decisions to build a substa- station with around 50% lower operating costs compared Glossary tion at Pysäysperä in the municipality • The Jylkkä substation, located in Kala- with a regular power system substation. The goal for the new of Haapajärvi and another substation at joki, will be expanded and fitted out with stations is to substantially improve the quality of electricity Kärppiö in the municipality of Teuva. The a third transformer, making the substa- and the security of supply. total capital expenditure will be roughly tion Finland’s most important connec- EUR 55 million. The investments include tion point for wind power. The project Read more the substations as well as the modifica- will be completed during 2022. New lightweight connection stations tions to the surrounding transmission lines necessary for linking the transmis- • During the period under review, invest- sion lines with the new substations. The ment decisions were made concerning
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the refurbishments of the substation grid operations also represents a type of located in Kangasala and the Isohaara asset for Fingrid. We have digitalised our CASE substation located in Keminmaa. asset management one step at a time: • 2017: company-level data archives • A 400/110-kilovolt substation sys- • 2018: information quality up to par tem will be expanded and modernised • 2019: IoT concept – sensors and the BUSINESS REVIEW 2020 in Alajärvi. New wind power capacity platform amounting to roughly 2,000 megawatts • 2020: value creation with IoT data is currently under construction or plan- • 2021 and onward: AI, new maintenance Review by the President & CEO ning in the vicinity of Alajärvi. The con- concepts, autonomous decision making Operating environment nections for the new capacity require and business model upgrades in the main grid. The project Our goal is to have an autonomous main- is due for completion in 2023. tenance system in use in 2025 to com- Strategy municate to our staff, with the help of • The 220/110-kilovolt Kellarijänkä sub- artificial intelligence (AI), what types of Fingrid’s reputation, customers and other stakeholders station is under construction in Kemi- preventive maintenance the transmission järvi to prepare for future wind power system needs. Finance and treasury connections. The new substation will also promote the development of dis- With this proactive approach, we will save Business operations tribution networks and improve system in maintenance costs and improve the DIGITAL MAINTENANCE MANAGEMENT FOR IMPROVED Personnel security in the area. It will also enable system security. A token of our success- SYSTEM SECURITY the connection of a new biorefinery ful maintenance management, we scored Internal control and project under planning in the area. The top results in ITOMS (The International The goal of digital maintenance management is to improve the system secu- risk management project will be completed during 2023. Transmission Operations & Maintenance rity of the grid through more effective condition monitoring of the substation Study) and were the only TSO to achieve equipment. Digital condition monitoring in its turn modernises maintenance Research and development Life cycle management backed up by a Top Performer nomination both in the activities, based on actual needs, and makes them more efficient. Control Glossary careful maintenance and systematic transmission line and substation mainte- measures have been developed, for example, through innovation competi- operations nance categories in March. ITOMS looks tions arranged in cooperation with new supplier partners. In 2020, all au- The main grid represents a totality of as- into the effectiveness of maintenance tomation systems in substation control room buildings were integrated into sets amounting to several billion euros. In based on criteria such as maintenance Fingrid’s digital condition monitoring systems. Various systems developed addition to new grid extensions, it is also costs and disturbance statistics. for the verification of mechanical and electrical defects in grid equipment very important to service and maintain the were additionally adopted at substations. New monitoring solutions will be grid properly. Digitalisation has made this Fingrid’s consistent success in this survey launched at a rapid pace starting from early 2021. easier. Furthermore, the data linked with over several years has attracted a lot of
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international attention. We have received operations and provides an opportunity to the need arises, Fingrid has roughly a a blackout. Furthermore, we develop the particular praise for our proficient organ- compare our operations with peer TSOs. 1,000-megawatt capacity reserve ready reserve power plants to compensate for isation focused on our core competences to be started up instantaneously. the reactive power generated in the pow- as well as for our optimised order-supply A total of 29 TSOs participated in the er system. chain management. Additional success comparative study worldwide, including The reserve power plants are only used in factors include our investments in IT sys- companies from Central Europe and Asia. major disturbances of the power system, We maintain up-to-date security stand- BUSINESS REVIEW 2020 tems, digitalisation and other new ways such as a large power station being tem- ards at our reserve power plants. In of working. Reserve power provides security in porarily incapable of feeding electricity to 2020, we completed a refurbishment disturbances the main grid. The reserve power plants project at the Vanaja reserve power Review by the President & CEO By participating in ITOMS, we want to We own ten reserve power plants that are not used for commercial electricity plant, which included replacing the fuel Operating environment promote best practices throughout our help to secure a reliable supply of elec- production. Another reason for main- oil and extinguishing systems, among and business model operations. Furthermore, the study sup- tricity for our customers and society. The taining and developing the reserve pow- other things. The main objective of the ports systematic efficiency and continu- reserve power plants are rarely used but er plants is the unlikely, but nevertheless upgrade was improving environmental Strategy ous improvement of transmission system we maintain readiness at all times. When possible event of a major disturbance, or and fire safety.
Fingrid’s reputation, customers and other stakeholders
Finance and treasury Weighted overall score in ITOMS CASE
Business operations High Fingrid Personnel ALL MAIN GRID LINES PHOTOGRAPHED FROM THE AIR
Internal control and Europe Fingrid carried out aerial photography of all the transmis- risk management sion lines during the summer of 2020. Amounting to roughly System 12,000 kilometres of transmission line, it was the most exten- Research and development security Nordic countries sive imaging project of Finland’s grid system ever completed. Glossary The previously created images covered 2,000 kilometres of Asia & Australia grid lines. The aerial photography will bring the documenta- North & South America tion of the main grid up to date, while also helping to assess the condition of the grid and enable planning of future main- Low tenance work. High Costs Low Watch the video Image: Fingrid scored top results in ITOMS.
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UTSJOK! I
POWER SYSTEM as well as real-time data and situational It is crucial for society that the power sys- awareness enable new ways of operating IVALO! tem operates reliably and that electricity and their introduction at Fingrid. On the is available at all times for the needs of other hand, an increasingly electricity-de- ! ! ! Fingrid Oyj ! ! ! industry and consumers alike. Previous- pendent society needs a secure and robust VAJUKOSKI ! ! ! KUOLAJÄ!RVI ! ! transmission grid ! ! ! ! ! ! ISONIEMI ly, production was adjusted according power system that must be carefully pro- ! ! ! !
! BUSINESS REVIEW 2020 400 kV grid K!OKKOSNIVA to the consumption, by means of hydro- tected against various threats, including ! ! 220 kV grid ! power as well as thermal power stations. cyber threats. European network codes, M!ELTAUS ! ! ! ! ! ! Now thermal, mostly coal-powered en- a clean energy package, forms of Nordic 110 kV grid ! ! ! ! ! Review by the President & CEO ! ! ! ! VALAJASKOS!KI ! ! ! ergy is not available anymore for adjust- cooperation and data protection require- lines of other companies ! P!IRTTIKOSKI PETÄJÄSKOS!KI ! ! ! O!SSAUSKOSKI ! ! ! ing the production of electricity, as it has ments guide our grid operations, which ! ! Operating environment ! ! !! ! T!AIVALKOSKI ! KEMIN! MAA ! ! !! I!SOHAARA ASMUNTI and business model !! ! been replaced with the harder-to-control we develop together with our customers. ! ! ! ! ! ! ! T!UOMELA ! ! solar and wind power. The development Security of supply and preparedness for ! !
