The TSO estimated Finland would consume around 14 TWh this year, up from 11 TWh in the previous year when an energy crisis of soaring prices was exacerbated by Russia’s invasion of Ukraine and cuts in gas supplies to Europe. Finnish gas demand plunged by 56% last year.
“Demand [for gas] has been very price sensitive. If it is affordable, demand returns,” Gasgrid Finland CEO, Olli Sipila, told Montel at a political forum in Pori on Wednesday. “But some actors have made investments into [alternative] technologies that are replacing demand.”
Europe’s benchmark gas price, the Dutch TTF front month, spiked to more than EUR 340/MWh last year but has since fallen back to below EUR 35/MWh.
Europe took measures to fill gas storage, conserve gas consumption and import more LNG to replace the reduced pipeline gas flows from Russia.
In Finland, Finnish oil major Neste has been using more liquefied petroleum gas (LPG) or propane in its operations instead of natural gas. And several municipal utilities and forestry firms invested in electric boilers, an alternative to fossil fuels when producing heat or steam.
Winter outlook
The cut of the 6bcm Imatra connection with Russia in May last year left Finland reliant on the 2.6bcm connection to Estonia – but the 5bcm/year floating LNG terminal commissioned earlier this year provided security for the coming winters.
“It [security of supply] looks good, but crisis is not all over yet. This winter and the next one we have to stay vigilant,” said Sipila. “The terminal has been fully booked for Q2 and Q3, and capacity is now being sold for the next season as well.”
The terminal also secured the wider Finnish-Baltic gas market supply security. Low gas prices are also likely to spur Baltic gas demand.
Sipila noted uncertainty regarding further cuts to pipeline gas supplies to Europe, and how that could change the situation quickly.
“Also during gas grid maintenance supply outages in the Baltics, it [the terminal] is needed. Like at the moment in the markets – due to the Baltic gas grid maintenance – the amount of gas flowing to the south to Finland [via the Baltic Connector] is very small,” he said.
“We see the [terminal] as very important.”
Hydrogen future
In the long term, the role of natural gas would however be diminished as the country eyed carbon neutrality by 2035. But the gas grid would still be needed for synthetic methane and biogas.
“We have a good situation in Finland, where our gas [grid] infrastructure is at a halfway point in its lifecycle. We can run the grid a few decades with minimal investments and monitor the situation,” he said, adding, [but] “are these new technologies [replacing natural gas] coming?”
He said the gas TSO was cooperating with the electricity TSO Fingrid on monitoring how the energy market will develop.
Hydrogen would play a large role in the future energy system, said Sipila.
Gasgrid and partners like Fortum and Helen aimed to use 100 TWh of electricity by 2035 to produce 3m tonnes of hydrogen annually, a figure they would boost to 140 TWh by 2045, according to a joint strategy published by the TSO and its partners.
