Designing the Future of Power in Finland and Sweden
Designing the Future of Power in Finland and Sweden
CLEAN POWER, SMARTER MARKETS
Finland and Sweden are setting the pace in the global energy transition. Their ambitions are clear:
Achieve self-sufficiency in clean energy;
Double the electricity production to meet growing demand;
Decarbonise the economy.
TODAY’S POWER MARKET DESIGN STANDS IN THE WAY. HOW CAN THESE COUNTRIES TRANSITION TO CLEAN POWER AFFORDABLY AND AT SCALE?
Our study, commissioned by Fortum, sheds light on how Finland and Sweden can unlock large-scale, cost-effective electrification by rethinking how power markets are designed.
QUANTIFYING OPPORTUNITIES
We use our global climate economic model, INTERSECT, to simulate three economic scenarios towards 2040:
Delayed electrification: no new policy development
Ambitious decarbonisation: Finland and Sweden meet their climate targets
Electricity doubling: Finland and Sweden achieve climate targets and double their electricity production
Using these, we estimate economic gains from electrification. These include investments, jobs added, gross value added, and tax revenue.
We assess the state of the Finnish and Swedish power markets and provide recommendations on changes that enable Finland and Sweden to meet their goals. We find that, compared to a delayed-electrification scenario, ambitious decarbonisation can unlock electrified industries in 2040 through:
AN ELECTRICITY-DOUBLING SCENARIO INCREASES INVESTMENTS IN ELECTRIFICATION SIGNIFICANTLY
Accumulated investments 2025-2040 in the delayed electrification scenario and additional investment generated to reach an ambitious electrification scenario
EUR billion
We assess six market instruments and find that a market-wide capacity renumeration mechanism (CRM), publicly backed power purchasing agreements, and a two-way Contract for Difference mechanism deliver the best market outcome for Finland. Together, these instruments can effectively mitigate capacity risk, price and counterparty risk, and other risks. We find that political priority, stable policies, coupled with a CRM instrument will deliver the best outcome for Sweden.
contact us
Signe Rølmer Vejgaard
info
Phone: +45 5373 2310
Mail: sir@copenhageneconomics.com