RAASAKKA! ! ! ! ! ! Strategy ! ! I!SOKANGAS of technology and new innovations have various exceptional circumstances are ! ! ! !! !! ! !!!! LEVÄSU!O ! !! !! ! ! ! PIKKARALA introduced new possibilities and ways of also factors affecting our operations. ! ! ! ! ! !!P!YHÄKOSKI ! Fingrid’s reputation, customers ! ! ! ! PYHÄNSELKÄ ! U!TANEN ! S!IIKAJOKI ! !! !! and other stakeholders managing the power system. ! ! ! NUOJUA S!EITENOIKEA ! ! !! ! ! ! ! ! ! ! ! VIHANTI ! ! ! ! ! LEPPIKOSKI Clean energy will require a higher de- ! ! !! ! ! ! ! ! J!YLKKÄ ! ! ! ! !! ! ! ! ! TIHISENNIEM!!!I! ! ! ! ! ! Finance and treasury ONTOJOKI ! ! ! ! ! ! !! The energy transfor- ! HAAPAVEDEN VL ! ! The shift in the energy mix has also mand response. ! ! VUOLIJO! KI
UU! SNIVALA ! ! ! ! ! ! !! ! ! ! V!!E! N! TUSNEVA ! !! ! changed grid design. It has become nec- mation will increasingly the call for de- HIRVISU!O ! ! WISAFORE!ST !! !! ! ! ! ! Business operations ! ! ! ! ! ! ! ! ! PELTOMÄ!!KI ! essary to expand electrical networks and mand-side flexibility. The volume of ! ! ! ! ! ! SÄRKIVAARA ! ! ! ! ! ! !!! ! ! ! ! ! LIEKSA ! ! build more substations. Due to the in- renewable production is increasing and ! ! ! ! ! ! !! ! ! ALAPITKÄ ! !! ! ! Personnel ! ! ! ! ! ! ! ! ! TUOVILA! ! ! ! ! !! ! ! ! ! JUA!NKOSKI ! ! A!LAJÄR! VI ! ! ! ! ! ! ! ! ! ! ! the capacity generated by renewables ! ! creased production of renewable energy, ! ! ! ! ! !UIMAHARJU ! ! ! !! ! ! ! ! ! ! ILOHARJ!!U!! !! ! !! ! ! ! ! ! SEINÄJOK!I ! ! ! ! PAMILO ! ! ! KALTIMO ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Internal control and the management of various operational varies according to weather conditions. ! ! !! ! ! ! ! ! KONTIOLAHTI ! ! ! ! !! ! ! ! ! ! !! ! ! ! ! !! ! ! KOI!VISTO ! ! ! !! ! ! ! ! ! !! ! ! risk management ! ! ! ! ! ! conditions of the power system has be- The change is enormous and in particular KRISTINEST!AD ! ! ! VIHTAVUORI ! ! ! ! ! ! ! ! ! KRISTIINA PETÄJÄVESI ! !!! ! ! ! ! ! ! ! ! VARKAUS ! !! ! ! ! ! RA! !UHALA!HTI ! !! !! ! ! ! ! ! !! KAUPPILA ! KELJO!! ! HU!UTOKOSKI ! ! ! ! KIIKANLAHTI ! ! ! come more demanding and requires new challenges the operational capability of R!ÄNNÄRI ! ! ! ! ! ! ! ! MÄNTTÄ ! ! !! ! ! !! ! Research and development ! ! ! ! ! ! ! JÄMSÄ ! ! !!! ! ! ! ! ! ! KA!NKAANPÄ!Ä ! !! ! ! TO! IVILA ! ! !! approaches. our power system, where generation and ! ! ! ! ! ! ! ! ! ! ! SAVONLINNA ! ! ! ! ! TAHKOLUOT!O ! ! VISULAH!TI ! !! ! ! ! !! ! ! ! !! ! ORIVESI !!! ! ! ! ! ! ! Glossary ! ! ! ! ! demand must be in balance at all times. ! ! ULVILA ! ! ! ! !!! ! !! ! ! ! ! !! ! ! ! ! ! !!! !! K!A! NGASALA ! ! MELO!!! ! ! ! ! ! ! ! !! ! ! ! ! ! KONKAPELT!O MU!LTISILTA ! ! ! ! ! ! PYHÄVESI ! ! ! ! ! ! ! ! OLKILUOTO ! ! ! ! !! ! ! ! ! ! ! LA!VIANVUORI !! There is a need for technological devel- The possibilities for demand response are ! ! ! ! ! ! ! ! ! HUITTINEN ! ! ! RAUM!A! ! !!! TAINIONKOS!!KI !! ! ! !! ! ! !! ! ! ! ! ! !! ! !! ! ! !HEINOL!A! ! ! ! ! ! ! ! ! ! !! IMATRA ! ! ! ! ! ! !! ! ! ! ! !!!! VUOKSI ! ! ! ! ! ! !LUUKKALA opment. Vital societal functions are in- under development, but the capacities ! ! YLLIKKÄL!Ä ! ! ! ! ! ! ! ! ! ! !!! ! !! ! VANAJA! ! ! ! KALANTI ! ! ! ! ! !! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ORIMATTILA ! !!!! ! !FORSSA ! !!! ! ! ! ! ! ! ! !! !! ! ! ! ! ! ! ! ! ! ! KORIA ! ! ! ! !! creasingly reliant on electricity. This con- available through demand-side measures ! ! ! HIKIÄ ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! !! ! ! ! !!! ! ! ! ! ! KYMI ! ! ! ! !!! ! !LIETO ! ! ! NAANTALINSA!!L!MI ! ! P!ERNOONKOSKI ! ! !!!!!!!!!! ! NU!RMIJÄ!RVI ! ! !!! ! !! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! !! ! VÄ!H!ÄN! UMMI ! K!!Y!MINLINNA do not yet meet the adjustment needs. ! ! ! ! !! !!! sequently increases the significance of a AHVENKOSKI ! ! ANTTILA ! !! ! ! ! ! ! ! ! SALO ! ! ! !! ! ! ! !! ! ! ! ! P!ORVOO ! RUOTSINKY!L!Ä! ! ! ! ! ! ! !! ! LOVIISA ! !KOPULA !! !! ! ! !T!A!!M!!MIS!T!O !!! !!! ! !! KILPILA!HTI ! !! ! !!! ! ! ! ! LEPPÄ!VA!A!RA ! ! ! ! !! !L!Ä!NSISALMI ! !! !!!! ! ! !!! !! ! Fingrid’s mission is to enable the utilisation KEMIÖ ! VIRKK!ALA ! ! ! !!!!! disturbance-free power system. Advanc- ! ! ! E! SPOO KARJAA! !! ! ! !! ! ! ! INKOO ! !! ing technology will support the change, of demand response, which has attained !!
however. Artificial intelligence, automation an important role in society. 1.1.2021 Image. Finland’s transmission grid.
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Network Code for Emergency and ages, maintenance and development of Our Our transmission reliability rate was Restoration: a more unified operation- joint grid models, and regional short-term 99.99995 (99.9998) per cent. Transmis- al framework for the power system electricity sufficiency reviews. transmission sion disturbances mainly occurred in east- The purpose of the Network Code for ern Finland, where the several on-going Emergency and Restoration (NC ER) is In 2020, the coordinator agency particu- reliability investment projects caused power sys- to prevent major disturbances and, on a larly focused on the continued develop- tem abnormalities. The biggest frequency BUSINESS REVIEW 2020 more general level, to prevent the escala- ment of software for the new methodol- rate was deviation in the Nordics occurred during a tion of all disturbances and deterioration ogy of transmission capacity calculation, test of the NordLink transmission line be- of the system. Should a blackout never- which is one component in the adoption tween Norway and Germany in Septem- Review by the President & CEO 99.99995% theless occur, the goal must be a rapid of the agency’s services. In 2022, RSC will ber . The failure was evident in Finland’s Operating environment and effective restoration. The network be incorporated and renamed Regional main grid as brief voltage and frequency and business model code became effective at the end of 2017 Coordination Centre (RCC). MWh/h on Friday 28 February between 8 variations. At least one Finnish power sta- and the measures it requires are currently and 9 a.m., with Finland’s electricity pro- tion disconnected from the grid. Strategy being implemented. The 24-hour capa- The consumption of electricity de- duction contributing 9,849 MWh/h and bility of continued operations and an au- creased in 2020, level of system secu- the remaining 2,539 MWh/h being im- An outage in a connection point in the Fingrid’s reputation, customers and other stakeholders tomatic under-frequency control scheme rity remained high ported. The area price of electricity on the grid caused by a disturbance in Fingrid’s must be implemented in December 2022 In 2020, the consumption of electricity day-ahead market in Finland was €46.98/ transmission system lasted an average Finance and treasury at the latest. A testing plan related to the decreased in Finland by approximately six MWh during the peak consumption hour. of 0.5 (4.3) minutes. The cost of the dis- measures of the system defence plan and per cent compared with the previous year. turbances (regulatory outage costs) was Business operations the restoration plan was drawn up during The factors underlying the decline in con- The main grid operated reliably in 2020, at EUR 0.9 (2.7) million, and including the Personnel the period under review. sumption include the mild winter and the an excellent transmission reliability rate. quick reclosures, EUR 3.2 million. lower year-on-year consumption slightly The importance of electricity transmission Internal control and Commissioning of joint operational of electricity by the industry and service reliability is illustrated by the fact that the The availability and reliability of Fingrid’s risk management planning services progresses sector, due to the COVID-19 pandemic. cost of a nationwide major disturbance to high-voltage DC transmission links re- The operational planning office (Region- The total consumption was 80.3 (86.1) customers and society at large would be mained very high and better than during Research and development al Security Coordinator, RSC) of the four terawatt hours. We transmitted a total of in the region of EUR 100 million for each the previous year. Disturbance-clearing Glossary Nordic transmission system operators 68.4 (68.7) terawatt hours of electricity in hour of outage. and fault elimination measures were high- started its operations in Copenhagen in Fingrid’s grid, representing 77.9 (76.0) per ly successful, and the connections were 2016. The operational planning office will cent of the transmission volume in Finland Two occasions called for raised distur- quickly restored and made available to the in the future be in charge of joint Nordic (consumption and inter-TSO). bance-clearing readiness in 2020. We market. operational planning. RSC has received proactively raise our readiness when fac- five tasks: the calculation of cross-border The imported and domestic production tors such as difficult weather are expected Countertrade costs amounted to EUR 0.7 transmission capacity, system security capacity was high enough to meet the to pose challenges to grid maintenance to (0.9) million. The number of disturbances analyses and risk identification, coordi- peak demand of the year. The electricity enable as rapid clearing and communica- resulting in countertrade costs remained nation of cross-border transmission out- consumption peaked at 12,388 (14,542) tion of disturbances as possible. low and at the same level as in 2019.
