How did Europe end up in the energy crisis? Was the energy crisis caused by the prevailing war situation, or are there other reasons behind it? The controversy around green energy has been going on for three decades. What is ultimately classified as green energy in the EU has been more politics than fact-based science.
Electricity consumption in Europe has grown steadily, but in Finland, electricity consumption has remained almost unchanged over the past twenty years, 80–90 TWh per year. The biggest change has been in electricity production. Now, we are more dependent on imported electricity than we were at the beginning of the millennium. The biggest change of all has been in the EU electricity market.
Electricity has changed from a socially necessary critical factor in the security of supply to a raw material purchased from the stock exchange. As a raw material, the cost of which is determined by supply and demand. The stock exchange has functioned when consumption and production have been mainly in balance.
The exchange price of electricity is determined by supply and demand like other raw material markets – apart from the top ceiling price of EUR 5000 per MWh. This was originally a theoretical ceiling and was never believed to be reached.
The whole of Western Europe has relied on the availability of electricity. In energy solutions, the cheapest electricity has been found on the stock exchange. Now the electricity market has been extensively integrated, and it sells a lot of cheaper electrical energy from outside the EU, which has been produced, for example, in Russia. In the risk assessments, the restrictions related to the availability of electricity have only been directed at weather conditions before the changes in 2022.
Finland’s 110 kV, 220 kV and 400 kV electricity networks cover the whole of Finland geographically. Preparations for changing weather conditions are made by digging a lower-voltage distribution network underground. The electricity network is functional, and the electricity consumption structure in Finland did not change much, has it? At the same time, the production structure has changed considerably, and up to one-fifth of Finland’s electricity comes from imported electricity. In Europe more broadly, the share of imported electricity is considerably higher than in Finland.
Is electrification happening too quickly?
The green transition means practically the same thing as electrifying everything. In the past, several different alternatives were used for heating in Finland, and electric heating was not considered an energy-efficient solution due to the energy transmission and production efficiency of electricity.
Electricity transmission technology has not changed much in decades, but electricity has become a green option. Ground source heat and air source heat pumps are based on electricity in an even more energy-efficient way, i.e., for every kWh of electricity consumed, more heating power can be extracted. Electricity has been a simple solution to all problems. Electricity is odorless, tasteless, and invisible, regardless of how it is produced at the starting point of the cables. Electricity travels in the network from the production point to the consumer. Where the electricity is produced and where it is consumed is impossible to say unless it is supplied in separate production networks.
How to ensure that a consumer or company that has purchased green electricity receives electricity produced with green energy would require much more measures, where sustainability certification should be developed further and more dynamic. This can be solved between companies, markets, and regulation.
Challenges arise from politics. Whether the electricity is produced with green energy or not is determined simply by negotiating in the meeting room.
What counts as green energy?
Is electricity produced with nuclear power, natural gas, biofuel, wood, peat, sun, wind, and hydropower green? Depends on the time, the questioner, and the respondent. This does not really have a clear definition.
The renewability of energy will be examined. What is the time span of regeneration, when the tree grows to its full size in a few decades, and natural gas, on the other hand, over tens of thousands of years in the depths of the earth. This is one of the major reasons why the EU is now in an energy crisis. Electricity has become a tool for politicians to wield power. Electricity has shaped the country-specific price competition in the EU’s internal market, and even when war breaks out, it has not been possible to achieve a clear, fully common understanding of it throughout the EU.
For the past two decades, electricity reforms have been driven by changes related to heating. Next, a similar reform will apply to transport. EU regulation is accelerating the electrification of cars, and industry is becoming more dependent on electricity. Often, other raw materials were used in industrial production, and the resulting energy side streams resulted in an additional energy surplus. Now this industry has partly moved away from Europe and the remaining industry has electrified its production. To curb consumption, solutions are sought in automation, energy efficiency and regulation.
Electricity-related infrastructure changes
The electrification of cars poses new challenges in tens of thousands of housing companies and commercial properties in Finland alone. Long distances also require new charging points on the roadsides, as most electric cars do not travel especially in cold weather more than 300-400 km at most.
