Finland’s largest electricity user storms out of data centers: “We can’t let people come here recklessly”

The steel company of Finland’s largest electricity user Outokumpu managing director Kati ter Horst is concerned about the energy use of future data center investments in Finland.

“We cannot allow certain investments to come here recklessly and use relatively cheap and low-carbon electricity in Finland without understanding what it means in terms of the balance of electricity production and consumption,” says ter Horst.

Ter Horst is calling for a long-term industrial and energy policy in the face of large data center investments in Finland.

Siilasmaa’s concern

The energy use of data centers came up again when the technology entrepreneur and Nokian former chairman of the board Risto Siilasmaa criticize In an interview with Helsingin Sanomat Finnish data center investments.

In Siilasmaa’s opinion, the risk is that investments that are more economically useful than data centers may not be able to be found in Finland if data centers consume a large part of the electricity.

“I have nothing against data centers, but if all the planned data centers were to come here, it would already mean the need for a new nuclear power plant for electricity production,” says Kati ter Horst.

“And since we don’t have a nuclear power plant under construction at the moment, it would take 20 years before one is here.”

In Ter Horst’s opinion, Finland needs to think about what kind of investments are wanted in the country and what that means for the energy strategy.

“It doesn’t happen that at some point we will be able to get some bigger industrial investment here, which will create more jobs and leave more added value in Finland than data centers, but the investment cannot be made because there is not enough electricity or its price will rise too high.”

The US requires reserve power

According to Ter Horst, new data centers in the US are already required to build backup power. This has been done in the state of Alabama, where Outokumpu’s Calvert stainless steel production plant is located.

“It is one way to ensure that the data centers do not consume all the electricity from the market, but have to invest in energy supply themselves.”

Meanwhile, industry has been promised a stable gas price in the state.

On the other hand, the data center construction boom is visible to Outokumpu as an increase in demand for stainless steel, especially in the United States.

New nuclear power?

Outokumpu’s Tornio steel plant alone uses about four percent of Finland’s electricity. Ter Horst’s concern is related to the industry’s stable need for electricity, if many more electricity users come to Finland and at the same time there is even more weather-dependent electricity production in the electricity system.

In response to this, the construction of a new large-scale nuclear power plant has been discussed in Finland in recent years.

As a major electricity user, has Outokumpu itself been involved in discussions about new nuclear power?

“We haven’t really been involved in it, but Outokumpu is happy to participate in the discussion about how Finland solves these problems and what opportunities we have.”

Addiction is now hitting Europe

Another concern of Outokumpu’s Kati ter Horst in the energy market is related to the EU emissions trading system, which is being reformed this year.

“I think it’s really important not to scrap the emissions trading system. Companies like Outokumpu have made investments in the front field to benefit from it. It would be quite unfair for the system to suddenly change,” says ter Horst.

The rise in energy prices has raised demands in some Central and Southern European countries for the suspension of emissions trading, which has been in use for twenty years, or for a significant relaxation in order to safeguard the competitiveness of industry. For industry, emissions trading is reflected in energy costs through the price of emission rights.

In Europe, industry is now being disciplined especially by the rise in gas prices as a result of the Iran war. For Outokumpu, this is not as big a concern, because production has already been significantly electrified. In recent years, Outokumpu has invested in reducing emissions, especially at the Kemi chrome mine, and the company should have enough free emission rights until 2030 if carbon dioxide emissions decrease at the planned pace.

“Europe’s vulnerability in the Middle East crisis comes precisely from the fact that there is still a certain dependence on fossil fuels,” says ter Horst.

“It is difficult to make investment decisions”

Ter Horst warns that scrapping emissions trading would make the next investment decisions more difficult. At the beginning of the year, the company said it was considering selling the carbon monoxide gas produced in ferrochrome production to a Norwegian company Norwegian e-fuelille as a raw material for new aviation fuel.

“If the price of coal is very uncertain, it is very difficult to make investment decisions 20 years ahead.”

During the beginning of the year, the discussion on reforming the emission trading has already lowered the price of emission rights.

Outokumpu will finally benefit

According to Ter Horst, Outokumpu is often asked whether its investments in emission reductions have been beneficial. According to ter Horst, lower-emission steel has indeed resulted in better prices and margins, but the actual effect has started to be seen at the beginning of the year, when the carbon limit mechanism (CBAM) came into force in the EU.

The carbon limit mechanism requires pricing of carbon emissions also from steel coming from outside the EU. According to Ter Horst, this has already been seen in the beginning of the year as a decrease in the amount of cheap steel imported from Asia to the EU.

Outokumpu is concerned that the drop in the price of emission rights will also weigh on the pricing of the carbon limit mechanism and dilute its benefits.

Data centers come after cheap electricity

Emissions trading and the data centers planned for Finland are also connected to each other.

“Finland has invested in reducing emissions faster than many other countries. This is now reflected in emission-free and affordable electricity, which data centers are also coming to Finland to follow,” says ter Horst.

In his opinion, a plan should be drawn up on how the investments made in Finland are now to be utilized.