Capital expenditure

1.1.2 Capital expenditure

Fingrid’s grid investment programme improves system security and promotes the electricity markets as well as the implementation of the national energy and climate strategy. The annual capital expenditure in the grid has remained extensive.

The company’s total capital expenditure in 2016 amounted to EUR 146.7 (147.5) million. Of that amount, a total of EUR 135.8 (138.4) million was invested in the transmission grid and EUR 3.3 (0.7) million in reserve power. ICT investments totalled EUR 7.5 (8.4) million. A total of EUR 2.4 (1.8) million was used for R&D projects during the year under review.

At the end of 2016, Fingrid had thirteen 400 kilovolt substation sites and 67 kilometres of 400 kilovolt power line contracts as well as a significant number of 110 kilovolt substation and power line projects under construction.

Fingrid’s all-time biggest investment, the 400 kilovolt ‘Coastal Power Line’ transmission connection from Pori to Oulu was completed at the end of 2016. With the completion of this power line on the western coast of Finland, there are now three 400 kilovolt transmission links connecting the northern and southern parts of the country. The project, which cost a total of EUR 260 million, was carried out according to plan over a span of ten years. The transmission link serves the wind farms that have been built in western coastal areas and which will be followed by more in the future. Several existing and planned nuclear power stations are also located close to this line. The new connection furthermore improves the cross-border transmission between Sweden and Finland. The investments carried out by Fingrid also help prepare for the new AC link to be built between the countries by 2025. Thanks to the Coastal Power Line, Finland’s future as a single price region is now more secure. The voltage upgrade will also decrease transmission losses. This multi-year project was a major challenge for both Fingrid personnel and our suppliers. The employment impact of the project amounted to approximately 1,000 man-years. A large part of the congestion income collected by Fingrid was allocated to this major investment.

Overall, the Coastal Power Line consisted of three extensive projects:

• A 400 and 110 kilovolt transmission line connection from Seinäjoki to Vaasa, and a new transformer substation in Nivala were completed in 2011.

• A 400 kilovolt connection from Ulvila to Kristinestad was completed in the second stage of the power line project October 2014.

• In the final phase, a 400 kilovolt power line connection from Kokkola (Hirvisuo) to Muhos (Pyhänselkä) was completed in late 2016.

Overall, the Coastal Power Line includes 380 kilometres of new 400 kilovolt power line, nine new substations and several smaller substation extensions. This provides 600–800 megawatts of entirely new transmission capacity between northern and southern Finland.

The roughly EUR 130 million modernisation project on Finland’s oldest transmission line, dubbed the ‘Iron Lady’ and running from Imatra to Turku, proceeded as planned during the year under review. The Hikiä–Forssa section of this major project was completed and commissioned in March. Modernisation of the Iron Lady continues between Lieto and Forssa. Work on the Yllikkälä–Koria section also started, between Lappeenranta and Kouvola. Furthermore, a decision was made to renew the transmission line between Hikiä and Orimattila and to build a new substation in Orimattila. The Iron Lady project is expected to be fully completed by 2020.

With the aim of securing the electricity supply for both residents of the Helsinki region and functions that are vital to society, Fingrid will reinforce the Espoo substation and the Länsisalmi substation in Vantaa. These substation upgrades and extensions, which cost nearly EUR 9 million for Espoo and roughly EUR 18.5 million for Vantaa Länsisalmi, started in 2016 and will be completed in 2017. The supply of electricity from the main grid to Helsinki and Vantaa takes place via the Länsisalmi and Tammisto transformer substations, serving around 800,000 people. Increasing electricity consumption and changes taking place in the production of electricity in Helsinki necessitate upgrades in supply capacity. The extension of the Espoo substation will improve the system security of the transmission facilities in western Uusimaa, the region west of the capital area. Local electricity production has decreased while consumption is constantly increasing.

