The producers of aluminium are heavy users of electricity. Picture shows Hydro aluminium plant in Sunndal at the west coast of Norway. Photo: Øivind Leren

The Nordic countries generate only moderate emission levels of greenhouse gases compared to other developed countries of a similar size. This is related to their lower dependency on fossil fuels. However, their consumption of energy per capita is among the highest in the world.

Relatively high heating costs, due to the cold climate combined with a sparse population distribution pattern and the greater need for individual transportation plus generally high levels of income, are considered the main factors behind this high level of energy demand. Despite continuous economic growth in the region, however, the demand for energy has remained stable over the last ten years.

At the regional level the differences in terms of the geographical distribution of energy production and demand become even more pronounced. In terms of the generation of hydro power, the Norwegian regions, especially in the south, dominate thanks to the ready availability of suitable hydrological sources.

Sweden, on the contrary, has a more heterogeneous supply mix, as hydropower dominates in the north while the major urban regions in the south are supplied by nuclear power plants.

In Denmark, thermoelectric generation is the main source of electric energy while wind energy generates approximately 20% of the country's total energy supply.

In Finland, nuclear energy is dominant in the south along with thermoelectric generation from natural gas and biomass. Hydropower generation is however rather modest in Finland and is mainly found in its northern regions.

Capitals consume a lot

The metropolitan regions in the Nordic countries with the highest level of consumption of electric power are Stockholm (20.5 TWh), Västra Götaland (19.8 TWh), Oslo og Akerhus (16.1 TWh), Hordaland (13.4 TWh), Uusimaa (13.2 TWh) and Skåne (12.6 TWh). Services are the most intensive sectors in these regions particularly in Stockholm (49.8 %), Oslo og Akerhus (42.1%) and Uusimaa (42.7%). Households also account for a considerable proportion of the total consumption of electricity in the metropolitan regions: Oslo og Akerhus (48.5%), Skåne (35.9%), Uusimaa (35.6%), Stockholm (31.5%) and Västra Götaland (28.5%).

Industry

The industrial sector is the major consumer in Iceland (76.8%), followed by Finland (52.6%), Norway (45.8%) and Sweden (41.2%). The metallurgic industry is among the most energy intensive in the Nordic countries, particularly in Iceland, but also in Norway and Sweden.

The pulp and paper industry also consumes a considerable share of electricity particularly in Finland, Sweden. As a consequence of the availability of natural resources for these industrial activities the regions with high energy consumption patterns by industrial sector are often located in the northernmost regions of Sweden and Finland or along the west coast of Norway.

Renewable energy

The Nordic countries have made considerable progress in the use of renewable sources of energy over the last two decades. On average, the Nordic countries generate electricity from renewable sources at four times the level of the OECD countries.
There are considerable variations between countries and regions mainly as a result of the availability of natural resources as shown in the maps on pages 14-15. Iceland and Norway almost exclusively base their electricity generation on renewable energy sources while, in Norway hydropower accounts for almost 100% of all the electricity generation from renewables. In Iceland hydropower accounts for approximately 76% of the total supply of electricity while the rest comes from geothermal power.

Denmark produces approximately 30% of its electricity from renewables of which approximately 64% is generated from wind power with the rest coming from solid biomass and municipal waste. This implies that wind power accounts for approximately 20% of the total amount of electricity generated in Denmark.

In Finland and Sweden biomass and hydropower are the main sources of renewable energy, which combined account for approximately 35.5% in Finland and 55% in Sweden of the total generation of electric power. Hydropower in Sweden accounts for approximately 84.6% of the total electric power generated from renewables while in Finland this figure is approximately 58%.

Contrary to its Nordic neighbours, however, Greenland is still entirely dependent on non-renewable energy sources for electricity generation.

The demand for renewable energy has been fairly stable over the last ten years in Finland and Sweden. Common to all the Nordic countries however is the increase in the use of biomass for heat generation. Denmark in particular has seen a significant improvement in this respect by increasing the ratio between the electricity produced from renewable energy sources and the gross national electricity consumption - from 5.8% in 1995 to 28.2% in 2005 - mainly thanks to the fast development and deployment of wind energy technologies.

