Jan. 30, 2001Despite the mild weather, electricity consumption in Finland grew by almost 2 per cent in the year 2000.
The increase in the consumption of electricity would have been more than half as big as this if the temperatures had been normal. The eight consecutive year of strong economic growth maintains the increase in the consumption of electricity.
Because of the warm weather which prevailed during the latter part of last year, consumption of electricity by households decreased while consumption by the other user groups increased by almost 3 per cent.
The precipitation levels have been high in the Nordic countries in recent years, also keeping hydropower generation volumes high. Last year, Norway, Sweden and Finland generated approximately 40 billion kilowatt-hours more hydropower than on an average year.
An increasing amount of inexpensive import electricity has been brought to Finland. In the year 2000, net imports of electricity reached an all-time high figure of 11.9 billion kilowatt-hours, which covered 15 per cent of the electricity used in Finland. Due to the good hydropower situation and competition, prices of electricity decreased again, by approximately 1 per cent.
Electricity trading in the electricity exchange grew rapidly, with almost one fifth of all electricity used in Finland being traded through the electricity exchange. Several changes took place in the ownership and structures of energy companies.
The favourable trend in economy, which began in 1993, continues further. The Finnish gross national product grew by 5.7 per cent last year. The favourable trend in economy will carry on this year, and the gross national product is expected to go up by 4.5 per cent. Electrotechnical industries have shown the biggest growth figures, and the wood-processing, metal and chemical industries have expanded as well.
Last year, Finland used a total of 79.1 billion kilowatt-hours of electricity. This means 1.7 per cent or 1.3 billion kilowatt-hours more than in 1999. The temperature and calendar adjusted growth rate was 2.8 per cent. If the temperatures had followed the normal pattern last year, the limit of 80 billion kilowatt-hours would have been exceeded. 60 per cent of the increase in the consumption of electricity was covered by imports and 40 per cent through domestic generation, which grew by less than 1 per cent only. This year, the consumption of electricity is expected to grow by approximately 2 per cent.
More than 31 per cent of the total electricity need in Finland was covered through combined heat and power (CHP) production, some 27 per cent through nuclear power, approximately 18 per cent through hydropower and 8 per cent through coal and other conventional condensing power. Net imports of electricity rose to 15 per cent.
Record pace continued in imports of electricity
A new record of 11.9 billion kilowatt-hours was achieved in the net imports of electricity last year. The previous records were 11.1 billion kilowatt-hours in 1999 and 10.7 billion kilowatt-hours in 1990. Net imports of electricity grew by 6.8 per cent last year.
Imports from Sweden increased by one quarter while imports from Russia decreased by 13 per cent. Exports of electricity from Finland to the west were small last year because of inexpensive electricity available in the Nordic countries.
The mild weather reduced the need for heating, but despite this, CHP production in district heating power plants in urban areas remained at about the same level as in 1999. Industrial CHP production decreased slightly.
Finland is the leading country in the world in high-efficiency combined heat and power production, which is also highlighted in the climatic process. An increasing proportion of CHP production took place by means of natural gas. Domestic biomass and peat are also important fuels in CHP production.
Nuclear power generation decreased slightly on 1999, mainly because of the extensive annual servicing of the Loviisa Nuclear Power Plant. Finnish nuclear power plants continued to stay among the best plants in the world. On 15 November, Teollisuuden Voima Oy submitted a preliminary application for the construction of a new nuclear power plant.
Hydropower almost to the record volume
Hydropower year 2000 was good in Finland. Hydropower plants generated 14.4 billion kilowatt-hours of electricity, which was almost 15 per cent more than in the previous year. The hydropower record of 15.0 billion kilowatt-hours is from 1992. The smallest generation figure within 20 years, 10.1 billion kilowatt-hours, is from 1980.
Because of increased hydropower generation and imports of electricity, coal and other condensing power generation decreased by approximately 9 per cent. However, condensing power generation was growing rapidly until the autumn, but the weather, which was warmer than in 1999, turned condensing power generation to a decline.
Wind power generation continued to grow rapidly but it still only covers 0.1 per cent of the total use of electricity. Wind power generation grew more than 1.5-fold thanks to new wind power installations.
In 2000, industries used almost 55 per cent of all electricity, households and agriculture some 24 per cent, and the service and public sectors a total of more than 17 per cent. The transmission and distribution losses were less than 4 per cent. Use of electricity by households decreased by 2 per cent because of the warm latter part of last year. Consumption by the other user groups increased by almost 3 per cent.
Electric heating, which is included in all user groups, constituted less than 10 per cent of the total use of electricity. Approximately 13,000 homes were connected to electric heating. At the turn of the year, a total of about 593,000 homes, providing accommodation for approximately 1.6 million Finnish people, were heated with electricity.
Industrial consumption of electricity in 2000 grew by 2.7 per cent to 43.2 billion kilowatt-hours. Industries accounted for almost 55 per cent of all electricity consumption in Finland. The wood-processing industry used 26.3 billion kilowatt-hours of electricity, up by 2.2 per cent on the previous year. Without the strike in the wood-processing industry in the spring, its electricity consumption could have gone to almost 27 billion kilowatt-hours.
