CEO of Jukka Ruusunen spoke in Nordic energy management seminar 10 June 2015. The topic for Ruusunen's presentation was Securing Supply in the Nordic Power Market.

1. Securing Supply in the Nordic Power Market
Jukka Ruusunen
President and CEO, Fingrid Oyj
Nordic Energy Management Seminar, Finlandia Hall, Helsinki, June 10th, 2015

2. Until mid 1990's:
Vertically integrated monopolies
Today: International
electricity markets
?
June 2015 Jukka Ruusunen
Renewables
Subsidies
"Nordic Energiewende?"

3. Today:
Electricity markets
Basic idea:
• Competition
• Efficiency
Price signals:
1. Efficient dispatching and cross-border trade
2. Drive investments (energy mix)
TO
secure supply
June 2015 Jukka Ruusunen

4. Game changer: renewables and subsidies
0
2000
4000
6000
8000
10000
12000
Installed 2014 Estimated 2025
Finland Norway Denmark Sweden
Nordic market: Over 22 GW of windpower planned by 2025!
Wind and
solar!
Europe
June 2015 Jukka Ruusunen

5. Wind and solar challenge the current market model...
June 2015 Jukka Ruusunen
Dispatch
• Renewables not sensitive to price signals
• More difficult for the "the invisible hand" to balance
supply and demand
Investments
• Renewables push down wholesale market prices
• Profitability of market based investments
disappears
• No investments for back-up capacity

6. ...and reshape the Nordic power system
June 2015 Jukka Ruusunen
There is surplus of energy
BUT
there will be scarcity of
 peak power
 flexibility
 inertia

7. Possible implications
June 2015 Jukka Ruusunen
 Power shortages for citizens
during peak hours
 Centralized control actions to
balance supply and demand
 Restrictions for the operation of
big nuclear units

8. Scarcity 1: Peak power
June 2015 Jukka Ruusunen
Demand for
Norwegian
balancing power
increases in
Europe
Denmark:
Condensing power
not competitive -
peak load reserves
introduced
Baltic countries:
Lower price level
via integration -
condensing power
not competitive
Finland: Closure of
condensing power
due to low
profitability – new
nuclear!
Price peaks
become more frequent
and stronger!
Probability for
power
shortages and
load shedding
is rising!
Sweden: Early
decommissioning of
nuclear power due
to low profitability –
replaced by wind

9. Case Finland: conclusions from Pöyry's generation adequacy study
• Situation before Olkiluoto 3 is challenging –
Finland is dependent on electricity imports
• Commissioning of Olkiluoto 3 won't fix the
situation completely
• Competitiveness of condensing power is low
now and also in the future
• Surplus of energy, the prices of energy
futures are low
* Source: Pöyry Management Consulting Oy, Report available: http://www.tem.fi/files/42026/Kapasiteetin_riittavyys_raportti_final.pdf
June 2015 Jukka Ruusunen

10. Scarcity 2: Flexibility
[MW]
0
10 000
20 000
30 000
40 000
50 000
60 000
0:00 6:00 12:00 18:00
Simulation: 20 GW wind
power in the Nordics year
2020
Demand +4 000 MW/h
Wind production
-1200 MW/h at the
same time
June 2015 Jukka Ruusunen
Less flexible
generation
• More subsidized wind power –
intermittent
• Commercial investments rely
on nuclear (Finland) – not
flexible
• Condensing capacity
decommissioned – flexible
back-up disappears
• Even hydro power facing
difficulties – flexible and
renewable
Some remedies
available
• Increase of demand response
will help, but cannot change the
big picture
• Cross border capacity
increases, but similar
challenges in the whole region
• Technological innovations can
help - in the long run

11. Scarcity 3: Inertia
June 2015 Jukka Ruusunen
Drivers
• More wind – does not contribute to the rotating
mass of the system.
• Less thermal generation – less rotating mass
Consequences
• Power system more sensitive to
disturbances – risk for operational
security
• Problems for big nuclear units and cross-
border connections – more centralized
control actions

12. How to go forward?
June 2015 Jukka Ruusunen

13. June 2015 Jukka Ruusunen
"Finland must have an excellent security of
supply. When we generate electricity by
ourselves, security of supply is in Finnish
hands. We must reach self-sufficiency in
electricity generation, because that has an
impact on security of supply and electricity
pricing. Then we rule electricity price."
Different political stories...
Finnish MEP candidate
... leading into very different solutions!

14. Step 1. Upgrade the market model to version 2.0
• Increase of cross border capacity within the market
area
• Better capacity calculation methodologies
• More advanced and integrated reserve and regulating
power markets
• Improved imbalance pricing principles
• Increase of market transparency
• Advanced end-user market (e.g. datahub)
• Active demand side response
• Regional view on capacity mechanisms
June 2015 Jukka Ruusunen
Improved regional
cooperation!

15. Step 2. Longer term - two scenarios
June 2015 Jukka Ruusunen
European or regional solution
– no room for a national solution!

16. Towards a new power system
June 2015 Jukka Ruusunen
Regional or European solution – no room for a national solution!
Renewables are here
to stay
Decentralized + market based
or
centralized + subsidies
peak power + flexibility + inertia

17. Fingrid Delivers. Responsibly.