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Countertrade refers to special regulations of the intense spring flooding season. for transmission management purposes The floods affected all the Nordic coun- Interruptions at connection points due to grid disturbances which are used to eliminate short-term tries at the same time, which restricted grid bottlenecks, i.e. areas where elec- the availability of hydropower plants for qty min tricity transmission is congested. Fingrid maintaining the reserves. Electricity con- 1.20 12 1.10 11 additionally guarantees the cross-bor- sumption is increasingly active in various BUSINESS REVIEW 2020 1.00 10 der transmission it has confirmed by car- reserve resources, particularly in the fre- 0.90 9 rying out countertrades, i.e. purchasing quency-controlled disturbance reserve. 0.80 8 and selling electricity, up until the end of Sales of frequency-controlled reserves to Review by the President & CEO 0.70 7 0.60 6 the 24-hour usage period. The causes of Sweden grew compared to the previous Operating environment 0.50 5 countertrade include outages and disrup- year. In accordance with the agreement and business model 0.40 4 tions in power plants or in the grid. between the Nordic TSOs, the hours re- 0.30 3 quired for maintenance of the automat- Strategy 0.20 2 Some transmission outages in connection ic Frequency Restoration Reserve were 0.10 1 with capex projects took place through- increased, and the procurement costs Fingrid’s reputation, customers 0 0 and other stakeholders 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 out Finland. The focus has been on east- for the reserve type correspondingly in- ern Finland, where a large number of pro- creased compared to the previous year. qty/CP min/CP Finance and treasury jects is currently underway. Demanding outages require careful advance planning The volume of transmission losses in the Business operations and close cooperation with customers. main grid remained at the level of the pre- vious year, 1.5 (1.3) terawatt hours. This Personnel HVDC disturbances, total duration and quantity Reserves required to maintain the power was 1.8 (1.5) per cent of the total volume
Internal control and h qty balance of the power system were pro- of transmitted electricity. The losses are risk management 1,200 35 cured from Finland, other Nordic coun- affected by the quantity of the electricity tries, Estonia and Russia. The availability consumed and transferred. Research and development 1,000 30 of reserves was good, with the exception 25 Glossary 800 20 600 15 400 10 Countertrade 1-12/20 1-12/19 10-12/20 10-12/19 200 5 Countertrade between Finland and Sweden €M 0.1 0.1 0.0 0.0
0 0 Countertrade between Finland and Estonia €M 0.2 0.5 0.0 0.1 2018 2019 2020 2018 2019 2020 Countertrade between Finland´s internal connections €M 0.4 0.3 0.3 0.0 Total countertrade €M 0.7 0.9 0.3 0.1
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Countertrade costs caused by Development of demand response HVDC disturbances • Industrial use: The industry has for a long time decreased its production if the wholesale price of electricity peaks. M€ • Heating and cooling systems in real estate: Shopping 1.0 BUSINESS REVIEW 2020 centres, for example, automatically adjust their systems according to the price of electricity. 0.75 • Consumer use: Individual consumers can allocate their Review by the President & CEO use of electricity according to the price. 0.5 • Electric vehicles: The charging of electric vehicles can be Operating environment allocated to hours of low demand, and in the future, they and business model 0.25 may even discharge their batteries during short demand Strategy peaks, by means of an intelligent charging system. 0.0 2018 2019 2020 Fingrid’s reputation, customers Effective demand response requires three things: and other stakeholders • There must be rules in place. Legislation should Transmission and distribution losses (%) Finance and treasury enable easy demand response. This has largely been accomplished in Finland, where both possibilities and Power system operation 2020 2019 2018 Business operations preconditions have been created for demand-side management. Electricity consumption in Finland, TWh 80.3 86.1 87.4 Personnel • There must be functional technological solutions in Fingrids transmission volume, TWh 68.4 68.7 68.6 place. The infrastructure must support demand-side Fingrids´s loss power volume, TWh 1.470 1.335 1.2 Internal control and Electricity transmission Finland-Sweden risk management management. Without hourly readable electricity meters, for example, consumers are not able to manage their Exports to Sweden, TWh 0.3 0.5 1 Research and development demand. Technology is a key enabler also for process Import from Sweden, TWh 18.8 16.3 14.5 automation, which in turn enables financial profitability. Electricity transmission Finland-Estonia Glossary • There is a need for companies that develop and offer Exports to Estonia, TWh 6.6 3.8 2.4 new business models. Electricity retailers offer add- Import from Estonia, TWh 0.04 0.3 0.9 on services to consumers and the industry. New players Electricity transmission Finland-Russia aggregate sources of demand response, in other words Exports to Russia, TWh 0.02 0 0 they build up larger entities of response measures that Import from Russia, TWh 3 7.5 7.9 can profitably be offered to the markets. Electricity transmission Finland-Norway Exports to Norway, TWh 0.04 0.1 0.1 Import from Norway, TWh 0.3 0.2 0.2
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CASE
COMPETITIVE SOLAR ENERGY BUSINESS REVIEW 2020 To reach the agreed emission control targets, it is necessary to make use of all available electricity from Review by the President & CEO renewable sources. In addition to reducing their own Operating environment emissions, the interest of companies in renewable en- and business model ergy production may also be based on financial bene- fits and a desire to improve their public image. Strategy A private individual can use solar panels to produce Fingrid’s reputation, customers and other stakeholders affordable electricity when energy consumption is low. Solar power is indeed a relevant source of energy at Finance and treasury holiday homes, for example. Anyone acquiring a solar power system also becomes more aware of their con- Business operations sumption of energy, as the system needs to be selected Personnel according to the required capacity.
Internal control and By combining weather data with assessments of the risk management total production capacity of solar panels installed in Finland and their locations, it is possible to create a Research and development solar power generation forecast. Fingrid’s solar pow- Glossary er generation forecast is updated once an hour and is valid for the next 36 hours.
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ELECTRICITY MARKET warm weather. A new phenomenon in the By maintaining wind power compared with the demand. Fingrid maintains and develops the elec- Nordic countries was the several occa- The area prices in Finland and Sweden tricity market. By maintaining a strong sions when the electricity prices on day- a strong diverged in situations where the trans- main grid, we make sure that Finland ahead markets sank to negative figures. mission capacity between the countries forms a unified price area for electricity. The impact of the coronavirus pandemic main grid, we was insufficient to meet the demand. Our With our cross-border transmission con- on the production and consumption of cross-border transmission connections BUSINESS REVIEW 2020 nections, we offer the market parties ac- electricity and on the electricity markets make sure functioned very well, however, and we cess to the European electricity markets. was fairly insignificant in the Nordic mar- succeeded in making all the existing ca- We plan transmission outages so that ket area. The prices of emission rights re- pacity available to the markets. Review by the President & CEO that Finland they cause minimal harm to the function- mained on a par with the level they rose Operating environment ing of the markets. We make the highest to in 2018 and 2019. An exception was forms a unified The situation in Finland was also affect- and business model possible transmission capacity available the drop in the price of emission rights ed by the decrease of imports from Rus- for the markets at all times. We develop during the first wave of the coronavirus price area for sia, due to the more affordable electricity Strategy the market rules and publish electricity pandemic in the spring of 2020. prices in the Nordics. There were sub- market data openly and free of charge. stantial intraday variations in the quan- Fingrid’s reputation, customers electricity. and other stakeholders We maintain and develop the market- The electricity transmitted between Fin- tities of electricity imported from Russia. places for reserve and balancing power. land and Sweden mostly consisted of The maximum transmission capacity was Finance and treasury We take care of balance settlement and large imports from Sweden to Finland. available almost throughout the year, with deliver imbalance power to the balance The transmission of electricity between quantities of electricity were imported the exception of the annual maintenance Business operations responsible parties. Fingrid Datahub Oy Finland and Estonia was dominated by to Finland, based on market incentives, work carried out at the Vyborg DC station Personnel will in the near future offer an effective exports from Finland to Estonia. A clearly throughout the year under review. Finland and on the Russian grid in July, August information exchange platform for retail smaller quantity of electricity was trans- has been dependent on imported elec- and September. Maintenance-, capex- Internal control and market parties. mitted from Russia to Finland than in tricity, as the domestic production capac- and fault-related transmission outages risk management 2019. This was a result of the affordable ity does not meet the demand. The price were implemented both on the cross-bor- Electricity market outlook price of electricity in the Nordics. In con- differences between the Nordic coun- der connections between Sweden and Research and development The wholesale area prices on the Nordic trast to the previous year, electricity was tries in 2020, which were large at times, Finland and on connections within the Glossary and European electricity markets were also exported from Finland to Russia on resulted mainly from a different produc- countries. The numbers and durations of the lowest in market history in 2020. The a few occasions. tion mix and limitations of the transmis- the outages were at the normal level. The price differences between areas were sion capacity. The Norwegian production connections to Estonia and Russia were significant, both among the Nordic price Electricity trading takes place per hour, is mainly hydropower, while Sweden has only subject to normal annual mainte- areas and on the Central European mar- and the direction of transmission can hydropower as well as wind and nucle- nance. Maintenance work was scheduled kets. The price decrease in the Nordic change from one hour to another. The ar power. The price differences became on weekends and similar periods to limit market area was primarily caused by ex- price of electricity in the Nordic markets particularly high when Finland’s neigh- the impact on the market and electricity tremely high hydropower production and was often lower than in Finland. Large bours offered a large supply of hydro and prices.