Fingrid has, over the last two years, made major investments to develop the transmission grid in Lapland by building or upgrading a total of six substations. These measures were necessary due to increasing local consumption and due to new wind power capacity. During the year under review, the substation at Vajukoski and Petäjäskoski received new transformers and the existing systems were upgraded and extended. The Vajukoski transformer substation, north of Sodankylä, serves both hydropower production and mining industry and links up with the Norwegian transmission grid via Ivalo. The Petäjäskoski transformer substation, a major link between Lapland’s 220 kilovolt and 400 kilovolt main transmission networks, also received an entirely new 220 kilovolt gas-insulated switchgear. Extensive upgrades were additionally carried out at the Taivalkoski and Ossauskoski substations. The total capital expenditure amounted roughly to EUR 43 million.

Several investment decisions were made during the year, many of which proceeded to the implementation stage.

The Inkoo substation that was built in the 1970s secures the electricity supply in western Uusimaa. An investment decision was made to modernise the ageing substation, and the project is due for completion in 2018. To secure the supply of electricity in the Hämeenlinna and Valkeakoski areas, Fingrid decided to modernise a 51-kilometre transmission line between the cities. Aged and worn out pylons and transmission lines will be dismantled and replaced with a new line. The project is due for completion in 2018.

Several of the investments are related to enabling or improving the operating conditions of industry. An upgrade on the Vuoksi substation and the roughly 24-kilometre Lempiälä–Vuoksi transmission line is planned between Lappeenranta and Imatra. The investment will be carried out sooner than originally planned, due to an extension to Kemira’s industrial plant in Joutseno, and it is due for completion in 2018. The electricity supply for the new bioproduct mill in Äänekoski will be secured with the construction of a new 110 kilovolt transmission line between Äänekoski’s Koivisto and Laukaa’s Vihtavuori substations, due for completion in late 2017. Olkiluoto’s 400 kilovolt switching station, which is outdated and has insufficient system security, will be modernised. The Olkiluoto substation is one of the most important grid nodes, with three nuclear power plants connected to it. The project is due for completion in 2019.

Fingrid’s Huutokoski reserve power plant will undergo a EUR 15 million upgrade. The Huutokoski plant, located in Joroinen, is one of the ten reserve power plants owned by Fingrid which are tasked to support a sufficient supply of electricity in Finland during major disturbances in the power system. The upgrade project includes the modernisation of obsolete systems to secure reliable operation for the next 20 years as well as significant environmental investments. The systems to be modernised include fuel tanks and fuel systems, extinguishing systems, the plant’s internal electrical and automation systems as well as the plant’s own reserve power systems.

In 2006, Fingrid launched a project aimed at building a complete, modern IT system to support asset management operations. Thanks to system integrations, all the master data of the transmission grid assets is now in a single application. The overall project combined both modern ICT technology and in-house knowledge, and transformed operational procedures. Thanks to advanced technology, significant efficiency improvements were achieved in asset management. The ELVIS IT system project tasked to support asset management and use of the assets was completed in 2016.

Major improvements have been achieved in the reliability of cross-border transmission connections and Fingrid now has more expert resources on DC transmission connections. A 24/7 back-up system was taken into use in HVDC operations as of the beginning of 2016. During the year under review, disturbance clearing has been accelerated, individual disturbances have been prevented proactively and measures to secure the reliability and availability of the HVDC connections have been implemented much faster than in previous years. The total duration of interruptions in 2016 remained at around 10% of the 2014 and 2015 levels. The number of interruptions was halved from 2014 and 2015.

By international standards, Fingrid’s maintenance management is world-class. The company was one of the best operators in the International Transmission Operations and Maintenance Study (ITOMS) for the 11th consecutive time. Lloyd's Register audited Fingrid’s asset management operations and awarded Fingrid a certificate for compliance with the ISO 55001 standard.

In 2016, Fingrid’s personnel had no accidents resulting in absence from work (2015: 1), in other words, the zero accidents target was achieved. Suppliers’ personnel had 12 (13) accidents resulting in absence from work, three of which resulted in an absence of more than 30 days. The suppliers’ and Fingrid’s combined accident frequency rate decreased somewhat from the previous year.

The occupational safety development project continued, with a focus on implementing occupational safety models and tools and improving safety attitudes. On-line training was introduced in early 2016 and used by more than 1,700 people during the year. A safety observation campaign was carried out with suppliers and Fingrid's own personnel. Work was also continued to develop a mobile reporting system for occupational safety, quality and environmental issues, on-line training and Fingrid’s safety management system.