Potential Funding in Finland
Financial support for renewable energy implementation is provided by the Finnish Energy Authority, the Ministry of Employment and Economy and Business Finland. The two key categories of financial support are the feed-in tariff and subsidies.
The feed-in tariff (FIT) support became available in Finland in 2010. In 2012 about 100 million euros were provided to subsidize renewable energy. The concept of FIT is illustrated in Figure 2. In general, FIT makes it profitable for a renewable power producer to be present on the energy market with the help of financial support from the government. This support is meant to cover the difference between the average energy market price and the target price. Currently, the target price in Finland is 83,5 €/MWh. The energy market price varies daily. FIT is the difference between the target price and the average of last three months’ market price. If, for example, a biogas plant can sell for the energy market for an average of 38 € per MWh, the Finnish government will support bioenergy production by paying the biogas plant an extra 45,5 € per MWh. This financial support can relate to different renewable energy sources; however, in focus are especially wind energy, energy production from wood chips or wood fuels and anaerobic digestion. There is a special feed-in tariff of 105,3 €/MWh for wind energy, which was valid until the end of 2015. If bioenergy or biogas production utility generates also heat, they are allocated extra 20 and 50 €/MWh.
The application process starts when energy producer with an already constructed plant informs the Finnish Energy Authority about the intention to start energy production. The energy producer provides the authority with all the technical specifications of the facility. The exception is a wood chips energy production plant, which can start operation and then apply for the feed-in tariff support. If all the formal requirements are met, the Energy Authority decides about the allocation of financial support.
The allocation criteria are as follows:
The feed-in support holder should be based on Finnish territory or in Finnish waters, and connected to the electricity grid
The feed-in support holder should be based on Finnish territory or in Finnish waters, and connected to the electricity grid;
the energy utility should be entirely constructed from new parts;
Minimal capacity requirements:a) For wind energy – at least 500 kVA, b) For anaerobic digestion (AD) and bioenergy based on solid biofuel – at least 100 kVA;The energy efficiency of AD and bioenergy must be at least 50%; There should be both heat and power production with AD; If the average energy market price for the last three months is lower than 30 €/MWh,according to the Finnish regulations, the target price should be lowered to 30 €;
The feed-in tariff is applicable only until a production limit is achieved, which is:
a) 2 500 MVA for wind energy;
b) 19 MVW for AD
c) 150 MVA for bioenergy based on solid fuels
The Ministry of Employment and the Economy (MEE) and the Energy Authority are in charge of feed-in tariff support decisions. The MEE, as the main competent authority, is responsible for management, supervision and assessments, whereas the EA deals with practical legal matters and payments of the tariffs and the bonuses. The maximum period a company can receive the support is 12 years. The feed-in tariff is funded from the state budget.
Energy aid: Climate- and environment-friendly investment and investigation projects
(information from: https://www.businessfinland.fi/en/for-finnish- customers/services/funding/sme/energy- aid/)
All energy aid applications regardless of project size must be submitted to the innovation funding centre Business Finland. Applications can be submitted continuously until further notice. The Business Finland innovation funding centre grants aid for projects whose acceptable costs do not exceed EUR 5 million and for projects involving new technology whose acceptable costs do not exceed EUR 1 million. Aid for higher investment costs is granted by the Ministry of Economic Affairs and Development.
The key aim of energy aid is to promote the development of innovative solutions for replacing the energy system with a low-carbon alternative in the long term. Energy aid can be granted for investment and investigation projects that promote:.1) The production or use of renewable energy, which in turn promotes new technology and its commercial utilisation, involves investments in a new plant, or is a replacement investment that significantly increases the production volumes of renewable energy or that allows the achievement of some other positive energy impact that complies with the goal 2) Energy savings or improving the efficiency of energy production or use and the purpose of which is not to fulfil an obligatory environmental obligation is not a compulsory energy audit that companies must carry out under the Energy Efficiency Act (1429/2014)
3) Otherwise replacing the energy system with a low carbon one. Energy aid is discretionary, and priority is given to projects involving new technology. The aid can also be considered for projects using conventional technology, with priority for well-prepared projects and carefully compiled aid applications. Aid is not granted for projects launched before the aid decision is made. In addition, aid will be granted to cover costs arising as of the date of the financing decision at the earliest. The aid must have a significant impact on the launch of the project.
