Caruna is the lone warrior of electricity network companies

The huge storm on Boxing Day 2011 and the resulting loss of electricity in hundreds of thousands of households affected the Finnish electricity network business more than any other single storm.

During the years 2010-2022, the companies have invested more than eight billion euros in the construction of a weatherproof electricity network as well as in the needs of Finland’s green transition.

These investments were, however, ensured by the Energy Agency, which with a flat method of calculating a reasonable return gave the investments of network companies operating as monopolies a guaranteed and excellent level of return.

When the returns go down, it was let down

So it was no wonder that when the Energy Agency moderated the profit level of grid companies at the beginning of the year, many companies were disappointed, even though the profits are decreasing moderately and gradually. However, electricity grids no longer offer the same level of return as before.

In the heated debate, almost all network companies complained about the Energy Agency’s new control method to the market court, and from there the dispute will probably proceed to the Supreme Administrative Court.

For example, Finland’s largest network company Caruna calculated that during the years 2024–2027 it will only be able to invest 345 million euros in networks instead of the necessary 591 million euros. The drop in investment is therefore quite substantial.

But is the drop the same for all of Finland’s 77 electricity network companies or is Caruna a lone warrior in the world of dozens of electricity network companies?

The Network Director of the Energy Agency Veli-Pekka Saajon according to the report, more detailed information about the investments made will not become clear until next year, but the new development plans for investments given by the network companies last summer are positive.

Investments are decreasing, but in a controlled manner

According to the agency’s preliminary analysis, the companies seem to invest even more than when the previous plan was issued in 2022. If the analysis is correct, it can be considered a small surprise.

The network company’s investments in recent years have ranged from 800 to 1,000 million euros. According to the companies’ new plans, they will range from 650 to 800 million euros in the future and will decrease with the completion of the weather-proof electricity network, as we get closer to 2036.

However, in the energy industry’s vision, the investment need for electricity networks is at most 1.2 billion euros per year, if Finland electrifies and “greens” at the rate the industry predicts.

The difference in investment needs perhaps indicates the gap between realism and optimism. Time will tell if it is closing or expanding.