Finland’s early market liberalization and high share of cogeneration has encouraged the development of a versatile knowledge in energy technologies that is currently being commercialized for international markets. One of the driving forces behind this movement is the DENSY programme, pooling resources from business, research and even the financing sector.

Merinova Technology Centre, Finland

Tekes, the Finnish National Technology Agency, started the technology programme DENSY for developing distributed energy system technologies in 2003. It is a five-year programme that aims at strengthening the Finnish energy technology industry to reach for global markets by developing new technologies and business solutions. Tekes is the main public funding organization for research and development in Finland and promotes especially innovative and risk-intensive projects.

The programme’s background lies deep in Finland’s high energy needs that are due to the energy-intensive industry, cold climate and long distances. At the same time, the country’s own energy resources – hydropower, wood and peat – are scarce. To respond to these tasks, developing an efficient energy system and related technology has for decades had a high priority in Finnish energy strategy. This, in turn, has resulted in the building up of world-class expertise in related technology and business. For instance, the technology used in heat and power cogeneration has been mainly developed in Finland. Finland’s energy technology exports have already increased four-fold since the early 1990s and reached a value of €3 billion ($3.7 billion) – approximately twice the value of the country’s oil imports.

A Wärtsilä biomass fuelled CHP plant in Trollhättan, Sweden
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The DENSY programme aims at five folding the turnover of the field, from €1.3 billion in 1992 to €6 billion by the end of 2010, as well as the investments in research and development, and increasing the employment from 5500 to 13 000 persons.

Martti Äijälä, technology director at Tekes, summarises the motivation for starting up the DENSY programme: “Given the liberalization of energy markets, there are new opportunities for power production in a number of applications. These are typically end-use customer segments, with a local energy source and sufficient heat demand of their own to enable small-scale cogeneration. Local solutions can be profitable in that they reduce the costs of power distribution.” Äijälä continues: “Small-scale and modular generation can be implemented rapidly corresponding to the growth in demand while increasing energy security and lowering emissions globally. This is a growth sector for the energy technology industry.”

Jonas Wolff from Merinova Technology Centre, programme manager for DENSY, says that the biggest challenges are to commercialize research and development efforts and to present the right business models for independent power producers as well as power plant suppliers as related service providers. The aim is to pool resources and build new-networked business models in order to provide solutions according to customer needs.

Small scale power production technology can become cost effective, given that industrial production technologies can be used and high volumes can be reached.

Deregulation drivers

Finland is a forerunner in utilizing and developing renewable energies, especially biofuels and cogeneration. Indigenous fuels, such as biofuels, peat, hydro and some wind power, cover over 30 per cent of the total power consumption already, while the share of cogeneration of total power generation exceeds 35 per cent.

Given the high share of cogeneration, any growth in the sector will come from the smaller sites and applications, thus indicating the trends that are behind the technology programme in the first place.

“Finland has focused on its strong fields of know-how and searched for suitable sectors of development from the wide area of energy and climate technologies,” points out Äijälä. “The core competence areas are the use of power and heat co-generation and renewable energy sources like biomass.”

Finland has a good basis to achieve a significant role in the promotion of sustainable and climate-friendly energy technology. High-level basic know-how, created earlier and based on long traditions in the energy field, is utilized in the development of these technologies.

To maintain the high level of energy technology and to fulfil the Finnish energy strategy, heavy investments in new technology research and development (R&D) and on improving conventional technologies are still needed.

“Renewable energy sources, especially bioenergy, wind power and waste-to-energy technologies, efficient production and end-use of energy and energy distribution technologies have been chosen as special focus areas,” Äijälä stresses.

One factor for this growth has been the early deregulation of energy markets in Finland, consequently offering advantages to global markets in the development of new services and products. On the other hand, high-level Finnish know-how in information and communication technology (ICT) has also supported the development of cleaner energy technologies.

The teleoperator TeliaSonera will provide remote reading to all of Vattenfall’s 360 000 Finnish customers’ electricity consumption meters. This not only saves costs of reading but also enables customer-specific metering and gives the network operator more accurate information that enables more focused development and maintenance of the network, thereby improving the efficiency of network management. Eventually, the functionality of the electricity market will also be improved.

In new services like remote controlling and condition monitoring of power plants, the follow-up of energy technology and communication in electricity trading ICT has a central role. Successful Finnish products can be found in energy production, transmission, distribution and end-use technologies. The product range covers advanced automation and ICT to large diesel engines, fluidized-bed combustion and more generally in combustion technology, components and generators of windmills as well as frequency converters.

Fuel cell potential

Wärtsilä is one Finnish energy company that is very active in the field of distributed generation. Wärtsilä’s main business is still in diesel engine power plants but the company has recently made an investment in bio power, by acquiring and developing a Finnish boiler manufacturer. Additionally it also has an ambitious development programme in solid oxide fuel cells.

“We see a clear trend towards distributed energy production as building grids is getting more difficult due to complicated permission procedures. The possibility to take advantage of the heat also encourages the distribution of production,” says Pekka Alhqvist, group vice president, Power Plants, Wärtsilä.

A Wärtsilä CHP unit in operation in Hungary
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Wärtsilä expects fuel cells to bring heavy changes especially to ships’ energy production while they are at harbours. With fuel cells, ships could produce their energy effectively and without polluting. However, this is not likely to be a near-term solution.

“Wärtsilä considers fuel cell development as a long-term project. The potential is great, but we do not expect a major breakthrough for another ten years,” says Ahlqvist.

