Vision and initial feasibility of a recarbonised Finnish energy system for 2050

VISION AND INITIAL FEASIBILITY

ANALYSIS OF A RECARBONISED

FINNISH ENERGY SYSTEM

Michael Child & Christian Breyer

Lappeenranta, 07.06.2015

Results for EnergyPLAN simulations of 2050 Finland

Recarbonised Finnish Energy System

Christian Breyer► [email protected]

Michael Child► [email protected]

Agenda

Introduction to study

Methods

Main results

Interpretation of results

Questions and discussion




Primary aims:

To examine the components of a fully-integrated (power, heating/cooling and mobility) fully-functional, reliable and recarbonized energy system for Finland in 2050

To determine the extent to which differing levels of nuclear power and forest-based biomass affect the cost of such an energy system

To explore the roles of energy storage solutions in facilitating high shares of variable renewable energy generation, with a particular focus on Power-to-Gas (PtG), Power-to-Liquid (PtL) and energy storage technologies

To develop more accurate future energy scenario modelling methodology in Finland that includes complete transparency of modelling assumptions

To encourage discourse on energy-related issues that will contribute to the transformation of the Finnish energy system towards long-term sustainability

5Recarbonised Finnish Energy System



The uniqueness of our work

Only research to consider 100% RE scenarios for Finland

Only research to seek a virtually carbon-free energy system by 2050

Full integration of power, heating/cooling and mobility sectors

Greatly expanded roles for wind and solar energy

First study to explore large-scale energy storage solutions and Power-to-Gas (PtG)

System modelled on an hourly resolution using historical data for a calendar year

Full transparency of technical and economic assumptions

Results suggest that a 100% RE scenario is a highly competitive cost solution

compared to other test scenarios with increasing shares of nuclear power and a

Business As Usual (BAU) scenario




Agenda


Methods

Main results






EnergyPLAN

• Developed in 1999 at

Aalborg University in

Denmark

• Widely used and respected

• Energy system analysis

carried out in hourly steps

for one year

• Model includes analysis of

electricity, heating and

transport sectors

• Results form basis of

technical regulation and

market optimization

strategies

• Main aim is to assist in the

design of national energy

planning strategies

• Model can also be applied on

larger and smaller scales

• Free download from

http://www.energyplan.eu/





Introduction to scenarios

− 2012 Reference

− 2020 Reference

− 2050 Basic (Maximum 145 TWhth biomass)

− 100 % RE

− Low Nuclear (1.6 GWe)

− Medium Nuclear (2.8 GWe)

− New Nuclear (4 GWe)

− 2050 Low Biomass (Maximum 113 TWhth biomass)

− 100 % RE

− Low Nuclear (1.6 GWe)

− Medium Nuclear (2.8 GWe)

− New Nuclear (4 GWe)

− 2050 Reference Business As Usual (BAU)

Test scenarios

• Target of essentially

zero carbon

emissions from

energy sector

• Target of complete

energy

independence –

Finland as an island





Key insights:

• Getting the least cost mix of technologies is a manual balancing act using EnergyPLAN

• EnergyPLAN separates electrolysers for different end products – in reality integrated

Technology

Installed Capacity GWe

2012 2020

2050

Basic

100%

RE

2050

Basic

Low

Nuclear

2050

Basic

Medium

Nuclear

2050

Basic

New

Nuclear

2050 Low

Biomass

100% RE

2050

Low

Biomass

Low

Nuclear

2050

Low

Biomass

Medium

Nuclear

2050 Low

Biomass

New

Nuclear

2050

BAU

Wind onshore 0.175 1.6 30 22.5 16 10.5 38 32 34.9 21 3

Wind offshore 0 0.9 5 5 5 5 6 6 6 6 1.5

Solar PV 0.01 0.1 30 30 30 30 35 35 35 35 1

Hydro - Run of river 2.595 3.111 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5

CHP - DH 3.49 3.5 9 8 7.5 7 8.5 7.5 7 6 4

Condensing 2.045 1.5 0 0 0 0 0 0 0 0 3

Nuclear 2.75 4.3 0 1.6 2.8 4 0 1.6 2.8 4 6

PtG - CH₄ 0 0 23.5 19.6 17.6 17.6 29.4 27.4 25.4 23.5 1.0

PtG - H₂ 0 0.142 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57




Agenda


Methods

Main results






Primary energy

Key insights:

• Strong roles for renewables in test scenarios

• Domestic hydrogen becomes major element of TPED

0

50

100

150

200

250

300

350

400

450

2012 2020 2050 Basic100% RE

2050 BasicLow Nuclear

2050 BasicMediumNuclear

2050 BasicNew Nuclear

2050 LowBiomass100% RE

2050 LowBiomass

Low Nuclear

2050 LowBiomassMediumNuclear

2050 LowBiomass

New Nuclear

2050 BAU

Pri

mar

y E

ner

gy

(TW

hth

/a)

Nuclear

Hydrogen

Hydro

Solar PV

Wind offshore

Wind onshore

Biomass

Natural Gas

Oil

Coal and Peat




Electricity production

Key insights:

• Electricity has increased role in energy system due to its flexibility

• Electricity from wind and solar PV become backbone of system

-10

40

90

140

190

240

2012 2020 2050 Basic100% RE

2050 BasicLow

Nuclear


2050 BasicNew

Nuclear


2050 LowBiomass

LowNuclear


2050 LowBiomass

NewNuclear

2050 BAU

Ele

ctri

city

Pro

du

ctio

n (

TW

he/

a)

Nuclear

Condensing

CHP-Industry

CHP-District Heating

Hydro - Run of river

Solar PV

Wind onshore

Wind offshore

Net import/export orcurtailment




Electricity consumption

Key insights:

• Closer relation of end user consumption to total production in reference scenarios

• Large demand for electricity in PtG processes

-10

40

90

140

190

240

2012 2020 2050 Basic100% RE

2050 BasicLow

Nuclear


2050 BasicNew

Nuclear


2050 LowBiomass

LowNuclear


2050 LowBiomass

NewNuclear

2050 BAU

Ele

ctri

city

Co

nsu

mp

tio

n (

TW

he/

a)

V2G losses

PtG (H₂)

PtG (CH₄)

Transport

District cooling

Individual heating

Heat pumps - CHP

Total consumption(households and industry)

Flexible demand




Total annual costs

Key insights:

• Stranded investments in nuclear/ coal power stations not accounted (higher WACC?*)

• Test scenarios have high level of investment

• Reference scenarios have high level of fuel and CO₂ costs (risk of high CO2 price**)

* WACC 7% ► 15%

BAU: + 3 b€

New Nuclear: + 2 b€

** CO2 price 75 ► 150 €/t

BAU: + 1.9 b€

rather likely according to Luderer G. et al.,

Environ.Res.Lett., 8, 034033, 2013

0

5000

10000

15000

20000

25000

30000

2012 2020 2050Basic

100% RE

2050BasicLow

Nuclear

2050Basic

MediumNuclear

2050BasicNew

Nuclear


2050 LowBiomass

LowNuclear


2050 LowBiomass

NewNuclear

2050 BAU

To

tal a

nn

ual

co

sts

(M€/

a)

Variable costs - other

Variable costs - CO₂

Variable costs - fuel

Fixed operation costs

Annualized investment costs




Levelized cost of electricity

* Includes 40% electrical efficiency + 50% thermal efficiency; ** final value is levelized cost of energy (incl. heat)

Key insights:

• Despite higher LCOE, offshore wind distribution favourable to energy system and may lead to overall cost