The electricity consumption of the metal industry was 7.1 billion kilowatt-hours, which was 3.2 per cent more than in 1999. Consumption by the chemical industry increased by more than 4 per cent to 5.9 billion kilowatt-hours. The operating rate in the metal and chemical industries was good throughout the year. The remaining industries used a total of 3.9 billion kilowatt-hours of electricity, meaning an increase of 3.1 per cent on the previous year.
Industrial production in Finland grew by approximately 11.5 per cent. Preliminary estimates suggest that industrial production grew as follows in the various sectors of industry: 6.5 per cent in the pulp and paper industry, 5 per cent in the metal industry, 7 per cent in the chemical industry, and 38 per cent in the electrotechnical industry.
The anticipated deceleration of global economic growth will probably impair Finland’s export outlook in 2001. This is also reflected in the need for electricity by industries, which, however, will probably grow by some 2 per cent. This growth corresponds to the estimate of the Confederation of Finnish Industry and Employers concerning the long-term annual growth. The operating rate in the pulp and paper industry will remain good and its electricity need will grow by some 2.5 per cent. Additional capacity built in this industry will contribute to the growth in the use of electricity.
In the metal industry, the consumption of electricity will grow by just over 1 per cent and in the chemical industry by almost 1 per cent. The growth figures in the metal and chemical industries are slightly smaller than earlier because of factors such as overhaul shutdowns, which are carried out at the plants at intervals of a few years. The use of electricity by other industries will increase by approximately 2 per cent.
The total price of electricity, including tax, electric energy and transmission, decreased by an average of 1.1 per cent in 2000. At the beginning of 2001, the average price of household electricity was 50.0 Finnish pennies per kilowatt-hour. This means a decrease of 0.7 per cent in a year. The total price of electricity, including tax, electric energy and transmission, for medium-sized industry was 30.2 pennies per kilowatt-hour at the beginning of this year. This price has reduced 0.4 pennies per kilowatt-hour, i.e. some 1.2 per cent, over the past year.
Electricity transmission charges levied by holders of distribution networks decreased by an average of 0.1 per cent. List prices of electric energy, which is subject to competition decreased during the year 2000 by an average of 2.3 per cent. There were no changes in the taxation of electricity in 2000.
The price of electricity has been decreasing since the autumn of 1998, when real competition also extended to cover customers with small-scale electricity consumption. The decrease in the price of electricity since that time has given a typical household user of electricity average savings of approx. FIM 150 to 170 per year and approx. FIM 500 to 550 to those using electricity for heating even if the consumer had not subjected electricity procurement to competition. Since the autumn of 1998, customers of distribution companies have already saved almost FIM 2 billion in more inexpensive prices of electricity.
Further growth in the electricity exchange
In 2000, gross turnover of the Finnish market parties operating in the Nordic electricity exchange Nord Pool grew by approximately 30 per cent. Finnish electricity exchange parties traded in approx. 13.4 billion kilowatt-hours in the Elspot market. This corresponds to some 18 per cent of the total electricity need in Finland. Some of the volume of long-term wholesale contracts which finished at the end of October was transferred to the Elspot market.
In Finland, the average price of electricity traded in the electricity exchange was approximately 8.9 pennies per kilowatt-hour, i.e. some 9 per cent higher than in 1999. The system price in the entire Nordic electricity exchange rose by approx. 5.5 per cent despite the exceptionally good hydropower year.
Trading in electricity derivatives grew by 66 per cent on 1999. Derivatives trading in Nord Pool totalled 359 billion kilowatt hours, with the value of transactions being FIM 127 billion (NOK 117 billion). The volume of standard derivative contracts made outside the exchange and brought to Nord Pool for clearance amounted to approx. 1,180 billion kilowatt-hours.
Changes in energy companies
At the beginning of 2001, there were 99 electricity distribution companies in Finland while the figure was 105 a year before. The number of distribution companies is going down. When the Electricity Market Act came into force in 1995, there were 117 distribution companies, 141 in 1990 and more than 300 in the 1960s.
Numerous changes took place in the ownership and structures of energy companies. Hanerga Oy, Jyllinkosken Sahko Oy, Koillis-Pohjan Sahko Oy, Lounais-Suomen Sahko Oy, Megavoima Oy and Tuusulanjarven Energia Oy were merged into Fortum Sahkonjakelu Oy. The sales operations of Lansivoima Oy and Tuusulanjarven Energia were transferred to Fortum Energiatalo Oy.
Inergia Oy’s sales operations were transferred to Fortum Energiatalo Oy at the beginning of 2001. Oulun Seudun Sahko transferred its sales operations to Suomen Energiakauppa Oy, where Oulun Seudun Sahko is a majority shareholder and Fortum a minority shareholder.
H�en Sahko Oy and Lapuan Sahko Oy were merged into Vattenfall Siirto Oy. Vattenfall purchased Keski-Suomen Valo Oy and H�enlinnan Energia Oy. Sales operations of both of these and those of Revon Sahko Oy, which was purchased by Vattenfall in 1999, were transferred to Vattenfall Sahkonmyynti Oy.
Porvoon Energia Oy merged its subsidiary Porvoon Seudun Sahko Oy into itself.
Vieska Energia Oy is being transferred to the ownership of Herrfors Oy Ab and the share majority of Kokemaen Sahko Oy to Satapirkan Sahko Oy. Even other changes have been carried out or prepared. As an example, Rovakaira Oy was divided into three companies at the beginning of 2001.
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