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Sufficient transmission capacity is a ty by building the Lake Line connection, necessary prerequisite for the markets for which environmental impact assess- CASE to function effectively. To increase the ments (EIA) were prepared during 2020. cross-border transmission capacity be- The targeted construction start for the tween Finland and Sweden, we are cur- Lake Line is in 2024 and the transmission rently preparing, in cooperation with the line is due for completion in 2026. BUSINESS REVIEW 2020 Swedish TSO, a third AC connection to Sweden. The increased transmission Developing the electricity market capacity will help to decrease the price Fingrid’s mission is to develop the elec- Review by the President & CEO disparities between the countries. The tricity market. In order for the power sys- Operating environment transmission link is due for completion tem to operate as much on market terms and business model in 2025. The Forest Line connection will as possible, it is important that the elec- significantly increase the north–south tricity market and the technical system NORTHERNMOST VIRTUAL POWER PLANT Strategy transmission capacity necessary for the characteristics are optimally in synch. The Finnish power system and help to keep arrival of a wide range of flexible resourc- Fingrid’s reputation, customers The Hullu Poro resort in Kittilä, Lapland connected its 11 glass-roofed Finland as a single price area in electrici- es on the market and enabling of a broad and other stakeholders suites, named ‘Aurora pyramids’, to a virtual power plant in the spring of ty trading. The project will be completed scope of market options close to the con- 2020, as a result of which Aurora pyramids became a Fingrid Reserve Finance and treasury in 2022, a record achievement. Once the sumption hour and to the customers low- Unit. With the help of the service run by Vibeco, a subsidiary of Siemens Forest Line is finished, we will upgrade ers the threshold for various players to Oy, the hotel can adjust its electricity consumption up or down for grid Business operations the north–south transmission capaci- participate in the electricity market. balancing purposes. Personnel The area has a smart micro-network, which was complemented with Internal control and risk management a solar energy system and 1.3-megawatt battery storage to enable lo- cal production and storing of electricity. The micro-network is in other Research and development words capable of independent operation, which secures a reliable sup- Electricity market 2020 2019 2018 ply of electricity for the resort even in various emergencies. Glossary Day-ahead system price, €/MWh 10.93 38.94 43.99 Area price Finland, average €/MWh 28.02 44.04 46.8 The calculated annual energy output of 114 megawatt-hours makes the Congestion income between Finland and central Sweden (SE3), €M 70.6 53.9 22.9 solar panel field one of the largest in Finland. Congestion hours between Finland and central Sweden (SE3), % 44.5 37.0 20.7 Congestion income between Finland and northern Sweden (SE1), €M 174.8 77.1 33.6 Read more: Congestion hours between Finland and northern Sweden (SE1), % 62.8 40.1 23.6 Aurora pyramids – the world’s northernmost virtual power plant Congestions income between Finland and Estonia M€ 48.1 14.97 2.79 Congestions hours between Finland and Estonia, % 32.9 11.8 5.4
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CASE The growing share of variable renewa- land, Sweden, Norway, and eastern Den- ble capacity is a welcome addition to the mark. The NBM develops new Nordic power system, but at the same time, it is marketplaces for automatic and manual DIGITAL TECHNOLOGY TO HELP IN a challenge to the functioning of the sys- Frequency Restoration Reserves to ena- GRID MAINTENANCE tem. In order to successfully connect all ble the TSOs to procure reserve energy renewable capacity, such as wind pow- necessary for balance management. The Fingrid will invest two billion euros in the BUSINESS REVIEW 2020 er, to the electricity system, making it in- NBM also helps the Nordic TSOs to pre- main grid over the next ten years. In ad- creasingly cleaner, the market environ- pare for joining the pan-European reserve dition to building new systems, the ser- ment and its rules must be developed. marketplaces currently under develop- Review by the President & CEO vicing and maintenance of the grid are ment. In addition to the development of also important activities. Digital condition Fingrid has several ongoing projects for reserve energy marketplaces, other sig- Operating environment monitoring helps to allocate resources and business model developing the electricity market, includ- nificant updates to the electricity market and forecast maintenance needs as effi- ing the Nordic Balancing Model, the cen- include the adoption of a shorter imbal- ciently as possible, which will save costs Strategy tralised information exchange system i.e. ance settlement period enabling 15-min- and improve the system security. datahub, flexibility market solutions for ute trading, and a new balancing model. Fingrid’s reputation, customers the transmission grid, and transmission An updated NBM roadmap was pub- and other stakeholders Furthermore, the data linked with grid capacity calculation and its development. lished in November 2019, and the work operations represents a type of asset Finance and treasury The projects link together the develop- on the model has since then progressed for Fingrid, and the control of which has ment of both the electricity market and on several fronts and the Nordic stake- become increasingly digitalised over the Business operations of the power system operations. The said holder reference group, consisting of the years. The installation of sensors neces- projects, as well as many other electricity key stakeholders, convened several times Personnel sary for data acquisition at substations market projects, continued to progress during the period under review. A joint started in 2016 and have continued ever Internal control and during 2020 and will be a major focus Nordic plan on the new balancing mod- since. The data collected with sensors risk management also going forward. el and a new target timeline were pub- is transferred into cloud platforms for lished in 2020. The new balancing model Research and development analyses. Additionally, the data can also NBM progressed on a broad front in will replace separate production and con- be processed as needed, as close to the Glossary 2020. A key mission of TSOs is the re- sumption balances and transfer from the source as possible. al-time settlement of imbalance between corresponding pricing to a single balance electricity production and consumption, model in early November 2021. Our vision for 2025 is an autonomous in other words balance management. The maintenance system that can communi- Nordic Balancing Model (NBM) modi- A derogation request process for the im- cate, with the help of artificial intelligence, fies and automates the way in which the plementation of a 15-minute imbalance when any preventive maintenance should power system is balanced in the Nordic settlement period (ISP) was started in be started. synchronous area, which consists of Fin- early 2020. A public consultation was
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carried out concerning the request for the European Union Agency for the Co- derogation on the 15-minute ISP, and the operation of Energy Regulators (ACER) CASE regulator’s decision on the request is ex- in February 2020. Now, having received pected during the first quarter of 2021. the regulatory authorities’ views and the The new target timeline for the 15-min ACER decision, there is better clarity on ISP will be confirmed once the decision the preconditions for launching the mar- BUSINESS REVIEW 2020 has arrived. ketplace, and the earliest possible launch date has been postponed. The Nordic The adoption of a 15-min ISP will be TSOs also arranged a public consultation Review by the President & CEO significantly affected by the new Nor- on the exact gate closure time of the Nor- Operating environment dic marketplace for a manual Frequency dic aFRR capacity market. and business model Restoration Reserve, which has involved extensive development activities both on Datahub version 1.0 functionalities im- Strategy a national and Nordic level. Until now, the plemented in 2020. A centralised infor- Swedish and Norwegian TSOs, Svenska mation exchange platform for the retail Fingrid’s reputation, customers and other stakeholders kraftnät and Statnett, have taken care market of electricity, datahub, is sched- of balancing in the Nordic synchronous uled to go live on 21 February 2022. The Finance and treasury area, using balancing power, whereas datahub will contain data from about 3.7 COMPETITIVE TRADING BETWEEN POWER EXCHANGES the new energy marketplace currently million accounting points in Finland. The Business operations under development will enable specific datahub go-live readiness of the energy Competitive trading between the Nordic power exchanges started Personnel power system balancing for each price sector is monitored according to the mile- in June 2020. The competition between electricity exchanges will area. Furthermore, the marketplace will stones determined jointly with the Energy increase the number of alternative trading services available to elec- Internal control and be based on the 15-minute trading pe- Authority. A precondition for a success- tricity market operators. The competition makes it possible for more risk management riod, so, overall, the changes have made ful launch, the close cooperation with the than one Nominated Electricity Market Operator to connect with the it necessary for the Nordic TSOs to sig- entire sector was continued in 2020. European market coupling on the day-ahead market in the Nordic Research and development nificantly modify their IT systems and to price areas. Despite competitive trading between the exchanges, the Glossary upgrade their process automation. Starting from June 2020, the datahub general principles of capacity calculation and allocation between the was gradually made available to the en- price areas will remain unchanged. The regulatory process on the new Nor- tire sector for test operation. A total of dic capacity market for automatic Fre- 53 electricity retailers and 75 distribution The Nordic countries became the second area in Europe to imple- quency Restoration Reserve (aFRR) has system operators successfully complet- ment competition between power exchanges. The start of competition been very active in 2020. The Nordic na- ed the first milestone in the certification between power exchanges marks a new development step towards tional regulatory authorities (NRAs) re- process within the set deadline, in De- pan-European energy markets. ferred the decision on the market rules to cember. The complete set of the data-