reduction in new simulations

• Low full load hours in thermal plants lead to high LCOE

For 2050

Basic

Medium

Nuclear

Scenario

UnitsWind -

onshore

Wind -

offshore

Solar PV

- ground

mounted

Solar PV -

rooftop

Hydropower

- Run of the

river

CHP

plants

Nuclear

plants

PtG

Methane

Capex €/kWe 900 1800 300 400 3060 820 6500 870

Opex_fixed % of capex 4.51 % 4.55 % 2.00 % 1.00 % 4.00 % 3.66 % 3.50 % 3.30 %

Opex-var €/MWhe 0 0 0 0 0 2.7 0 0

Fuel €/MWhe 0 0 0 0 0 27.288 5.4 40

Efficiency % - - - - - 90 %* 37 % 51 %

Lifetime Years 30 30 40 40 50 25 40 30

Full load

hoursHours 2816 4280 982 982 6123 1124 7963 2667

WACC % 7 % 7 % 7 % 7 % 7 % 7 % 7 % 7 %

crf %year¯¹ 8.06 % 8.06 % 7.50 % 7.50 % 7.25 % 8.58 % 7.50 % 8.06 %

LCOE € cents/kWhe 4.0 5.3 2.9 3.5 5.6 12.2** 10.4 11.5**




Carbon emissions

Scenario parameter 2012 2020

2050

Basic

100%

RE

2050

Basic

Low

Nuclear

2050

Basic

Medium

Nuclear

2050

Basic

New

Nuclear

2050

Low

Biomass

100% RE

2050 Low

Biomass

Low

Nuclear

2050

Low

Biomass

Medium

Nuclear

2050

Low

Biomass

New

Nuclear

2050

BAU

CO₂ -equivalent

emissions Mt48.15 48.97 0.20 0.21 0.22 0.26 0.17 0.25 0.24 0.27 25.10

Cost of CO₂ -

equivalent

emissions (MEUR)

289 1224 15 16 17 19 13 19 18 20 1882

Renewables share of

primary energy (%)33 34 100 89 81 74 100 89 82 75 43

Key insight:

• Future aim should be virtually zero emissions from energy sector

• Denmark has goal of zero emissions from power sector by 2035 and zero emissions from all

energy sectors by 2050

• Small amounts shown in table from non-biogenic component of waste




Agenda


Methods

Main results







A 100% renewable energy system seems possible for Finland, given the assumptions made in this study

The 100% RE scenarios are highly cost competitive

High level of energy independence seems achievable

Prominent roles of renewable energy and energy storage solutions should be considered in all future modelling

Opportunities exist for increased domestic investment and RE-based employment

Flexibility should be a defining feature of future energy systems

100% RE should be an equal partner in all future discourse regarding the Finnish energy system

Further study is needed related to how people will choose to live, how they will perceive risk and the role of energy in their lives (Futures Research) in order to hone the technical requirements of the energy system used in modelling




Agenda


Methods

Main results






Questions of comments?

NEO-CARBON Energy project is one of the Tekes strategy research openings

and the project is carried out in cooperation with Technical Research Centre of

Finland VTT Ltd, Lappeenranta University of Technology (LUT) and University

of Turku, Finland Futures Research Centre.

Thank you

FURTHER INFORMATION




Inputs + Strategy = Outputs

• Developed in 1999 at

Aalborg University in

Denmark

• Widely used and respected

• Energy system analysis

carried out in hourly steps

for one year

• Model includes analysis of

electricity, heating and

transport sectors

• Results form basis of

technical regulation and

market optimization

strategies

• Main aim is to assist in the

design of national energy

planning strategies

• Model can also be applied on

larger and smaller scales

• Free download from






Flows of energy - 2012




Flows of energy – Basic 100% RE scenario




Flows of energy – Low Biomass 100% RE scenario




Flows of energy – BAU scenario




Breakdown of annualized investment costs

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2012 2020 2050 Basic100% RE

2050 Basic LowNuclear


2050 Basic NewNuclear

2050 LowBiomass 100%

RE

2050 LowBiomass Low

Nuclear


2050 LowBiomass New

Nuclear

2050 BAU

Small CHP units Large CHP units Large Power Plants Wind Wind offshore Photovoltaic

River of hydro Nuclear BioJPPlant CO2Hydrogenation Chemical Sythesis Electricity grid

District heating grid District heating substations EV batteries EV charging station Individual oil boilers Individual NG boilers

Individual biomass boilers Inidividual heat pumps Individual electric heat Gas grid Other