Future potentials

Because certain renewable energy sources have been exploited to the extent that further expansion possibilities are limited, as is now the case in Denmark in respect of wind energy, and in Norway and Sweden with hydropower, future developments in terms of renewable sources of energy are expected to focus on the utilisation of currently un- or under-exploited resources.

This is the case in both Norway and Sweden, where wind power appears to be the currently preferred option and the one with the highest potential for expansion. Offshore windmill parks in particular have become a topic of joint interest across the Nordic countries.

Governmental interactions

The generation of electricity and heat power from renewable sources in the Nordic countries has been dependent on various public support schemes. Examples here include feed-in-tariffs -fixed price or premium (Denmark), green certificates (Sweden), taxation of fossil fuels in heat production (Finland, Sweden and Denmark) and CO2 emission trading and R&D support.

In Iceland, state subsidies or other support schemes for electricity generation have been considered unnecessary given the abundance of, and easy access to, hydro and geothermal power.

Market deregulation

Progressive deregulation towards the market-based trade of electric power in the Nordic countries has been an ongoing theme for many years. Indeed it is claimed that this is a successful process and one that has received significant political support from the national authorities.

The Nordic power sector acts today as a single integrated market and transmission operation managed by independently regulated operators that initially cooperated in Nordel. In 2009 the European Network of Transmission System Operators for Electricity (ENTSO-E) took over the operational tasks of Nordel together with five other TSO associations in Europe.

Energy innovation

The Nordic countries have a strong position worldwide in energy innovation thanks to strong national support for this sector. These countries account for more than 30% of the word's market in the production of wind energy technology. Innovation in bio-energy is also strong in the Nordic countries which have a share of almost 30% of all the biomass-based generation of heat and power in the industrialised world and around 10% of the total scientific knowledge production.

Energy innovation is a very important economic activity in the Nordic countries assuming approximately 6% of total revenues and employment in the region while the export of energy technology and equipment accounts for approximately 5-9% of total industrial exports.

Sweden, Finland and to a lesser extent also Denmark exhibit a strong position as regards innovation in relation to bio-energy, particularly in Combined Heat and Power (CHP) generation. The main reason that Sweden and Finland are strong in bio-energy is the existence of their highly developed forestry and paper pulp industries, providing for the easy availability of biomass.

Denmark is an innovation leader in the wind energy sector which has become an important exporter of technology. Norway on the other hand has gained a reputation in the solar energy industry through the development and production of components supplying the internal market. Norway is also stronger in small hydro-based technology relative to its Nordic neighbours.

An understanding of the three pillars of energy policy, namely energy efficiency, security of supply and the environmental impact of energy usage has clearly been a part of the discourse in the Nordic countries.

Over the last three decades, the five countries have sought to respond to economic and environmental challenges through various national policy frameworks for the energy sector.

Starting in the 1970s and in the wake of the 'oil crises', security of supply leaped to the top of the political agenda. This materialised into power generation from coal in Denmark, while in Sweden and Finland nuclear power was chosen.

In Norway, the abundance of hydropower resulted in the extensive building of dams and hydro-electrical power stations. During the 1970s, Iceland witnessed an expansion of hydropower as well as geothermal energy, a source that has been exploited for district heating since the 1930s.

As a result of environmental concerns during the 1980s and 1990s, renewable energy sources have progressively substituted for coal - mainly wind power in Denmark and district heating based on biomass in Sweden and Denmark.

In Finland and Norway overall increases in renewable energy usage have however been modest during this period. The major exception is in heat production by Finnish industries where biomass became an important energy source.

Oil is important

In terms of volumes produced oil is undoubtedly the most important energy source in the Nordic countries followed by renewable energy (mainly hydro-, geothermal and wind energy), nuclear power, coal and gas.