Private investments

Distributed generation has also attracted the interest of the Finnish risk investment sector. Jarmo Saaranen of VNT-Management Ltd. is managing the international Power Fund that is focusing specifically on distributed generation.

Power Fund has approximately €17 million in commitments and the major investors consist of Finnish institutions and global power electronics corporations. It is a limited partnership and it invests mainly in the power electronics industry. The focus areas within the power electronics industry are distributed power generation, power quality, high and slow speed motors, and power electronic related products and services. The fund normally makes equity based minority investments.

“By following the activities in DENSY, we get a good understanding of the innovations, resources and opportunities of Finnish energy companies. Most of the companies we’ve been interested in have been active in the national technology programme,” says Saaranen.

As a national organization, Tekes is funding research in public research institutions and industrial development. However, the participation and co-financing of industry is also required in the public sector, especially applied research with a short expected time to market. This ensures the right direction of research towards relevant topics and possible implementation of results.

In addition, scenarios and technology roadmaps are being drawn up. Professor Tuomo Kässi from Lappeenranta University of Technology, who is heading the scenario work, says that indications of eventual market success can be drawn from the analysis. The different scenarios are based on the most significant market factors, but as the market conditions vary and develop, scenarios are never forecast to be fulfilled. However, they give a good indication of the changes in technology demand during transition like market liberalization or rapid economic growth. The findings are now available for companies and research institutions to utilize and develop further.

“As the technologies converge it is important to find new implementations and develop innovative business. It is essential to develop products and services side by side to enable companies to support the products through their entire life cycle,” says Kässi.

Wolff believes the high level of cooperation between companies, universities and research institutes is definitely one of the contributing factors to Finland’s success in the field.

“In the field of network integration, we have pooled projects to tackle the issues from both the generator’s and the power distributor’s point of view. Thus we can bring both the power technology industry and the utilities to jointly take part in and co-fund research, product development and improvement of codes and regulation. We encourage programme participants to take advantage of each other’s competences with joint projects,” says Wolff.

DENSY programme’s international cooperation focuses on the field of basic research, however enterprises are also encouraged to collaborate with their foreign counterparts in greater depth. The programme also aims at further leveraging Finnish companies’ expertise and connections in the Baltic Sea region.

Unique fuel cell plant

The co-operation of research institutes and companies is active for instance in fuel cell development. Technical Research Centre of Finland, VTT, launched a unique planar solid oxide fuel cell (SOFC) power plant last autumn as a part of Tekes’ DENSY.

The goal of the project is to develop a small-scale power plant (5 kW) that would be connected to the power distribution, natural gas and heating network. In the future, this product will use similar technology; for example, it could be a power plant that runs on natural gas or biogas and diesel fuel as the source of energy for large properties, blocks or ships.

VTT is working in close co-operation with the research institute located in Jülich, Germany. Through this SOFC project, Finland is involved in several international research programmes and agreements. The project is also part of an EU framework programme.

“The advantage of planar SOFCs is that they are efficient and affordable. We are concentrating on developing the power plant concept; for fuel cells and other components, we will use the expertise found in our network,” states the project’s manager Jari Kiviaho of VTT.

Charging a mobile phone with a fuel cell
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This project tests the whole operational chain of the power plant: the processing of the fuel, cells individually and together as well as the entire system. As part of this project, VTT has also developed a monitoring and automation system for the power plant.

“In this project, we have been able to combine the interests of several companies. Patria has its sights set on using the fuel cells as part of its own products, Verteco manufactures the components, Wärtsilä is interested in producing the systems, Gasum wants to promote the use of natural gas and Fortum produced low-sulphur diesel to be used in the fuel cells. Pre-commercial products are expected to reach the market by 2010,” says Kiviaho.

Heat all round

One type of energy increasingly exploited in Finland is the low-temperature heat energy in the ground and in water, which can be collected in pipes containing heat-absorbent fluids, and concentrated by high-tech heat pump systems.

Suomen Lämpöpumppu Oy (SLP) is looking for new ways to collect low-temperature heat energy. Projects within Tekes’ DENSY Programme include an eco-village near Kuopio, where pipes will collect heat from the sewerage system and a nearby lake; and the extraction of heat from treated wastewater outlets in Vaasa and Joensuu.

There is plenty of interest around the world in such schemes, and particularly in Eastern Europe, where major developments in wastewater treatment and sewage systems are in the pipeline.

Localized energy systems are becoming more important as energy-users seek to reduce their dependency on large heating and electricity grids. The Finnish company Wärtsilä specialises in decentralized power generation, with emphasis on environmentally friendly technologies.

Within Tekes’ Distributed Energy Systems Programme (DENSY), Wärtsilä is developing combustion technologies for heat and power plants that use bio-fuels like bark and wood chips, and also building prototype fuel cell systems with a view to future commercial applications.

“It’s very important to participate in major technology programmes, to build up links with the many small companies in the energy sector in Finland,” explains Jukka Ylänen, vice president for Solutions Management at Wärtsilä.

Although wind power as yet only accounts for a tiny fraction of the electricity used in Finland, Finnish companies are active in international wind technology markets.

“The prospects for our new 3 MW units are promising, due to falling costs, and the environmental and logistic benefits of having fewer, but larger turbines”, says Veli-Matti Jääskeläinen, managing director of Winwind. “Technological research financed through Tekes’s DENSY Programme has helped us to develop advanced turbines that can be effectively connected to weak local grids around decentralized wind power sites.”