Category

Full load hours

2012 2020

2050

Basic

100%

RE

2050

Basic

Low

Nuclear

2050 Basic

Medium

Nuclear

2050

Basic

New

Nuclear

2050 Low

Biomass

100% RE

2050

Low

Biomass

Low

Nuclear

2050 Low

Biomass

Medium

Nuclear

2050 Low

Biomass

New

Nuclear

2050 BAU

Wind onshore 2800 2819 2816 2816 2816 2816 2816 2816 2259 3031 2817

Wind offshore - 4278 4280 4280 4280 4280 4280 4280 4280 4280 4280

Solar PV 1000 1000 982 982 982 982 981 981 981 981 980

Hydro - Run of river 6424 6403 6123 6123 6123 6123 6123 6123 6123 6123 6123

CHP - District Heating 4106 3834 1641 1516 1124 916 812 876 891 718 2773

Condensing 2900 6020 - - - - - - - - 2687

Nuclear 8025 7749 - 7963 7964 7963 - 7963 7964 7963 7963

PtG (CH₄) - - 2583 2500 2667 2222 2333 2500 2692 2083 6000

PtG (H₂) - 3521 3509 3509 3509 3509 3509 3509 3509 3509 3509

Key insight:

• Low full load hours for thermal plants and PtG are problematic in some scenarios

• Synthetic gas production may also be needed for non-energy purposes





− Cost of bioenergy is dependent on the form

− Waste is assumed to be free

− Agricultural residues have little market value currently and will likely remain half

the price of energy wood

− Estimated biomass price is 22 €/MWh in 2050 (plus 5-11 €/MWh handling)

− Stumpage price currently 2 €/MWh

− Price to customer currently 9-23 €/MWh*

− Stricter sustainability criteria could raise this to about 50 €/MWh*

− Energy wood price highly unlikely to exceed 50 €/MWh in 2050

− Likely to be convergence between the price of energy wood and the price of

pulpwood (stumpage price currently about 12 €/MWh)

*Sikkema et al. Mobilization of biomass for energy from boreal forests in Finland & Russia under present sustainable forest management certification and new sustainability requirements for solid biofuels. Biomass and Bioenergy 71 (2014) 23-26





2012 (TWhth)

2050(TWhth)

Biomass for heat and power 36 68

Biomass for small-scale housing 18 18

Industrial liquors for energy generation

38 38

Agricultural residues for energy generation

n.a. 21

Total biomass 92 145

• 2050 assumptions based on 88 Mm³ annual

harvesting –i.e., less than current annual

increment

• Low biomass scenarios developed which utilize

less than current amount of forest biomass

1 Mm³ = 2 TWh = 7.2 PJ




Fuel use - IndustryKey insights:

• Some shift from manufacturing to services

• Increased efficiency in industrial processes

• Industrial demand may be most rigid

• Opportunities also for Power-to-Chemicals

0

20

40

60

80

100

120

140

2012 2020 2050 Basic100% RE

2050 BasicLow

Nuclear


2050 BasicNew

Nuclear


2050 LowBiomass

LowNuclear


2050 LowBiomass

NewNuclear

2050 BAU

Fu

el u

se -

Ind

ust

ry (

TW

hth

)

Biomass

Natural gas/Grid gas

Oil

Coal/Peat




Fuel use - Transport

Key insights:

• Electrification of transport leads to

significant gains in efficiency

• Domestic biofuel production offers huge

business potential

0

10

20

30

40

50

60

70

2012 2020 2050 Basic100% RE

2050 BasicLow Nuclear


2050 BasicNew Nuclear


2050 LowBiomass Low

Nuclear


2050 LowBiomass New

Nuclear

2050 BAU

Fu

el u

se -

Tra

nsp

ort

(T

Wh

th) Biofuels

Electricity

Hydrogen

Natural gas

Petrol

Diesel

Jet fuel




Main cost assumptions

Cost assumptions Cost category UnitFinland 2020 Finland 2030 Finland 2050

Value Value Value

Wind - onshore Capex €/kWe 1100 1000 900

Lifetime Years 20 25 30

Opex fixed % of capex 4.26 % 4.37 % 4.51 %

Wind - offshore Capex €/kWe 2500 2100 1800



Solar PV - ground-mounted Capex €/kWe 900 550 300



Solar PV – rooftop Capex €/kWe 1200 700 400



Hydropower - Run of the river Capex €/kWe 2750 2860 3060



Economic calculations based on 7% Weighted Average Cost of Capital (WACC)