Society depends on cars whose need for charging infrastructure is growing rapidly. Building infrastructure requires significant investments in charging devices and significantly better cabling for properties. If all cars were rechargeable now, the grid would not be ready. At the same time, the electricity production capacity would not be sufficient in any way in Finland or Europe to cover demand, and the price on the EU electricity exchange would be constantly capped at EUR 5,000 per MWh.
Significant changes have also been experienced in the renewal of the electricity production structure. As the price of electricity has risen, more and more consumers and companies have become electricity producers themselves. After a long wait, the legislation makes it possible to sell the electricity of a small producer not only to network companies.
The electricity produced in the same property can be consumed in the same place, and the electricity does not first have to be sold to the network company, which sells it back to other shareholders or residents of the local property. This will enable new types of business models and the entire structure of the electricity grid will begin to change for more consumer-oriented distributed electricity generation. This again creates new technological challenges for the management of the entire power grid. The renewed production structure is weather dependent and renewable electricity production requires new types of storage solutions, as electricity consumption and production must always be in balance. If production is cut off, it’s only seconds before the electricity goes out.
What if?
Electrification has left many things unthinkable. The video link shows one new way to approach the electrification of cars: https://www.youtube.com/watch?v=oTXptUuKGrc Should we have thought about how the distribution of transport fuel works now? Would it have been worth standardizing battery technology first and then creating a centralized battery replacement infrastructure? At the same time, it would at least have avoided the duplication and parallel construction of a huge charging infrastructure at millions to tens of millions of points in the EU alone. Now the EU decided to standardize the USB-C charging system a couple of decades later, when the entire charger infrastructure had become very confusing. Nokia made a choice about the policy of a single charger solution twenty years before the EU, and even then, the same reasons were behind it.
The lack of understanding and indecision of the big picture, the lack of appropriate regulation and standardization ultimately lead to chaos. We are in a crisis with electrification and repairs will take time.
Electricity is to society like blood in human blood vessels
Electricity is not a raw material, even though it has now been turned into an EU-wide commodity to be sourced from the stock exchange. Electricity is a necessity for society to maintain viability. In Finland, there was still a few decades back, a wider regional availability of backup power. Regional industry was able to produce electricity with energy side streams, municipalities were better prepared and more self-sufficient in terms of the energy balance. Now some municipalities have sold their energy companies, and some have stopped maintaining backup power solutions, as this is not economically viable. Neither nationally nor EU-wide, models suitable for backup power capacity have been formed to replace the change. What a futile thing when electricity comes from the end of the wire always, enough, and cheaply!
Socially, backup power contributed to the fact that we were not as vulnerable to access to electricity. The availability of electricity has been at a high SLA level, and we have very rarely had electricity distribution disruptions. Households have not needed UPS or generators to ensure the availability of electricity due to uncertainties. In contrast, in emerging markets, everyone has had their own backup power solutions acquired, if only they could afford to invest in them. Now in Finland, the backup generator shelves are empty.
In terms of legislation, we have been more cautious in Finland than in the rest of Europe. We have a security of supply approach in place for critical functions of society. In these activities, preparations have been made and the requirements related to preparedness have been extended to them based on legislation and regulations. This has ensured the supply of electricity to hospitals, telecommunications, water supply, even food logistics, airports and ports, and the maintenance of functions of other importance to society. Here, fortunately, Finland is much more reserved than the average European society.
Have we still done enough? For example, in the construction of telecommunications networks, we have stricter regulations than the rest of Europe. Access points must have stricter reservation regulations than global industrial standards. Battery backups must last for the base station for three hours than elsewhere the requirement is lower. In Finland, these are tested and checked more often, while in other parts of the world, to save costs, even basic standards are not followed. This can be seen even in the EU, where indecision, slowness in taking a decision and, ultimately, compliance are not equal.
Is enough demanded in Finland? As an example, if there are regular power outages in the network two hours a day, and the first outage is at the end of the first day, and the second at the very beginning of the next day. Three hours of battery charge and 48 hours of recharging are required. Batteries haven’t had time to recharge. The integration of the physical and digital worlds, the interdependence between electricity and telecommunications, creates completely new challenges for society and significantly new requirements for regulation, standards, and quality development. This is no longer something that society solves but must also be solved in each company and organization itself.