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hub service agreements was submitted Major progress in the reserve markets. The accelerating chance to submit one bid of less than to the Energy Authority for approval in The Nordic TSOs adopted a new Fast five megawatts for each hour of opera- late November. Frequency Reserve (FFR) for managing energy tion. Decreasing the minimum bid size will minor inertia incidents in the spring of lower the threshold of participation in the Flexibility markets approaching pilot 2020. Inertia refers to the ability to re- transformation balancing power market. The smaller bid stage. As the energy transformation ac- sist changes in the frequency thanks to size will enable more efficient utilisation BUSINESS REVIEW 2020 celerates, new solutions are needed on the kinetic energy stored in the rotating calls for of distributed decentralised resources for market terms to maintain the power sys- masses of the power system. The new balancing the power system and will be tem. Flexible response is necessary both Fast Frequency Reserve (FFR) responds the future standard practice on European Review by the President & CEO flexibility in for balancing the consumption and pro- to any changes in the electricity produc- balancing power markets as well. Operating environment duction and to support efficient use of the tion by cutting back consumption or by power system and business model grid infrastructure. Yet another driver of increasing production within roughly a Flow based capacity calculation meth- demand response solutions is the EU leg- second. management. odology to improve capacity allocation. Strategy islation, which was prepared for adoption A transmission-based capacity calcula- in Finland’s national legislation in 2020. In the Nordic countries, the required FFR tion methodology will be adopted in the Fingrid’s reputation, customers and other stakeholders The significant issues in the legislative capacity range, depending on the situa- Nordic countries to improve the alloca- package, in terms of demand response tion, is roughly between 0 and 300 meg- tion of capacity available to the markets. Finance and treasury markets, are the requirement for network awatts, of which Finland accounts for 20 In 2020, the Nordic energy regulators ap- operators, in addition to investments, to per cent. As a part of the implementation proved the updated capacity calculation Business operations implement demand side response and to of the Nordic FFR system, Fingrid has methodology for day-ahead and intraday Personnel coordinate the procurement of DSR ser- opened a marketplace for FFR capacity. markets, which will be used to calculate vices. A pilot project for independent aggrega- the transmission capacity bids offered to Internal control and tion in the balancing power market was the market. RSC, the Nordic TSOs’ joint risk management Fingrid’s development of flexibility mar- started in July 2020. The purpose of the operational planning office in Copenha- ket solutions has progressed within the pilot is to test the scalability of previously gen, will acquire the necessary new cal- Research and development INTERRFACE and OneNet projects fund- tested solutions and to increase the par- culation software. The new methodology Glossary ed from the EU’s Horizon2020 research ticipation of aggregated flexibilities in the will be adopted as soon as it has matured programme. In the INTERRFACE project, balancing power market and in power enough to enable effective functioning which started in 2019, Fingrid has fo- balancing. of the markets, yet no sooner than April cused on the cooperation between TSOs 2022. and DSOs as well as on the development The pilot for a one megawatt minimum needs in the transmission and frequency bid size on the balancing power market Sector integration refers to the integra- management of the power system. Read was also extended until the end of 2020. tion of the energy sectors and the energy more in Research and development Each Balancing Service Provider had a vectors, both on the system level and on
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the end-user level. The energy sectors insights into the demand-side flexibility consist of traffic, built-up environment potential at a specific moment of time. and the industry, while the energy vec- Both preparing for the challenges and CASE tors consist of electricity, heat and gas. taking advantage of the opportunities Sector integration can help to achieve a will require development work with oth- clean energy system both resource- and er energy sector players on the national, BUSINESS REVIEW 2020 cost-effectively through the capability to Nordic as well as the European level. process energy in the most optimal form in each stage of production, transfers and In 2020, Fingrid participated in a working Review by the President & CEO consumption, such as as electricity, heat, group directed by the Ministry of Eco- Operating environment gas or liquid. nomic Affairs and Employment, tasked and business model to promote sector integration in Finland From Fingrid’s point of view, sector inte- and to produce insights for the national Strategy gration brings to the table both challeng- energy and climate strategy to be com- es and opportunities. The integration of pleted at a later date. Fingrid addition- Fingrid’s reputation, customers various energy sectors and their electri- ally coordinated strategy work to create and other stakeholders NEW POWER TRANSFORMERS BOOST CAPACITY fication will increase the consumption of a joint vision for the Nordic TSOs and a Finance and treasury electricity and cause new types of var- roadmap on the development of sector Fingrid procured two new 400-MVA hundred megawatts. The transformer iations in consumption. The increasing integration on the Nordic level. power transformers for the Pyhäselkä substation modernisation in Petäjäv- Business operations demand must be met with a sufficient and Petäjävesi transformer substations esi is connected with the Forest Line transmission grid capacity while at the Roadmap for open data. A roadmap Personnel from the Slovenian KOLEKTOR ETRA project, where the intention is to up- same time taking into account the ge- was drawn up jointly with in-house ex- company. The nearly 300-tonne trans- grade the transmission links between Internal control and ographical locations of new generation perts and customers for the Open data former arrived at the Pyhäselkä substa- northern and southern Finland. risk management capacity. New consumption and energy service maintained by Fingrid. The tion on 18 October. storage systems in their various forms roadmap was created by surveying the Research and development The contract includes an option for will also provide more opportunities for current situation of the service and its The revamp of the Pyhäselkä transform- five additional transformers linked Glossary demand-side management, which will in development needs with interviews, af- er substation is a part of the moderni- with several planned wind power pro- the future help both in system balancing ter which the vision for the service and sation of the Oulujoki network, planned jects throughout Finland. and in the management of grid conges- the development themes were defined to be completed in stages by 2022. In tions Other key factors in the operation in separate workshops. While some im- addition to updating the ageing trans- Read more: of the power system will also include the provements were implemented already mission network, the region is expecting Fingrid is acquiring new 400 MVA forecasting of new types of demand var- in the autumn, the development work new wind energy capacity worth several power transformers iation on the power system level and the will start in earnest in 2021.
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ANNUAL REPORT 2020 8. PERSONNEL
Our operations are based on an open, from home. Working remotely increased Bold supervisory work Fingrid supervisors received clear in- collaborative, renewing and high-per- the significance of individual responsibil- Our operations are characterised by structions to ‘prioritise and facilitate’ in forming work community. Our personnel ity even more. openness and a flat hierarchy. Supervi- early 2020. The need to focus on the is strongly committed to the company’s sors hold a key role is managing the work execution of primary tasks and to make vision and mission. The meaning of our Being the CEO of one’s own work involves community culture and communication. everyday work as smooth as possible work – responsibility for the functioning power and freedom, but also helping This is why the company has invested in were clearly highlighted in the feedback BUSINESS REVIEW 2020 of the power system – has always been others and working as a team. The team training and guidance for supervisors. from personnel. Our investment rate and an integral part of our daily work. In addi- aspect suffered from increased remote The daily management and leadership major changes in our operating environ- tion, we work to achieve the clean power work. Working remotely offers many ben- skills of supervisors play a key role in en- ment have caused a sense of urgency Review by the President & CEO system of the future. The meaningfulness efits, such as flexible working hours, less suring our work community’s job satis- and scheduling pressure in recent years. Operating environment of the work inspires and creates a sense commuting and better work-life balance. faction and ability to cope at work. The theme of making everyday work run and business model of belonging, as does the opportunity to The feeling of togetherness at work suf- more smoothly was perfect in the con- carry out autonomous specialist work. In fers from physical distancing, however. In 2020, it was not possible to arrange text of the coronavirus pandemic, when Strategy our HR strategy, we highlight four goals: Creating new ideas and cooperative de- the traditional Supervisor Days, but our developing anything new would be diffi- being the CEO of one’s own work, bold velopment becomes inevitably more dif- supervisors came together for five on- cult in any case. Smooth work was sup- Fingrid’s reputation, customers and other stakeholders supervisory work, continuous develop- ficult when working remotely. line events. Training was offered to su- ported by Virta projects, where teams ment and learning, and securing exper- pervisors on topics such as labour law, were asked to come up with ideas for Finance and treasury tise. We tried to ensure the best possible con- communication, and performance man- streamlining their tasks. nectedness, engagement and support agement. Business operations CEO of one’s own work for our personnel during the most diffi- Personnel Fingrid’s specialists enjoy the opportuni- cult times of the pandemic. Webinars on ty to do their work autonomously, taking ergonomics and efficiency when working Internal control and independent responsibility for it, while at remotely and on ways of staying in touch Number of risk management the same time supporting the team and with colleagues online, as well as a pres- employees 2020 Men Women 2019 Men Women 2018 Men Women the common goals. At Fingrid, specialist entation on the coronavirus by an occu- Permanent 363 281 82 338 261 77 327 251 76 Research and development 89% 77% 23% 89% 77% 23% 86% 77% 23% positions come with an inherent respon- pational health physician, were arranged Glossary sibility for the work and for developing it shortly after going over to remote work in Temporary 45 32 13 42 28 14 53 40 13 and one’s own skills. March. Our President & CEO gave weekly 11% 71% 29% 11% 67% 33% 14% 75% 25% online briefings to the personnel through- Full-time 376 292 84 359 277 82 349 268 81 In this sense, all of our employees are the out the spring. Our teams had coffee 92% 78% 22% 94% 77% 23% 92% 77% 23% CEOs of their own work. This model of breaks online. The entire personnel was Part-time 32 21 11 21 12 9 31 23 8 specialist work faced a tough challenge invited to the traditional Fingrid Coaching 8% 66% 34% 6% 57% 43% 8% 74% 26% in the exceptional year under review, as Day in May, this time online, to discuss Total 408 313 95 380 289 91 380 291 89 and comment on our value dialogue. the coronavirus pandemic forced most of Average 400 384 376 our specialists to work almost exclusively