Value Value Value

Renewable Energy

Biomass gasification plant Capex €/kWth 420 420 300



Biodiesel plant Capex €/kWth 3420 3080 2770



Biopetrol plant Capex €/kWth 790 710 640



CO₂ Hydrogenation plant (P2G) Capex €/kWth 1750 970 870



Biogas plant Capex €/kWth input 240 216 194



Biogas upgrading Capex €/kWth 300 270 240



Gasification gas upgrading Capex €/kWth 300 270 240








Value Value Value

Thermal Plants

Heat pump for DH and CHP Capex €/kW_e 3430 2970 2220



Large CHP plant Capex €/kW_e 820 820 820



DH/CHP boiler Capex €/kWth 100 100 100



Condensing plant (average) Capex €/kW_e 1000 1000 1000



Waste CHP plant Capex €/kWth input 0.216 0.216 0.216



Nuclear Capex €/kW_e 5500 6000 6500








Value Value Value

Storage systems

Heat storage DH Capex €/kWth 3 3 3



Grid gas storage Capex €/kWth 0.05 0.05 0.05



Lithium ion stationary Capex €/kWh_e 300 150 75



Lithium ion BEV Capex €/kWh_e 200 150 100








Value Value Value

Infrastructure

District heating grid Capex €/MWhth 72 72 72



District heating substation - Residential Capex €/connection 6200 5600 5000



District heating substation- Commercial Capex €/connection 21500 21500 21500



District cooling network Capex €/MWth 600000 600000 600000



Key comment:

• The importance of transparency of all assumptions is critical

• Disagreement over assumptions can provide the basis of progressive discussion

• This must be the new standard in Finland

• Too many reports and documents lack this transparency




Further cost assumptions

Cost assumptions UnitFinland 2020 Finland 2030 Finland 2050

Value Value Value

Fuel

Coal/Peat €/MWh 11.16 11.52 12.24

Oil €/MWh 42.84 47.88 57.96

Oil USD/bbl 107.40 118.90 142.00

Diesel €/MWh 54.00 59.76 70.56

Petrol €/MWh 54.72 60.12 70.92

Jet fuel €/MWh 57.96 63.36 74.16

NG €/MWh 32.76 36.72 43.92

Liquid biofuels €/MWh 84.78 73.48 65.02

Biomass (weighted average) €/MWh 18.00 19.80 21.60

Straw €/MWh 14.04 15.48 18.36

Wood chips €/MWh 18.36 21.60 27.36

Wood pellets €/MWh 36.72 39.24 43.92

Energy crops €/MWh 16.92 18.72 22.68

Uranium (Including handling) €/MWh 5.40 6.48 7.56





Cost assumptions Unit Finland 2020 Finland 2030 Finland 2050

Value Value Value

Fuel handling (storage, distribution and refining)

Fuel oil to central CHP and PPs €/MWh 0.943 0.943 0.943

Fuel oil to industry and DH €/MWh 6.858 6.858 6.858

Diesel for transportation €/MWh 9.767 9.767 9.767

Petrol / Jet fuel for transportation €/MWh 7.502 7.502 7.502

NG to central CHP and PPs €/MWh 1.483 1.483 1.483

NG to industry and DH €/MWh 7.380 7.380 7.380

NG for transportation €/MWh 11.326 11.326 11.326

Biomass to conversion plants €/MWh 5.688 5.688 5.688

Biomass to central CHP and PPs €/MWh 5.688 5.688 5.688

Biomass to industry and DH €/MWh 4.270 4.270 4.270

Biomass to individual households €/MWh 10.746 10.746 10.746

Biomass for transportation (biogas) €/MWh 4.270 4.270 4.270





Carbon content in the fuels

Coal / Peat kg CO₂eq/MWh 363.60 363.60-381.24* 381.24

Oil kg CO₂eq/MWh 283.68 283.68 283.68

NG kg CO₂eq/MWh 198.14 198.14 198.14

Waste

(related to inorganic portion)kg CO₂eq/MWh 114.48 114.48 114.48

Solid biomass kg CO₂eq/MWh 396.0 396.0 396.0

* Emission factor will depend on share of each fuel.

Environment

Vision and initial feasibility of a recarbonised Finnish energy system for 2050