The energy transition is a huge opportunity for Finland, and both central government and the private sector have woken up to these opportunities.
Why is hydrogen such an interesting substance from a clean transition perspective?
In Sitowise’ The Smart City Talks on April 25 2024, the topic was hydrogen. The hot topic was discussed by Mikko Heikkilä, Head of Strategic Grid Planning at Fingrid, Timo Ritonummi, Senior Ministerial Adviser at the Ministry of Economic Affairs and Employment, and Venla Saarela, Head of Unit at Gasgrid.
Hydrogen can be produced, for example, by electrolysis. Oxygen and hydrogen in water molecules are separated from each other by electrical energy. When the electricity needed for electrolysis is produced emission-free, the process does not produce greenhouse gas emissions or consume fossil resources.
However, cost-effective means must be found for producing, storing and distributing hydrogen. The production of hydrogen requires extensive electricity production, and in order to achieve climate goals, it must be possible to produce electricity cleanly. Large investments are needed, but getting financiers in a tight economic situation is not easy.
Launched in May 2022, REPowerEU helps the EU save energy, produce clean energy and diversify its energy supply. The REPowerEU plan was born in response to the difficulties caused by Russia's invasion of Ukraine and global energy market disruptions.
In March 2023, the EU agreed on stricter legislation to increase renewable energy capacity, increasing the EU's binding 2030 target to almost double the EU's current share of renewable energy.
- Hydrogen plays a role in replacing fossil-based hydrogen in industry, and it also serves as a solution in sectors where direct electrification is not possible, Saarela says.
According to some estimates, 14% of Europe's energy would flow in hydrogen in 2050. In Finland, too, the potential of hydrogen has been awakened both in central government and in the private sector. Hydrogen provides a lot of energy relative to its mass and has a high calorific value. This makes hydrogen an interesting alternative to fossil fuels.
- At the moment, the green transition project portfolio in Finland is EUR 260 billion. This means more than 500 projects, of which the hydrogen development project portfolio is approximately EUR 20 billion. The hydrogen project base has increased fivefold during the year, Saarela says.
Before hydrogen makes a breakthrough, there are several challenges to be solved on the tables. Cost-effective means must be found for producing, storing and distributing hydrogen. The production of hydrogen requires extensive electricity production, and in order to achieve climate goals, it must be possible to produce electricity cleanly. Large investments are needed, but getting financiers in a tight economic situation is not easy.
- Price will be one of the deciding factors. A hydrogen economy cannot be made if it cannot be implemented at a lower cost, says Ritonummi.
Developing a hydrogen economy requires costs in order to solve challenges such as hydrogen storage. At the same time, more expertise is needed.
- Promoting the hydrogen economy requires many different parties and cooperation. For example, the need for technical information is emphasised in land use and zoning, Saarela says.
- Clean electricity is the most important solution to climate change. That's what we know how to do, and we have the technology to do it. Clean electricity electrifies our society, in fact in all possible sectors, such as industry as well as transport and heating. This is a key formula for combating climate change, Heikkilä says.
On the other hand, investment decisions are few and far between, and hydrogen is not helpful in this acute situation.
- For example, in global warming over the next 15 years, hydrogen will not be a so-called "game changer" either globally or in the EU. In other words, we don't wait for hydrogen to solve things right now, Ritonummi says.
Fingrid's forecast for electricity consumption in 2023, including industry, transport and heating, is that hydrogen production will be the largest single component in which growth is seen.
- Over the past three to four years, we have tripled our grid investment programme for the next ten years. A strong main grid enables the transition and creates connection opportunities for industrial investments and clean electricity production. This is not the case more widely in Europe and there is scarcity in the main grids. This makes Finland attractive, Heikkilä says.
Finland aims for carbon neutrality by 2035 and a leading position in Europe's hydrogen economy.
- The current targets for 2025 are unrealistic and higher growth will occur after 2030. It also remains to be seen whether we will have the kind of pipeline network that has been planned now, because there is no consumption or production at the moment, Ritonummi ponders.
Heikkilä sees the energy transition as a huge opportunity for Finland.
- Europe and the global world have a huge demand for clean energy and also for these energy-intensive energy products. Finland has excellent opportunities to succeed in this, as we have great renewable energy resources.
- In order to benefit Finland, we should combine the production and consumption of hydrogen and utilise the electrolysis, i.e. heat, produced as a by-product. For this, we need infrastructure, Saarela says.
In April, Gasgrid published a preliminary plan for Finland's hydrogen backbone network at its Hydrogen-powered Finland stakeholder event. Gasgrid's hydrogen infrastructure development projects launched in the Baltic Sea regions ensure energy self-sufficiency and promote hydrogen economy investments in Finland.
- The hydrogen backbone network will develop in stages. Investments in hydrogen production and infrastructure will improve Finnish competitiveness by bringing jobs and sustainable well-being to the whole country, Saarela says.