In the past few years, nuclear concerns, rising oil prices, and a growing understanding of our environmental impact has given energy issues a higher profile worldwide. In this report on the Continental Nordic countries, we look at the efforts being made in much of the Nordic region to secure a sustainable energy supply for the future and at the extent to which the innovative solutions of these countries can be exported around the globe.
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| Vestas V112 3.0-MW turbine. Courtesy: Vestas Wind Systems A/S |
The Nordic region—Norway, Sweden, Denmark, Finland, and Iceland—has always been famous for its darker inclinations. Norse mythology, defined as it is by the ultimate “destruction of the gods,” or “Ragnarök,” inspired Richard Wagner’s brooding Ring Cycle operas and, in more recent times, the tuneless angst of Scandinavia’s own black metal. Then there is the sinister genre of crime fiction that, thanks to Stieg Larsson, has become one of Sweden’s most famous exports. All convey an image of a region whose culture matches its extended gloomy winters.
In an age characterized by growing concerns over energy and environmental issues, however, the Nordic countries are gaining a reputation for something altogether more uplifting than short days and long winters. They are taking an indubitable lead in the international push toward more efficient energy consumption and power generated from more sustainable sources. The 22% of electricity supply that Denmark harnesses from wind power is the highest proportion in the world. Sweden already generates approximately 97% of its electricity from carbon-neutral sources, Norway generates 98.8% of its power from hydro, and Finland generates 29.5% from renewable sources.
In addition to making the most of available resources, the northern climate has arguably played a role in motivating these developments, as long cold winters require significant amounts of energy for heating and lighting.
The most impressive example of Nordic excellence in the energy sector, and arguably the foundation upon which recent innovation has been based, is the Nord Pool network. Created in 1993 as a small spot market for surplus power in Norway, it is now the world’s only multinational exchange for trading electricity, incorporating Norway, Sweden, Denmark, and Finland. In 2010 the Nord Pool Spot traded 307 TWh of electricity on a day-ahead and intraday basis, and this ease of access to the electricity market plays a large role in allowing its participants to invest in new and often intermittent sources of power generation.
Though the Nordic countries have established a strong position in the global energy sector, what is more inspiring is how they are building on these foundations. Finland’s government pushed through its Long-term Climate and Energy Strategy in 2008. Under this policy, the share of renewable energy in the country is set to increase to 38% by 2020. To achieve this target, a feed-in tariff scheme is now supporting power generation from renewable sources such as biomass, waste, and wind. Sweden’s 2009 Energy Policy puts forward objectives such as consuming 50% renewable energy by 2020, a 40% reduction in greenhouse gas emissions by 2020, and no net emissions of greenhouse gases in the atmosphere by 2050. More recently, Denmark has put forward its 2050 Strategy; although details have not yet been clarified, there is broad political support for making Denmark independent of fossil fuels by 2050.
To put the scale of this ambition into context, the European Union (EU) 2020 Plan aims to reduce greenhouse gas emissions by 20% compared to 1990 levels (and by 30% if other developed countries make similar commitments) and increase the share of renewables in energy generation to 20%. Though this is a significant increase from the 6% of renewable energy generation that is the current average among the 27 EU countries (EU 27), it is lower than current levels in all the Nordic countries.
Given the Nordic countries’ experience with renewables, they are now looking at how to export their expertise and success. With the majority of the world’s countries facing the same questions of energy security and the same concerns over their carbon footprint, Nordic models may offer solutions for the international community.
This report looks at just the continental Nordic countries, as they share grid interconnections. Because EU carbon-reduction goals strongly influence national policy, Norway is treated in its own section, as it is not a member of the EU 27.
Wind Power
Although the windmill has existed in central and south Asia for well over a millennium, the modern wind turbine was born in Denmark. (For details of wind turbine technology development, see “Changing Winds: The Evolving Wind Turbine” in our April issue or our archives at http://www.powermag.com.) The 1890s saw the Danish inventor Poul la Cour experimenting with electricity-generating wind turbines, and the modern industry was kick-started by Danish manufacturers such as Vestas, Nordtank, and Bonus Energy.
Today, Vestas is the largest turbine manufacturer in the world, having acquired Nordtank in 2004 and having installed throughout its history 44,000 MW of wind power—roughly a quarter of the world’s total installed capacity. Bonus Energy attracted the attention of Siemens, which acquired it in 2004 to form the core of the Siemens wind power division.
Even foreign companies with no previous ties to Denmark have chosen to establish a presence in the country. “Denmark is where the wind industry grew up,” said Simon Chau, CFO, Europe, of Suzlon, one of the largest wind turbine manufacturers in the world. Despite being headquartered in India, Suzlon has used Denmark as its springboard to the international market. “There is a lot of technology here and a local knowledge base. Today the big three—Vestas, ourselves, and Siemens —all have substantial interests in Denmark because of the availability of expertise and knowledge.”