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Skills development In 2020, Fingrid Academy offered coach- Fingrid is essentially a specialist organ- ing for supervisors, project management CASE isation where the most important re- coaching, the Loikka training programme source is the knowledge and skills of the for increasing specialists’ communication personnel. It is extremely important for and engagement skills, language training, the company to ensure that no critical and unit-specific coaching mainly relat- BUSINESS REVIEW 2020 skills are lost. Measures such as work ed to change, work community and emo- rotation and swapping tasks within a tional skills. We invest more than a million team are employed to ensure the impor- euros annually to develop both the work Review by the President & CEO tant knowhow is retained. All employees community and each employee’s personal Operating environment must also have deputies as needed. The development. In addition to shared train- and business model significance of substitute planning and ing provided by the company, personnel securing knowhow became very evident can take the initiative by proposing spe- Strategy during the coronavirus pandemic. As a cific training to boost their knowhow. In preventive measures against the virus, 2020, each Fingrid employee received an Fingrid’s reputation, customers and other stakeholders teams were split into smaller groups. average of 3 (5) days of training, and the training costs amounted to EUR 1.1 million. Finance and treasury As technology and the entire operational LOIKKA – A LEAP IN EFFECTIVE CRISIS COMMUNICATION Education level of environment evolve, working life changes permanent personnel 2020 2019 2018 Business operations continuously. Fingrid responds to chang- Basic and secondary 20 18 20 Over the course of three years, Fingrid has invested in several train- Personnel es by offering its employees opportunities education ing programmes called Loikka (i.e. ‘Leap’), aimed at developing the to develop and grow their competence. Lowest level of tertiary 31 31 32 communication, interaction and engagement skills of the personnel. Internal control and The approach of securing expertise as a education Substance specialists with a training and experience background in risk management strategic choice improves the quality of Bachelor’s degree 126 118 116 technology are coached to become proactive ‘CEOs of their own work’. personnel planning and helps the com- Master’s degree 176 159 150 We made bold progress by listening both to the specialist and the Research and development Post-graduate degree 10 8 9 pany to better prepare for future needs. coaches and by modifying the coaching topics in ways appropriate to Glossary the specific context. Work was continued online on the Zoom platform, Training hours by employee Skill development needs are agreed on group and gender 2020 2019 2018 when meeting face to face was not possible due to the coronavirus in the My strategy discussions, which are Training hours, women 31 48 40 pandemic. Everyone’s screens gave off a warm and genuine feeling of held twice a year with each permanent Training hours, men 23 31 39 influence during the final Loikka session when everyone opened their Fingrid employee. Each employee and Training hours, total 9 832 gift packages to mark the final coaching session and found woollen his/her supervisor is responsible for the Training hours per person 25 socks in Fingrid red, target dashboards and diplomas, finishing off with implementation of the measures agreed Training days per person 3 5 5 a sparring session. Making an impact – person to person. on in the development plan.
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ANNUAL REPORT 2020 9. INTERNAL CONTROL AND RISK MANAGEMENT
RISK MANAGEMENT AT FINGRID Fingrid’s risks are managed according to the internal control and risk management principles approved by the Board of Di- Fingrid’s societal responsibility as the foundation for risk management rectors. The risk management develop- ment project started in 2019 was finished Risk management BUSINESS REVIEW 2020 in 2020. The assessment of key risks was revised, the process was made more ef- ficient and risk management measures Review by the President & CEO were specified in more detail. Operating environment and business model RISK MANAGEMENT GOVERNANCE Keeping Sustainability System responsibility The nature and crucial importance of Fin- society powered Strategy grid’s operations to society are strongly reflected in the company’s risk manage- Fingrid’s reputation, customers Secure power supply ensures sufficient Responsible and sustainable business The grid operator under the systems and other stakeholders ment culture and its development. Fingrid production, transmission and distribution practices are a strategic choice for Fingrid. responsibility is responsible for the technical is responsible for the functioning of Fin- capacity of electricity and heat, as well as Responsibility is one of our values. We operability and reliability of Finland’s electricity Finance and treasury adequate functionality and resilience of take care of people and the environmental system and for discharging the duties land’s power system, which makes it fun- the systems both in normal circumstances impacts of our operations, and comply with involved in national balance responsibility damentally a risk management company. and in emergencies. The reliability of good governance practices while securing and national imbalance settlement in an Business operations Risk management is planned and gov- power supply is a precondition for other a reliable supply of electricity for everyone appropriate manner that is equitable and vital functions of society. A serious in Finland and enabling the achievement non-discriminatory to all electricity market Personnel erned holistically. The objective is to com- disturbance in the supply of electricity or of climate goals. In particular, through our participants (systems responsibility). The grid prehensively identify, assess and monitor heat affects all the functions of society operations we promote the UN’s global operator under the systems responsibility and may endanger critical functions and Sustainable Development Goals (SDGs) shall upkeep and develop its activities and Internal control and various threats and risks that the compa- the well-being of the population. related to climate actions, energy and services within the systems responsibility and risk management ny’s operations, environment, personnel infrastructure. maintain, operate and develop its electricity and property are subjected to and which system and other equipment needed for Research and development fulfilling the systems responsibility and the also have societal implications, and to be connection to other systems, so that the Glossary protected against them. Ensuring sys- prerequisites for an efficiently functioning tematic corporate safety & security is a national and regional electricity market and for the common market for electricity in the part of risk management. European Union can be ensured.
Continuity management is included in Security Strategy for Society Fingrid’s Principles of responsibility Section 45 System responsibility; Electricity Market Act 588/2013 comprehensive risk management, and its objective is to improve the organisa- tion’s readiness and to prepare, in the
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best possible way, for the realisation of Fingrid is various risks and ensure the continuity of operations in such situations. Key elements of Fingrid’s risk management responsible for The planning of comprehensive risk man- COMPREHENSIVE RISK MANAGEMENT the functioning agement during normal times contributes BUSINESS REVIEW 2020 to the contingency planning during so- of Finland’s cietal state of emergency as required of Proactive risk Continuity Contingency management management planning a company with duties critical to the na- Review by the President & CEO power system, tional security of supply. Predicting and managing Management of continuity Emergency uncertainties during threats and restoration preparedness Operating environment normal times during normal times which makes it and business model PROACTIVE RISK MANAGEMENT → Systematic identification → Maintenance of → Maintenance of the The company’s risks are divided based on and assessment of risks preparedness plans based contingency plan as fundamentally a Strategy and implementation on the chosen threat a continuation of the significance into strategic and major busi- of risk management scenarios, and scenario- preparedness plans for ness risks to be reported to the company’s measures based rehearsals normal time and rehearsal Fingrid’s reputation, customers risk management and other stakeholders Board of Directors, and operational risks. company. Finance and treasury Risks are identified and assessed in a con- CORPORATE SAFETY & SECURITY sistent manner as part of the company’s Business operations strategy process and in connection with Personnel significant changes affecting operations. Risk management measures are planned, Internal control and recorded and followed up on regularly in tracts, insurance, derivatives or similar personnel to identify the risks associated risk management the risk management system. The system means, with the company’s operations and imple- and the management process was over- • risk factors that are deemed moderate ment risk management measures as part Research and development hauled in 2019 and the go-live date of the in terms of their impacts and which are of their day-to-day work. An overall risk Glossary entire system in commercial use was in under the company’s control through assessment is carried out annually based 2020. clear controls and other practical on an assessment of the operating envi- measures, and ronment. The planning of risk management Risks identified in the risk assessment are • risk factors deemed minor in terms of measures is part of strategy implementa- classified in relation to the risk manage- their impacts but which require moni- tion planning. In order to manage the risks ment measures into one of three groups: toring. with significant impacts, risk management • risk factors that are deemed significant projects are launched as needed on the in terms of their impacts and which are The company’s risk management is con- company level in order to arrange supple- to be transferred, if possible, by con- tinuous and aims to engage the entire mentary measures and monitoring.