Who is it for?
Energy aid is available for:
- Companies of all sizes, including self-employed persons, traders and sole traders
- Communities and organisations, such as municipalities, parishes and foundations
-Energy aid is not available to:
-farms or projects implemented in connection with farms, except for projects in farms where the energy produced is used outside of agricultural production-establishment projects receiving state subsidy -organisations whose operation is financed from state budget agencies, institutions and other bodies belonging to a financial management organisation referred to in the State Budget Act (423/1988)
The following are also evaluated: - whether the applicant is an ailing company (insolvent or having lost half of its share capital), as denoted in EU provisions -whether the company has tax debt, outstanding payments of loans from Tekes/Business Finland, payment defaults, or other unsettled financial obligations
-whether there is a sufficiently detailed project plan
whether the company has other (own or external) financing needed for an investment or
Investments in renewable energy in 2018 (conventional technology)Investigation projects: - Renewable energy audits in the municipal sector, 50%
- Heating plant projects (wood fuels), 10–15%
- Heat pump projects*, 15%
- Solar heat projects, 20%
- Small hydroelectric power projects, 15–20%
-Landfill gas projects, 15–20%
- Small wind power projects, 20–25%
- Solar electricity projects, 25%
- Biogas projects, 20–30%
* Excluding projects related to the use of waste and residual heat, which are subject to aid percentages related to energy savings
Limitations, or aid is not granted:
- Aid is not granted for heating plants whose thermal output is over 10 MW
- For projects exceeding 1 MW, aid can only be granted to cover extra investment costs. Extra investments costs are determined by comparing the project with a corresponding project based on the use of fossil energy sources that could realistically have been implemented without the aid.
- Aid is not granted for heat production projects if the project involves replacing district heating with separate heat production.
- For heating plants, renewable energy must comprise at least 70% of fuel used.
-Aid is not granted for projects involving new construction (excluding new technology and solar power projects).
-Wind power, biogas, wood fuel, solar and wave power projects can only be supported if the project does not fulfil the preconditions for approving the feed-in system provided for in sections 9–11 of the Act on Production Aid for Electricity Produced from Renewable Energy Sources (1396/2010), the preconditions for participating in tendering provided for in section 30, or the annual production obligation laid down in section 33, subsection 1, paragraph 6, subparagraph a. However, if the project includes new technology, energy aid can be granted for it.
- Energy aid can be granted for an investment project related to operations belonging to the scope of the Emissions Trading Act (311/2011) for the part of the project that contains new technology.
-Energy aid can be granted for projects implemented on farms only if 80% of the energy produced is used outside of the farm.
-No aid is granted for the purchase of equipment for the production of wood and recycled fuels (including choppers, crushers, chip containers, other equipment), excluding projects involving new technology.
- Projects related to energy reserves are only supported if they involve investments in production capacity for renewable energy, or machines and equipment improving energy efficiency. Maximum costs related to energy reserves in the project are 50% of the total project costs.
- For fuel distribution projects, aid can only be granted in connection with production plant projects. Aid can be granted for one distribution station at most, provided that it is located in the immediate vicinity of the production plant.
- Aid will not be granted for waste incineration plant projects.
- The investment costs of the projects entitled to the aid must be at least EUR 10,000.