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| Simon Chau, CFO Europe of Suzlon |
This intellectual capital dominance persists, despite increasing competition from economies such as China. LM Wind Power, the world’s largest supplier of blades and components to the wind industry, pioneered the use of fiberglass in the construction of rotors, developed the GloBlade concept (increasing annual energy production by up to 5%), and recently announced the world’s largest wind turbine blade: 73.5 meters (241 feet). The latest turbine announced by Vestas has a nominal capacity of 7 MW and a diameter of 164 meters—large enough to fit four A380 Airbuses within its span. Across all of its product range, Vestas can now provide a guarantee of 97% turbine availability, an achievement unrivalled in the industry.
Manufacturers of smaller turbines are also able to carve out a niche due to innovation and technical expertise. Companies like Norwin, a Danish producer of small to midsize wind turbines, are looking to cater to applications where large rotors are unfeasible and large production unnecessary (Norwin’s integration of turbines into the iconic Bahrain World Trade Center building in Bahrain serves as an example).
Outside of Denmark, Sweden’s Vertical Wind and Finland’s Darrox are extolling the virtues of vertical axis wind turbines, one of several options in the focus on gearless wind turbines. Although not enjoying the same reputation in this field as their southern neighbor, Sweden and Finland both have important ambitions in the field of wind power generation. According to figures released by the European Wind Energy Association (EWEA), Sweden’s wind power capacity increased by a hugely significant 38.7% in 2010, a figure representing 308 new turbines with a capacity of 574 MW. Overall, Sweden’s installed wind power capacity jumped up to 2,163 MW. The country plans to achieve total wind power production of 30 TWh—of which 20 TWh is to be onshore and 10 TWh offshore—by 2020. Figures from the Swedish Energy Agency, however, show that in 2009, wind power generation in Sweden was just 2.5 TWh.
In order to attract further investment into the sector and promote growth, a common market for green certificates will be operating in Sweden and Norway beginning in January 2012. “The green certificate common market with Norway is another important step in the right direction. I think that we will achieve its 26.4 TWh generation target by 2016 or 2017,” said Gert-Olof Host, managing director of Triventus, a Swedish company with big plans to capitalize on this quick development.
As Holst pointed out, the company “is gearing up to install between 50 and 70 wind turbines every year from 2013 onwards—up from the 25-ish we put up every year at the moment.”
Wind power generation is also set to experience fast growth in Finland. That country aims to produce 6 TWh from wind power by 2020, corresponding to an installed capacity of around 2,500 MW. According to the EWEA, Finland had 197 MW of installed wind power at the end of 2010. In order to close the gap between reality and ambitions, the Finnish government introduced a feed-in tariff scheme at the beginning of 2011. That program equates to a total subsidy amount of €400 million ($577 million) a year. As soon as the subsidy came into effect, investors rushed to the country. “Finland is already sold out,” stated Markku Tarkiainen, CEO of Intercon Energy, a service company in the wind power market, emphasizing the interest that Finland’s wind power plans are raising among investors and developers. “At the moment, there are development plans for 10,000 MW; just a quarter of them will be realized.”
Local wind turbine manufacturers are gearing up to cope with the expanding demand. WinWinD, a Finnish-Indian group based in Helsinki, plans to launch a new-generation 3-MW wind turbine by the end of 2012. One of the country’s largest start-ups, Mervento, should be rolling out its first wind turbine, a product tailored for the needs of the 4- to 5-MW segment, by the end of the same year. “At the moment, our main focus is on Finland,” commented Guru Vijendran, CEO of WinWinD (Figure 1). “The national targets are ambitious and the feed-in tariff scheme has finally been introduced. I cannot see any reason why we should not get a significant share of the Finnish market. We have been in the market for 10 years, our turbines are already up and running out in the field, and our customers are planning to expand.”
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| 1. Rotor installation at Ajos Wind Park in Kem, Finland. Courtesy: WinWinD |
Mervento is similarly excited about the potential of the Finnish market. “As a start-up, first we have to establish our presence in the home market,” explained Patrik Holm, the company’s CEO. “I do not think that anyone can be a global player without being strong in his home market. We need to build Mervento’s track record by putting up hundreds of turbines here in Finland.”
Both companies are looking at Finland as a springboard to international markets. WinWinD also hopes to leverage the contacts network of Siva Group, its major Indian shareholder, to grow in the Indian market, and a local production facility has already been established in Chennai. For the time being, Mervento, taking a different approach, does not plan to establish its own production capacity abroad. Its strategy relies on being a “globally local” company, expanding abroad through licensing agreements and joint ventures.
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