Electrification of district heating does not burden but brings flexibility

From the reader. Supplier Sanna Pekkonen handled Kauppalehti’s editorial (KL 30.1.) many sensitivity problems in the energy system based on renewable electricity production. The assessment of the causes of the problems and the need for additional flexibility is correct in many respects, but the article gives a rather one-sided picture of the effects of electrification of heating on the balance and flexibility of the system.

The transformation of Finland’s most common form of heating, district heating, is the undisputed driver of our country’s electrification development. However, this increase in demand for electricity, measured in terawatt hours, does not significantly burden the electricity system.

Let’s look at an example Fortum’s owned Espoo’s district heating production, where electric boilers have replaced the old production based on burning coal. Between December and January, we consumed more than 170 gigawatt hours of electricity with electric boilers. Of this, less than a gigawatt hour was scheduled for hours when the price of electricity was more than 20 cents per kilowatt hour. This was also system-balancing consumption occurring on the intraday electricity market, which does not affect the prices of electricity on the exchange. In the same hours, we produced more than 14 gigawatt hours of electricity from our two more modern gas turbine units alone.

This does not only apply to Fortum: Fingrid’s from the open data material from December to January, it appears that when the hourly price of electricity has been more than 20 cents per kilowatt hour, electricity has been consumed by electric boilers at an average of only about five percent power compared to their peak level.

It is true that when the system is electrified, the combined production capacity of electricity and heat has been closed. However, this has mainly been inflexible capacity burning fossil fuels such as coal. In addition to environmental harm, preserving fossil production would also have been a more expensive solution for district heating customers due to the tighter market situation for fossil energy and emission rights.

In the same way, relying too much on forest fuels would be harmful to both the environment and the district heating customer’s wallet. There are simply not enough forest industry by-products that are considered sustainable for all district heating companies.

As in the editorial and Director of the Energy industry Jari Kostaman in an opinion piece (KL 25.1.) it is stated that disciplining biomass-based cogeneration through taxation, for example, would further tighten the situation in the electricity system. If, despite this, taxing the energy use of wood is considered necessary in the future, taxation should favor the combined production of electricity and heat instead of the production of heat alone. This is already the case with other heating fuels such as natural gas.

The most cost-effective way to increase the flexibility required by renewable production in the electricity system is to increase consumption flexibility. However, as the demand for electricity increases, these measures will eventually not be enough, and at some point new investments in adjustable production will be needed. We at Fortum are also investigating accurate solutions and possibilities for building large-scale pumped power in Sweden, and we are also figuring out how to develop the flexibility of our co-production with a fossil-free energy source.

Sampo Saarinen

head, strategic analysis, heating and cooling business, Fortum

Thomas Ekholm

director, strategy and solutions, heating and cooling business, Fortum