Investments promoting energy savings and energy efficiency in 2018 (conventional technology)Investigation projects:
- energy audits in the municipal sector, micro-enterprises and SMEs related to energy efficiency agreements, 50%
- other energy audits, analyses and investigation projects, 40%
Investment projects:- 20% for companies and communities that have entered into energy efficiency agreements - 25% when the ESCO service is used in the above - 15% for companies and communities other than those that have entered into energy efficiency agreements when the ESCO service is used - Increased support (20–40%) will be granted for projects containing new technology, including companies and municipalities that have not entered into energy efficiency agreements Limitations, or aid is not granted: - The maximum amount of aid for large-scale companies is 30%. - The precondition for the ESCO services is that guaranteed savings of at least 70% are available and that verifiable savings comprise at least 60% of total savings during the verification period, calculated in euros. - Aid is not granted for exhaust gas scrubbers or related heat recovery investments if they are related to emissions trading plants or heating plants with power ratings exceeding 10 MW. - Energy aid can be granted for an investment project related to operations belonging to the scope of the Emissions Trading Act (311/2011) for the part of the project that contains new technology or if the benefit available from emissions trading due to the investment is minor. - Aid is not granted for lighting-related projects involving conventional technology. - Aid is not granted for the insulation of buildings, doors or covers of refrigerator equipment and devices, or other corresponding solutions. -Aid is not granted for energy efficiency projects carried out in new constructions (excluding new technology).
- The investment costs of the projects to be supported must be at least EUR 10,000.
The Rural Development Programme for Mainland Finland(Information from: http://mmm.fi/maaseutu/manner-suomen- maaseudun-kehittamisohjelma- 2014-2020?p_p_id=56_INSTANCE_VK1aIPBoN2gn&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_count=3&_56_INSTANCE_VK1aIPBoN2gn_languageId=en_US)
The Rural Development Programme for Mainland Finland – the Rural Development Programme for short – is a tool for making the Finnish countryside a better place to live in.
The three focus areas are the following:
- Promote bioeconomy and, as part of it, agriculture that is economically, socially and ecologically sustainable and ethically acceptable
- Diversify rural industries and create employment by improving the competitiveness of businesses, supporting new entrepreneurship and promoting the networking of companies.
- Improve vitality and quality of life in rural areas by strengthening independent local activities The strategy is coordinated by the rural development unit of the Ministry of Agriculture and Forestry.
Finland’s Rural Development Strategy for the period 2014–2020 focuses on:
- Improved skills and dissemination of information, and more innovations and co-operation in rural areas-More effective climate change mitigation and adaptation - Increased biodiversity, improved status of water bodies and soil in agricultural use - Diversification of rural enterprising and higher employment, better services and improved possibilities for participation
-Improved competitiveness of agricultural production- Rural enterprises respond to consumer demand and values by producing high-quality food and by improving animal welfare
Who benefits from the Rural Development Programme and how? The Rural Development Programme benefits farmers, enterprises and residents in rural areas as well as the environment as a whole. The network of operators working within the scope of the programme also includes various educational institutions, development organisations, municipalities and local Leader action groups. Agricultural entrepreneurs Funding under the programme is allocated to agricultural entrepreneurs as compensation for farming in Finland’s northern conditions and for environmental work in agriculture. Environmental compensation provides significant opportunities for promoting environmental issues not only on farms but also in a wider context. The programme includes the provision of advice and training that contributes to increased understanding regarding energy efficiency, environmental issues and animal welfare. Farms may also receive subsidies for various investments aimed at increasing their competitiveness and enhancing the environmentally friendly aspect of their operations.
Enterprises in rural areas
Small and medium-sized enterprises in rural areas play an important role in providing employment, with the Rural Development Programme aiding them in starting, diversifying and growing their business operations. Enterprises receive subsidies for various purposes including product development, marketing, testing of new concepts, globalisation and collaboration. The programme aims to create practical conditions for bioeconomy in which the process of putting research and existing knowledge to good use is of major importance.
People living in rural areas
People living in rural areas can take advantage of the programme to develop their living environment in a more attractive direction, make their area more accessible and improve its services.
The programme supports new technology and methods that can be used to develop services. Bringing enhanced broadband connections to rural areas will provide businesses operating in those areas with better opportunities and make such areas more attractive as a living environment.
Development organisations, municipalities, enterprises and people can together draft local, regional and international projects that support the development of various sources of livelihood, skills and services.