Electricity consumption in Europe has grown steadily, but in Finland, electricity consumption has remained almost unchanged over the past twenty years, 80–90 TWh per year. The biggest change has been in electricity production. Now, we are more dependent on imported electricity than we were at the beginning of the millennium. The biggest change of all has been in the EU electricity market.
Electricity has changed from a socially necessary critical factor in the security of supply to a raw material purchased from the stock exchange. As a raw material, the cost of which is determined by supply and demand. The stock exchange has functioned when consumption and production have been mainly in balance.
The exchange price of electricity is determined by supply and demand like other raw material markets – apart from the top ceiling price of EUR 5000 per MWh. This was originally a theoretical ceiling and was never believed to be reached.
The whole of Western Europe has relied on the availability of electricity. In energy solutions, the cheapest electricity has been found on the stock exchange. Now the electricity market has been extensively integrated, and it sells a lot of cheaper electrical energy from outside the EU, which has been produced, for example, in Russia. In the risk assessments, the restrictions related to the availability of electricity have only been directed at weather conditions before the changes in 2022.
Finland’s 110 kV, 220 kV and 400 kV electricity networks cover the whole of Finland geographically. Preparations for changing weather conditions are made by digging a lower-voltage distribution network underground. The electricity network is functional, and the electricity consumption structure in Finland did not change much, has it? At the same time, the production structure has changed considerably, and up to one-fifth of Finland’s electricity comes from imported electricity. In Europe more broadly, the share of imported electricity is considerably higher than in Finland.
Is electrification happening too quickly?
The green transition means practically the same thing as electrifying everything. In the past, several different alternatives were used for heating in Finland, and electric heating was not considered an energy-efficient solution due to the energy transmission and production efficiency of electricity.
Electricity transmission technology has not changed much in decades, but electricity has become a green option. Ground source heat and air source heat pumps are based on electricity in an even more energy-efficient way, i.e., for every kWh of electricity consumed, more heating power can be extracted. Electricity has been a simple solution to all problems. Electricity is odorless, tasteless, and invisible, regardless of how it is produced at the starting point of the cables. Electricity travels in the network from the production point to the consumer. Where the electricity is produced and where it is consumed is impossible to say unless it is supplied in separate production networks.
How to ensure that a consumer or company that has purchased green electricity receives electricity produced with green energy would require much more measures, where sustainability certification should be developed further and more dynamic. This can be solved between companies, markets, and regulation.
Challenges arise from politics. Whether the electricity is produced with green energy or not is determined simply by negotiating in the meeting room.
What counts as green energy?
Is electricity produced with nuclear power, natural gas, biofuel, wood, peat, sun, wind, and hydropower green? Depends on the time, the questioner, and the respondent. This does not really have a clear definition.
The renewability of energy will be examined. What is the time span of regeneration, when the tree grows to its full size in a few decades, and natural gas, on the other hand, over tens of thousands of years in the depths of the earth. This is one of the major reasons why the EU is now in an energy crisis. Electricity has become a tool for politicians to wield power. Electricity has shaped the country-specific price competition in the EU’s internal market, and even when war breaks out, it has not been possible to achieve a clear, fully common understanding of it throughout the EU.
For the past two decades, electricity reforms have been driven by changes related to heating. Next, a similar reform will apply to transport. EU regulation is accelerating the electrification of cars, and industry is becoming more dependent on electricity. Often, other raw materials were used in industrial production, and the resulting energy side streams resulted in an additional energy surplus. Now this industry has partly moved away from Europe and the remaining industry has electrified its production. To curb consumption, solutions are sought in automation, energy efficiency and regulation.
Electricity-related infrastructure changes
The electrification of cars poses new challenges in tens of thousands of housing companies and commercial properties in Finland alone. Long distances also require new charging points on the roadsides, as most electric cars do not travel especially in cold weather more than 300-400 km at most.