Norway and to some degree Denmark also are oil and gas exporters. Norway produces over 600% more energy than its domestic demand while Denmark produces approximately 50% more than it requires. Iceland, Finland and Sweden however produce hardly any of their own primary fossil fuel requirements.

The Nordic region has good access to renewable energy sources as well as a high innovation capacity and efficient national energy policies. The region is also, in the main, able to supply its own energy needs.

Norway, Iceland and Sweden have the ability to produce electricity based primarily on hydropower. In Iceland geothermal energy is an additional major contributor to the country's energy supply while in Finland and Sweden nuclear power is an important source of energy.

Greenland had its first hydropower plant in 1993. The expansion of capacity and construction of additional three hydro power plants during the last years has led to a situation where 11% of the total energy consumption and almost 50% of electricity consumption is based on renewable energy.

Changing nuclear policies

Sweden and Finland use nuclear power as a major source of electricity generation. Since the beginning of the 1990s the Swedish energy sector functioned under the assumption that nuclear power would be phased out as current capacity reached the end of its commissioned life. In July 2010 however this decision was reversed when the ban on building new nuclear reactors was removed by the Swedish Government.

Considerable uncertainty however continues to exist over nuclear development issues in Sweden due to the enormous cost of building new reactors. Moreover two additional questions remain unanswered. Namely, what is the real cost of storing nuclear waste and who is responsible for covering the costs of a major accident?

In Finland, a new nuclear construction programme has been up and running since 2002 when the building of a new nuclear reactor (Olkiluoto 3) was approved in order to complement the four already existing reactors in the country. The construction of Olkiluoto 3 has, however, been delayed for three years, and is currently projected to be completed in 2012. In 2010, the Finnish government also preliminarily approved the construction of Olkiluoto 4 while an additional reactor is projected for construction in northern Finland.

This article is based on the energy chapter of the Regional development in the Nordic Countries, Nordregio Report No R2010:2

The text is edited by Odd Iglebaek

Information in the section on innovation is taken from: Mads Borup, Per Dannemand Andersen, Steffan Jacobsson and Atle Midttun (2008). Nordic Energy Innovation Systems –Patterns of need integration and cooperation. Nordic Energy Research

www.nordicenergy.net

Nuclear or wind?

Throughout November 2010 Sweden has witnessed a lively debate on the issue of investment in the future production of electricity. Should investment in nuclear power be continued or has the time finally come to shift to wind-power as the basis for future energy expansion?

The debate began with an initiative from three of the central environmental organisations, The Swedish Society for Nature Conservation (SSNC) Naturskyddsföreningen, The Federation of Swedish Farmers LRF and The Tällberg Foundation. Senior representatives of the three organisations went publicly asking Vattenfall, the large state-owned Swedish energy-company, not to undertake further investments in nuclear-based production of electricity.

The basis of their argument was partly environmental; wind-power is cleaner than nuclear-power, and partly economic; to produce electricity from nuclear power will become increasingly expensive compared to wind-power. Therefore to follow the nuclear-path would also lead to less profit for Vattenfall's owner, namely, the Swedish state.

Not everyone however agreed with the figures quoted by the environmentalists. The Energy-section of The Royal Swedish Academy of Science was in particular voicing their disagreement. Their senior representative claimed that nuclear-generated electricity would, like wind-power, become cheaper to produce over time. They added that the new generation of generators also would produce much less waste material. 2010 has seen the birth of 5 new nuclear-generators in Sweden and 50 more are planned or are under construction.

Approximately half of the electricity produced in Sweden originates from the chain-reactions of the Uranium (U235) atom. Therefore to substitute this with wind-power would be completely unrealistic, argued the spokespersons of The Royal Academy. On the other hand, this was never suggested by the environmentalists. Rather, they argued that the planned 20% expansion of Swedish electricity-production - equivalent to 30 TWh - could be based on wind. With no conclusion in sight the debate will undoubtedly rumble on into 2011.

By Odd Iglebaek