The Finnish Hydrogen Cluster (FHC), a network of companies and industrial associations, has set out ambitious plans to transform the country into one of Europe’s leading hydrogen economies.
According to the report, A Clean Hydrogen Economy Strategy for Finland, the potential for hydrogen production and related technologies could create between 60,000 and 115,000 jobs and €16-34 billion in economic value by 2035, rising to 150-240,000 employment opportunities and €41-69 billion by 2045.
The report is a response to the broad policy document published by the Finnish government in June, entitled A Strong and Committed Finland.
This sees the country accounting for 10% of the EU’s clean hydrogen production. The EU set a target of 10 million tons of hydrogen by 2030 in its REPowerEU plan, implying Finland is aiming for production capacity of 1 million tons by the end of the decade.
However, the strategy is not to export hydrogen in its raw form. The government is particularly keen for investments which allow Finnish industry – for example, steel, cement and chemicals — to decarbonise, and which promote self sufficiency and security of energy supply. This, in practice, means using hydrogen domestically to produce, for example, low carbon fuels and fertilizers.
Neste, Finland’s largest oil company, is developing a 120 MW green hydrogen production facility at its Porvoo refinery, which is expected to play a central role in its target of reaching carbon neutrality by 2035. Major companies, such as Wärtsilä, and Finnish universities are also exploring the use of combining carbon emissions from wood-based industries, such as pulp mills, with hydrogen to produce synthetic fuels.
Wärtsilä produces a range of engines and is investing heavily in generators which can run on hydrogen and/or hydrogen-blended fuels. In March, the company announced that, in cooperation with WEC Energy Group, is was successfully running one of its 50SG engines on 25 vol% hydrogen-blended fuel.
Meanwhile, energy company St1 is planning a synthetic fuel production facility using cement kiln emissions and green hydrogen to make either methane or methanol. The project has already attracted funding of €35.4 million from the ministry of economic affairs and employment.
The goal is therefore to establish leadership across the hydrogen value chain and make sure that clean hydrogen production supports the government’s energy security goals. The key to this transformation, the FHC report says, is low-cost, reliable, clean energy.
Finland already has a relatively low carbon energy system. Renewables and nuclear accounted for 62.3% of total energy consumption in 2022, according to Statistics Finland. The largest source of renewable energy comes from wood fuels, which accounted for 28.5% of total energy consumption. Hydropower and wind accounted for 3.7% and 3.2% respectively, while nuclear accounted for 20.4%.
The share of low carbon electricity is currently around 89% and grid emissions are just 64gCO2/kWh, according to FHC. In 2022, nuclear accounted for 34.5% of electricity generation and renewables 54.7%, the largest contributor being biomass (19.2%), followed by hydro power (18.8%) and then wind (16.3%).
However, the country is still a net importer of power, importing 12.5 TWh of electricity in 2022, which amounted to 15.3% of total consumption.
Government policy is to support nuclear power as a clean energy source. Hydrogen production using grid electricity will therefore initially depend on nuclear’s substantial share of overall power generation.
The country has four reactors, which range from 43-46 years old and one new one, Olkiluoto 3, which started regular electricity generation in April. Plans for two further nuclear plants, Olkiluoto 4 and Hanhikivi 1, were cancelled in 2015 and 2022 respectively.
Finland’s newest reactor will reduce the country’s power imports, but the lack of newbuild plans and retirements suggests nuclear power alone does not offer the potential for meeting new demand long term, nor the surplus, low-cost, clean power required for a vibrant hydrogen sector.
Instead, Finland is turning to wind and solar, but predominantly the former. The country had 5.6 GW of wind capacity at the end of 2022, a substantial jump from 3.3 GW at the end of 2021.
As of May this year, Finland had 120 GW of additional wind capacity in various stages of development. Not of all this will be developed and some plans are very long term, but transmission system operator FinGrid expects between 22-49 GW of new wind and solar capacity to be in operation by 2035, depending on various factors, including the degree to which electricity demand rises. Most of this will be wind.
Finland is therefore banking on the technology to deliver the low-cost, surplus, green power required for a hydrogen economy.
To put this in perspective, according to the IEA, electricity generation capacity available during peak demand periods in 2022 was 11.3 GW on average.
However, the country’s total installed generating capacity from all sources in 2022 was 21.4 GW, including 12.1 GW of renewable energy capacity. In addition to wind, this comprises 3.2 GW hydro, 0.6 GW solar and 2.7 GW bioenergy. Prior to the completion of the 1.6 GW Olkiluoto 3 reactor, Finland had 2.8 GW of nuclear capacity. Fossil fuel and peat generation capacity amounts to 5.8 GW.
The expansion of generating capacity suggests power surpluses are on their way.
All of Finland’s current wind capacity is onshore, with the exception of the 47 MW near-shore Tahkoluoto wind farm, but offshore wind is expected to make up a substantial proportion of new developments.
There are plans to expand Tahkoluoto up to 900 MW and to develop up to 3 GW in the Korsnäs area. In addition, five new sites are expected to be tendered this year and next, while a further two sites have been identified on the west coast for future development.
However, Finland’s possibilities do not stop there. Energy transition technologies will create demand for metals and Finland has large deposits of chromite, cobalt, copper, iron, lead, nickel and zinc.
Exploration is revealing more – in February, Finnish Minerals Group announced that its Sokli mineral deposit in Savukoski, in eastern Finnish Lapland, contains much greater amounts of rare earth elements than previously thought and a surprising diversity of metals, as well as large phosphate reserves, which are used for fertilizer production.
The reserve evaluation suggests a bigger deposit than the recent find in Kiruna in Swedish Lapland, which made headlines in January.
In addition, Finland is promoting another of its natural resources as perfect for the development of a hydrogen economy – fresh water. Hydrogen production via electrolysis requires large amounts of fresh water, which in water-stressed regions of the world competes with essential uses such as residential use, industry and agriculture.
Finland is the water-richest country in the world, according to the FHC report, although it depends a lot on how ‘water wealth’ is defined.
Finland does not have the largest amount of renewable fresh water reserves globally by any means, but came out top of a developmental study entitled The Water Poverty Index: an International Comparison, published in 2002. It does score high in terms of renewable freshwater resources per capita and particularly in international measures of good water management.
Fresh water availability is important for hydrogen production because it avoids the need for energy-hungry desalination plants, which would add significantly to costs. As such, Finland hopes that a mix of fresh water, surplus wind-generated power and critical minerals will give it the competitive advantage needed to take a lead role in Europe’s emergent hydrogen sector.