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Risk management process Risk matrix
Likelihood Unlikely Likely
Identify risk Assess risk BUSINESS REVIEW 2020 Severe Transfer Review by the President & CEO Report risk Operating environment Measure risk and business model Manage Impact Strategy Monitor risk
Fingrid’s reputation, customers Limit risk Monitor and other stakeholders
Minor Finance and treasury
Business operations
Personnel
Internal control and Both strategic and financially significant Risk protection takes place by reducing • developing technical solutions and adverse event. The planning of continuity risk management business risks are reported to the com- the likelihood of an adverse event and/ operations, and modifying proce- management is based on threat scenarios pany’s Board of Directors annually. Risk or its impacts on Fingrid and society. The dures, that are created based on a risk and oper- Research and development reporting is supplemented in connection most important protection measures are: • auditing operations and reporting on ating environment analysis. The scenarios Glossary with significant business projects and • supporting Fingrid’s risk management and monitoring the implementation of are used to assess the company’s abili- changes in the operating environment. culture and improving employees’ risk measures, and ty to maintain the functionality of critical awareness, • derivatives and insurance policies. processes and systems during emergen- As a general rule, risks are protected • comprehensive strategy work and cies when proactive risk management has against if the costs that the protection operational planning, CONTINUITY MANAGEMENT failed. Among the scenarios that must be entails are justified in relation to the mag- • influencing the regulation of opera- Continuity management, included in com- analysed are the loss of business premis- nitude of the risk. Risks related to major tions, prehensive risk management, is used to es or IT systems, a prolonged blackout or personal injury and environmental dam- • limiting risk through contractual ar- reduce the direct impacts of a realised extreme weather conditions. age are always protected against. rangements, risk and to accelerate recovery from an
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The technical and administrative prepar- The threat scenarios are decided on as edness required by proactive risk man- part of the company’s strategy, and the CASE agement and, in particular, continuity necessary recovery plans are drawn up management is guided on the company and the implementation of the plans are level by the preparedness policy, and by rehearsed for the most significant conti- the system defence plan that the com- nuity threats. The rehearsals are planned BUSINESS REVIEW 2020 pany maintains in accordance with the together with the company’s prepared- Finnish Electricity Market Act. ness unit.
Review by the President & CEO
Operating environment LESSONS LEARNED FROM THREAT SCENARIO REHEARSALS and business model
Strategy Risk management in the energy sector always includes preparedness Systematic preparation for managing disturbance situations for various threat scenarios. Fingrid was able to successfully prepare Fingrid’s reputation, customers and diverse scenario-based rehearsals for the exceptional circumstances caused by the coronavirus pandemic and other stakeholders and the power system continued to function normally throughout the spring, despite the pandemic. Finance and treasury Normal level Recovery
Business operations Operations Challenges were mainly encountered in the early stages of the lock- down, when our employees had problems in entering Finland from Personnel Accelerate recovery abroad. All worksites remained operational and any delays were insig- nificant, however. The challenges and operational changes at the work- Internal control and risk management sites caused by the coronavirus were reviewed jointly with suppliers, for example in the suppliers’ occupational safety group. Research and development Limit the impacts Measures were taken early on to protect the operations and the per- Glossary sonnel of Fingrid’s control centre, due to its critical role. Controlled PREPARING FOR decentralisation meant that all visits and contacts were cut back and RISKS CONTINUITY MANAGEMENT that the control centre functions were distributed to several locations. Time Read more: Image: Objectives of continuity management.. Coronavirus prevention procedures are well embedded on worksites – contingency measures proved their usefulness
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CONTINGENCY PLANNING external protection against crime related Fingrid is a company with duties critical to the company’s business. to the national security of supply and must be able to continue its operations RISK CONTROLS even when emergency legislation is in Risk management controls that are sig- force. Fingrid maintains a contingency nificant in terms of the company’s oper- BUSINESS REVIEW 2020 plan as part of the system defence plan ations and finances are described and referred to in the Finnish Electricity Mar- implemented by each process and func- ket Act. Fingrid is an active participant tion to support good governance, overall Review by the President & CEO in the collaboration to develop the ener- efficiency, the quality of internal control Operating environment gy sector’s preparedness activities and, and operational audits. and business model together with the National Emergency Supply Agency, governs the authorities’ The preparation and description of deci- Strategy and Finnish industries’ joint Power and sion-making controls take into account District Heat Pool, which co-ordinates the segregation of duties, as well as ex- Fingrid’s reputation, customers and other stakeholders emergency preparedness. In recent years, isting approval authorisations and oth- the Pool has invested in extensive pre- er factors that ensure appropriate de- Finance and treasury paredness rehearsals, called ‘Jäätyvä’, for cision-making. The effectiveness of the municipal, rescue and law enforcement existing controls is assessed regularly. Business operations authorities, the Finnish defence forces, Personnel and energy companies. The company complies with the Board- approved insider guidelines and related Internal control and CORPORATE SAFETY & SECURITY party principles, as well as separately risk management At Fingrid, corporate safety & security maintained guidelines concerning con- and the related preparedness and coop- flicts of interest and judicial disqualifi- Research and development eration with authorities are planned and cation. Glossary managed as part of the company’s overall risk management. Essential elements of Risk management at Fingrid is de- corporate safety & security planning and scribed in more detail on the company’s operations guidance are electrical safe- website. ty and occupational safety, the safety of properties and premises, information se- curity, personal and travel safety, emer- gency rescue operations and internal and
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ANNUAL REPORT 2020 10. RESEARCH AND DEVELOPMENT
Fingrid’s research and development activ- of substation maintenance management ities respond to the challenges of the en- by means of IoT technology. Read more ergy transformation, improve the cost-ef- about this project here. As regards the Fingrid’s strategic development themes fectiveness of the operations and increase fourth topic, ‘The power system as part of competence. In 2020, a total of EUR 4.5 the energy ecosystem’, the preparations 1–2 years 3–5 years 5+ years (3.4) million was used for Fingrid’s own for sector integration were started in late BUSINESS REVIEW 2020 research and development. The projects 2020. Read more in the ‘Electricity mar- Putting data and enterprise architecture in order are often carried out in cooperation with ket’ section industry players and top experts to ena- Preparedness for renewable energy and flexible solutions Review by the President & CEO ble the industry to utilise synergy benefits In the following section we have some and improve their impact. examples of the projects included in the The power system Operating environment Power system management and business model as part of the energy first two strategic development themes. system R&D activities was tied even more close- Strategy ly with the business operations by merg- Digitalisation to boost grid development and maintenance Preparedness for renewable energy management ing the focal points of R&D with Fingrid’s and flexible solutions Fingrid’s reputation, customers and other stakeholders strategic development themes. The pro- The load capacity of transmission lines ject portfolio is steered both by the stra- varies depending on the weather condi- Ways of working and reinventing culture Finance and treasury tegic development themes and the busi- tions. The aim of Fingrid’s Dynamic Line Process Research ness needs. Rating (DLR) project is to measure the development Business operations load capacity and to take all of the avail- Personnel The number of ongoing R&D projects in able thermal transmission capacity in 2020 was more than x. Nearly y per cent the existing grid into use. Three different Internal control and of the projects were carried out using Dynamic Line Rating systems based on risk management external resources. Most of the the R&D different technologies have been tested. the DLR systems will be adopted for more ly from the standpoints of transmission projects approved for the Energy Author- The measurement equipment has been extensive use as wind power production management and balance manage- Research and development ity’s innovation incentives in 2020 were installed on the 400-kV Isokangas–Py- increases. ment. Fingrid additionally participates Glossary linked with one of the three development hänselkä transmission line. According to in the OneNet flexibility market project themes presented above: 1) Prepared- the measurement data and calculations Fingrid continued its work to develop started in October 2020, also principally ness for renewable energy and flexible obtained to date, the capacity available flexible markets in 2020 in the INTERR- funded by Horizon2020. The three-year solutions, 2) Power system management, for utilisation is much higher than the FACE flexibility market pilot project un- project further developing the method- and 3) Digitalisation to boost the efficien- standard transmission capacity normal- der the EU’s Horizon 2020 programme, ologies created in the INTERRFACE and cy of grid development and maintenance ly in use, particularly in windy weather, where Fingrid has primarily focused on conducts pilot testing of various flexibility management. The key project of the third which improves the cooling of the con- the development needs linked with the market solutions, which help to solve the development theme is the digitalisation ductors. Based on the obtained results, hour of electricity delivery, particular- challenges posed by the energy trans-
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formation to the power system. The test environments used in the projects enable CASE the joint development and testing of flex- ible solutions with partners, both for Fin- grid’s own purposes and for the needs of our customers. Thanks to these projects, BUSINESS REVIEW 2020 Fingrid R&D costs can be recovered with subsidized funding and we get to be one of the first to test the new European flex- Review by the President & CEO ibility solutions. We will also start new Operating environment studies aimed at more extensive utilisa- and business model tion of demand-side management.
Strategy The purpose of the extended independ- ent aggregator pilot is to test the scala- Fingrid’s reputation, customers and other stakeholders bility of previously tested solutions and to increase the participation of aggregated Finance and treasury flexibilities in the balancing power mar- ket and in power balancing. The balanc- Business operations ing power market pilot was started in July HOW TO CREATE INNOVATIONS THAT ARE USEFUL FOR SOCIETY AT LARGE? Personnel 2020.
Internal control and The smaller bid-size pilot on the bal- A key prerequisite for innovation at 2020, where we asked our personnel tions and improving the management risk management ancing power market continued until the Fingrid is the working culture based on to think about how workplace cama- of the power system. end of 2020. The goal of the pilot was to trust, which emboldens everyone to try raderie could be increased during the Research and development ease entry to the balancing power mar- new solutions and even to fail at times. coronavirus pandemic and how new Our innovative approach benefits both Glossary ket and make the transition towards the employees can be included in the work our customers and society at large. European markets smoother. During the The company encourages everyone to community. System security stays at a high lev- pilot phase, each Balancing Service Pro- participate and to develop their own el, and the power system is capable vider can submit one balancing bid of less tasks and also larger processes. One Examples of more conventional inno- of connecting more and more emis- than 5 MW for each hour of operation on example of every-day innovation was vations include new technology and sions-free energy. the balancing power market. The mini- one the brainstorming challenges in digital tools for streamlining opera- mum bid size during the pilot is 1 MW.
