Climate change and transformation of the energy system

Greenhouse gas emissions must be rigorously limited through global measures. The EU’s energy and climate policy, which is effective until 2030, is based on significant reduction targets for emissions, an increase in the share of renewable energy, and an improvement in energy efficiency. The climate agreement concluded in Paris is seen as a breakthrough in abating climate change. The energy industry plays a key role in combatting climate change.

The structure of electricity production will change as the share of renewable energy grows and adjustable fossil-fuel condensing power production decreases. Balancing supply and demand will be a challenge as condensing power declines, since its replacement power sources – wind and solar – do not react to market price signals. Various national subsidy mechanisms will disrupt the operations of the European electricity market.

Clean energy technology is globally one of the fastest growing industries. The target of a carbon-neutral society introduces opportunities to invest in and develop new forms of technology in the areas of, for instance, electricity storage, low-emissions production and emissions sequestration. The growth of renewable energy will bring new operators into the market. With the increase of decentralised production, the role of distribution network companies will grow in controlling the system. Co-operation between TSOs and distribution network companies will be increasingly important in future.

The transformation in the structure of electricity generation due to efforts to mitigate climate change will result in a scarcity of power, flexibility and system inertia (the force that keeps the power system from disintegrating and evens out rapid fluctuations in the system). The significance of demand-side management is increasing. Storms intensified by climate change may cause widespread and sustained damage to electrical networks. This requires a high level of preparedness from Fingrid, as part of continuity management.