Society depends on cars whose need for charging infrastructure is growing rapidly. Building infrastructure requires significant investments in charging devices and significantly better cabling for properties. If all cars were rechargeable now, the grid would not be ready. At the same time, the electricity production capacity would not be sufficient in any way in Finland or Europe to cover demand, and the price on the EU electricity exchange would be constantly capped at EUR 5,000 per MWh.
Significant changes have also been experienced in the renewal of the electricity production structure. As the price of electricity has risen, more and more consumers and companies have become electricity producers themselves. After a long wait, the legislation makes it possible to sell the electricity of a small producer not only to network companies.
The electricity produced in the same property can be consumed in the same place, and the electricity does not first have to be sold to the network company, which sells it back to other shareholders or residents of the local property. This will enable new types of business models and the entire structure of the electricity grid will begin to change for more consumer-oriented distributed electricity generation. This again creates new technological challenges for the management of the entire power grid. The renewed production structure is weather dependent and renewable electricity production requires new types of storage solutions, as electricity consumption and production must always be in balance. If production is cut off, it’s only seconds before the electricity goes out.
What if?
Electrification has left many things unthinkable. The video link shows one new way to approach the electrification of cars: https://www.youtube.com/watch?v=oTXptUuKGrc Should we have thought about how the distribution of transport fuel works now? Would it have been worth standardizing battery technology first and then creating a centralized battery replacement infrastructure? At the same time, it would at least have avoided the duplication and parallel construction of a huge charging infrastructure at millions to tens of millions of points in the EU alone. Now the EU decided to standardize the USB-C charging system a couple of decades later, when the entire charger infrastructure had become very confusing. Nokia made a choice about the policy of a single charger solution twenty years before the EU, and even then, the same reasons were behind it.
The lack of understanding and indecision of the big picture, the lack of appropriate regulation and standardization ultimately lead to chaos. We are in a crisis with electrification and repairs will take time.
Electricity is to society like blood in human blood vessels
Electricity is not a raw material, even though it has now been turned into an EU-wide commodity to be sourced from the stock exchange. Electricity is a necessity for society to maintain viability. In Finland, there was still a few decades back, a wider regional availability of backup power. Regional industry was able to produce electricity with energy side streams, municipalities were better prepared and more self-sufficient in terms of the energy balance. Now some municipalities have sold their energy companies, and some have stopped maintaining backup power solutions, as this is not economically viable. Neither nationally nor EU-wide, models suitable for backup power capacity have been formed to replace the change. What a futile thing when electricity comes from the end of the wire always, enough, and cheaply!
Socially, backup power contributed to the fact that we were not as vulnerable to access to electricity. The availability of electricity has been at a high SLA level, and we have very rarely had electricity distribution disruptions. Households have not needed UPS or generators to ensure the availability of electricity due to uncertainties. In contrast, in emerging markets, everyone has had their own backup power solutions acquired, if only they could afford to invest in them. Now in Finland, the backup generator shelves are empty.
In terms of legislation, we have been more cautious in Finland than in the rest of Europe. We have a security of supply approach in place for critical functions of society. In these activities, preparations have been made and the requirements related to preparedness have been extended to them on the basis of legislation and regulations. This has ensured the supply of electricity to hospitals, telecommunications, water supply, even food logistics, airports and ports, and the maintenance of functions of other importance to society. Here, fortunately, Finland is much more reserved than the average European society.
Have we still done enough? For example, in the construction of telecommunications networks, we have stricter regulations than the rest of Europe. Access points must have stricter reservation regulations than global industrial standards. Battery backups must last for the base station for three hours than elsewhere the requirement is lower. In Finland, these are tested and checked more often, while in other parts of the world, to save costs, even basic standards are not followed. This can be seen even in the EU, where indecision, slowness in taking a decision and, ultimately, compliance are not equal.
Is enough demanded in Finland? As an example, if there are regular power outages in the network two hours a day, and the first outage is at the end of the first day, and the second at the very beginning of the next day. Three hours of battery charge and 48 hours of recharging are required. Batteries haven’t had time to recharge. The integration of the physical and digital worlds, the interdependence between electricity and telecommunications, creates completely new challenges for society and significantly new requirements for regulation, standards, and quality development. This is no longer something that society solves but must also be solved in each company and organization itself.