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New lightweight connection stations improve the quality of electricity. Fingrid, Outokummun Energia and PKS Sähkön- Breakdown of R&D costs siirto are together realising a solution for reducing the number of outages caused % to customers on long grid lines by more BUSINESS REVIEW 2020 than half, by as much as just over half. 100 The connection station is a streamlined 80 version of a standard grid substation. It Review by the President & CEO is a reliable, minimalist switching station 60
Operating environment with no room for expansion. In addition 40 and business model to shorter disturbance outages, the new solution also reduces the geographical 20 Strategy extent of planned maintenance outages. 0 It is also possible to use the stations for Fingrid’s reputation, customers 2018 2019 2020 and other stakeholders connecting new power plants, such as fu- ture wind turbines. Ensuring transmission capacity Finance and treasury System operation POWER SYSTEM MANAGEMENT Promoting the electricity market Other projects and administration Business operations Fingrid developed, jointly with the Nordic Personnel TSOs, a new type of reserve product, Fast Frequency Reserve (FFR) to handle con- Internal control and ditions of low inertia. In low-inertia con- risk management ditions, the FFR prevents the frequency of the power system from sinking exces- substation when needed and this way Research and development sively during a major disturbance in elec- secure its critical functions, even during Glossary tricity production. The FFR was adopted a disturbance. The fuel cell produces en- taken into use in the spring of 2020, and ergy from a water-methanol mixture. The Fingrid acquires these reserves on a mar- pilot test was successful. The methanol ket which it maintains. fuel cell turned out to be an adequate, though costly, way to secure the opera- We tested jointly with the Leppäkosken tion of a substation. The solution is most Sähkö utility company, a fuel cell solu- suitable for loads less than 4 kW and run tion that can charge the batteries of a times of more than 24 hours.
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ANNUAL REPORT 2020 11. GLOSSARY
Aggregation: Aggregation means com- project aims at developing a new kind of ITAMS: International Transmission Asset time based on price. Electricity consump- bining regulation-capable, smaller elec- platform for electricity market flexibility Management Study. ITAMS evaluates the tion is reduced when the price in the elec- tricity production, consumption and stor- services and related processes. efficiency of TSOs’ asset management. tricity market is high. age sites into larger entities that enable The study has been carried out five times, electricity trade in different electricity Inertia: In physics, inertia means an ob- and Fingrid has placed at the top each Net Promoter Score (NPS): The per- marketplaces. ject’s resistance to change in its velocity. time. Fingrid focusses especially on mak- centage of promoters, i.e. those willing to BUSINESS REVIEW 2020 Electricity grid inertia refers to the kinetic ing use of digitalisation, which is one fac- recommend the company, minus that of Network Code for Emergency and Res- energy in the electricity grid. The energy tor behind the good success in the study. detractors. Example: if 45% are promot- toration: Network code concerning the is contained in machines at power plants ers and 6% are detractors, NPS is 45% – Review by the President & CEO emergency and restoration of the elec- and factories which rotate at the same ITOMS: International Transmission Oper- 6% = 38%. The maximum score is 100%. Operating environment tricity network. frequency as the electricity grid. The ro- ations & Maintenance Study. This study and business model tating machines’ mass produces inertia looks into the efficiency of maintenance Materiality analysis: The materiality ENTSO-E: (European Network of Trans- for the electricity grid. based on criteria such as maintenance analysis is used to identify topics that Strategy mission System Operators - Electricity) is costs and disturbance statistics. The goal are the most important for Fingrid’s pri- a cooperation organisation of European INTERRFACE project: The European is to save costs and improve the system mary operations and corporate respon- Fingrid’s reputation, customers and other stakeholders transmission system operators (TSO). Its INTERRFACE flexibility market platform security. Fingrid has often placed close to sibility. It includes an assessment of the task is to develop the European Union’s project is one of the research projects the top and has received Top Performer substantial financial, social and environ- Finance and treasury electricity markets and to improve coop- financed under the EU’s extensive Hori- nominations both for the maintenance of mental impacts of Fingrid’s operations, eration between TSOs. The organisation zon 2020 programme. Fingrid and Elering transmission lines and substations. as well as of the impacts on stakeholders’ Business operations is headquartered in Brussels, Belgium. are involved in the project, which seeks decision-making based on, among other Personnel solutions for flexibility market platforms Cross-section Central Finland: Also re- things, operating environment and stake- eSett: A company that carries out the that enable the utilisation of distributed ferred to as Cut P1. The Cross-section holder analyses and a strategy update. Internal control and imbalance settlement of the Nordic elec- decentralised resources for both main- Central Finland refers to a trans-section risk management tricity market parties’ actual electricity taining power system balance and the across the transmission lines between PCI (Project of Common Interest) sta- consumption and production. The com- needs of distribution system operators northern and southern Finland defined tus: Such status can be granted to pro- Research and development pany, eSett Oy, is owned equally by the and balance responsible parties. on electrotechnical grounds. The exact jects that are essential to the EU’s internal Glossary Nordic TSOs Energinet, Fingrid, Svenska future location of the cross-section is af- energy market and to achieving the tar- Kraftnät, and Statnett. IoT solutions in grid operations: In fu- fected by factors such as the new pro- gets of the EU’s energy policies. Projects ture, the Internet of Things (IoT) and dig- duction and consumption connecting on with PCI status can benefit from, among GRI (Global Reporting Initiative): Cor- italisation will help monitor the condition the north–south transmission lines. other things, faster permit processing, porate sustainability reporting standards and lifecycle of substation equipment, and they are entitled to later apply for fi- in wide use throughout the world. making the substation condition man- Demand-side management/demand nancial support from the EU. agement more effective and reducing response: Demand-side management Horizon2020: An international project transmission outages for customers. means reducing the consumption of elec- Clean power system (also low-carbon financed by the EU Commission. The tricity or transferring it to another point in power system): A power system where
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electricity generation is based on car- duction and consumption. Fingrid orders Network codes: The goals of the EU’s bon-free production, such as wind, solar, up- or down-regulating power accord- third energy package adopted in July biomass, hydro or nuclear power. ing to the needs of the power system. 2009 for an internal electricity market Up-regulation refers to an increase in in the European Union. The main players Reserve markets: The amount of elec- generation or reduction in consumption. preparing the network codes are the Eu- tricity generated and the amount con- Down-regulation refers to a decrease in ropean Commission, energy regulators BUSINESS REVIEW 2020 sumed must be equal at any given mo- generation or increase in consumption. through their cooperation agency ACER, ment. The electricity market parties draw and European transmission system oper- up an advance plan for balancing their Imbalance power: For the electricity ators through their cooperation organisa- Review by the President & CEO consumption and production, but the bal- consumer, imbalance power is the differ- tion ENTSO-E. Operating environment ancing of deviations during each hour of ence between the electricity purchased and business model operation requires reserves, which Fin- and actual electricity consumption. For Day-ahead market: The day-ahead mar- grid acquires from the markets it main- the electricity producer, it refers to the ket refers to an electricity marketplace Strategy tains. difference between the electricity sold where electricity is sold and purchased and the actual electricity produced. for different hours of the following day. Fingrid’s reputation, customers and other stakeholders SDG (Sustainable Development Goals): Smart grid: The smart grid, i.e. intelligent In 2015, the UN member states agreed Load Frequency Control: Load Frequen- electricity system, is an electricity net- Finance and treasury on the Agenda 2030 for sustainable de- cy Control is an integral part of the im- work that makes broad use of digitalisa- velopment. It includes 17 global sustain- plementation of the new Nordic Balanc- tion and which is connected to electricity Business operations able development goals to be achieved ing Model based on Area Control Error generation and consumption, and in fu- Personnel by 2030. (ACE). It calculates ACE, i.e. the differ- ture, increasingly to grid energy storages. ence between electricity transmission Smart grids provide customers with more Internal control and Electricity market operators: Electricity measured at Finland’s borders and elec- possibilities to actively participate in the risk management producers, retailers and consumers – in- tricity transmission according to market electricity market. cluding households that participate in the results, in real time. Research and development electricity market. Glossary Security of supply: Security of supply re- Power exchange: A public marketplace fers to how reliable the electricity supply is. Fingrid’s stock for selling and purchasing electricity. Lost time injury frequency (LTIF): Num- exchange releases Balancing power markets: The balanc- ber of occupational accidents that led to FINGRID.FI/EN/PAGES/NEWS ing power markets help maintain a bal- at least one day of inability to work per ance in real time between electricity pro- million completed work hours.
50 Fingrid delivers. Responsibly.
For more detailed information on Fingrid and the contact persons for various functions, see the company’s website at www.fingrid.fi
FINGRID OYJ Läkkisepäntie 21, 00620 Helsinki PL 530, 00101 Helsinki Telephone 030 395 5000
Feedback and more information: [email protected]