The war in Ukraine has tied Nordic-Baltic grid operators closer together

In spring 2022, Europe entered a new kind of energy crisis in the changed geopolitical situation following Russia’s attack on Ukraine. We spoke with Fingrid’s CEO Jukka Ruusunen. “If anything, the war in Ukraine has only brought us closer, and we now clearly see how much stronger we are when we work together.”

What is the state of security of energy supply in the Nordic and Baltic regions, and what is the role of the transmission system in it?

“In a way, the northernmost parts of Europe are in the best state, because we are the least dependent on Russian fossil energy. Rising gas prices have also increased our electricity prices, but in Finland and the northernmost parts of Sweden, and Norway, the impact has not been as big as in Central Europe. However, the gas prices have increased electricity prices also in other areas of the Baltic and Nordic regions.”

“If we’re looking at electricity, our security of supply is in a good state. The role of Russian electricity has diminished over the years, and if we’re specifically thinking Finland, our development is rapidly trending towards energy self-sufficiency on an annual level. We are in a very good situation when it comes to both the availability of electricity as well as its price in the future.”

“The situation with Russia has only increased the cooperation between transmission system operators. I can say that there have been more discussions now than in a long time. Like with the rest of the EU, this situation has only brought us closer together, and we now clearly see how much stronger we are when we work together.”

Nordic transmission system operators have expressed their support for the Baltic region in the event of an escalation of the current situation and a sudden disconnection from the Russian system. What would this support mean in practice?

“If we look at the big picture, we also work with ENTSO-E, the European association for the cooperation of transmission system operators, whose utmost step was to integrate the Ukrainian power grid as part of the Central European power system. This improved the Ukrainian grid’s resistance to disruptions. Now, in a somewhat similar fashion, the Baltic countries have been working to withdraw from the Russian power system.”

“Transmission system operators always prepare for the worst, and this is a topic that has been discussed previously, too: what if the Baltic countries face problems in the withdrawal process? Whether those problems are political or technical in nature. The Nordic countries would be able to support the Baltic system through direct current interconnections. In practice, we have two Estlink interconnections between Finland and Estonia, which would allow us to help the Baltic countries to operate separately. We would pursue all the potential methods that these direct current interconnections enable.”

“All in all, we already have strong cooperation between transmission system operators in the Baltic Sea region. And our cooperation will only get stronger. I believe this is also a positive message for financiers.” 

NIB has funded Fingrid’s investment programme. What is the current state of the investment programme?

“Fingrid’s investment projects are making progress, and now they are required more than ever. There is no need to alter the investment programme because of the current situation and slowing down our investments would definitely not be a solution for us. Although there have been certain challenges with the logistics chains and the markets for raw materials such as metal, Fingrid is moving forwards at full power.”

“In particular, the situation with Russia is reflected on Fingrid’s customer side and projects have been brought forward, including larger ones. These include hydrogen projects, which represent one way of moving away from Russian gas in the Finnish industrial sector. I would say that after we analyse the situation for a while, we’ll end up expanding our investment programme for this decade instead of reducing it. This is because the same investments that will help us create a carbon-neutral Finland by 2035 will also help us to move away from our dependence on Russia. Climate issues and political risk management are now steering us in the same direction.”

What are the biggest future challenges in the energy sector?

“I’d prefer to talk about opportunities. In the energy sector, the development of electrification is accelerating more and more, which is fantastic for the environment. Some large industrial projects are starting in Finland, and I see this as a very positive thing. For example, there has been a huge investment boom in wind power. Finland is a very competitive country in the construction of onshore wind power and affordable electricity production. The consumption of electricity will see a double-digit increase, and Finland is in a competitive position both internationally and within Europe.”

“When we look at the transmission system, the large projects are still related to the majority of Finland’s domestic electricity consumption taking place in Southern Finland, and wind power in particular is being constructed further north. In other words, electricity needs to be transmitted from the north to the south. Our cooperation with Sweden is also a good example. Currently, construction is underway for the Aurora Line interconnector, which will increase the transmission capacity between Finland and Sweden. It’s possible that one day we will also have an Aurora Line 2, because both Finland and Sweden are currently building a lot of industry near areas with good wind conditions.”

Are the EU’s plans to decrease dependence on Russian gas and oil by the end of the year realistic?

“The direction is absolutely clear, but I’m sure there are more and less realistic plans towards that goal. For some countries, this will be a challenge and represent years of work. During this year, I’m sure we’ll be doing everything that can be done. Nevertheless, fossil energy will affect the price of European heating and electricity bills for a long time yet. Of course, the most important thing is that we make plans now and gather momentum for decreasing dependence.”

“After all, this kind of withdrawal is a political decision. However, we are constantly working in the background where the starting point is that the withdrawal is absolutely necessary.”

Fingrid is a public limited company responsible for electricity transmission in the Finnish transmission system. The transmission system comprises over 14,000 kilometres of 400-, 220- and 110-kilovolt transmission lines and over 100 power system substations. The transmission system is part of the cross-national Nordic power system. 

NIB has financed several transmission system operators and interconnectors in the Nordic-Baltic region, such as the Estlink 1 and 2 between Finland and Estonia, Statnett in Norway, and the LitPol line between Lithuania and Poland.