Electrification of society
Society will become even more dependent on electricity as emissions are reduced and digitalisation progresses.
The clean transition increases electricity consumption
Achieving carbon-neutrality targets requires changes in transportation, industry and heating. Replacing fossil fuels in a cost-effective way is based on technology operating on electricity. Electricity consumption is set to grow nearly 50 % by 2040, if Finland aims to achieve its climate targets within the time-frame laid down.
In certain branches of industry (for example bakeries, dairies, as well as the wood and paper industry), the importance of natural gas has been large. The electrification of processes replaces dependence on natural gas.
Locally, the changes can be quite significant. The electrification of heating and urbanization concentrate electricity consumption into cities, while decentralized electricity generation is created in sparsely populated areas, creating its own challenges for the transmission and distribution of electricity.
Dependence on the electricity system increases
An energy system that is heavily based on electricity means that demands on the reliability of the electricity system will increase. Already, the critical functions of society, such as hospitals, telecommunication networks and payment systems, are vulnerable to prolonged power outages. In an electrified society, the impact will more quickly extend to transportation, heating, and industrial performance.
The electricity system is also exposed to many new risks. Climate change will increase extreme weather events, which will challenge the functioning of electricity grids and weather-dependent electricity generation. Cyber threats can endanger the security of both companies and private individuals. The threat of sabotage and other intentional acts must also be taken seriously in the current security environment. It is therefore essential to strengthen the security of supply and the resilience of the electricity system.
Enormous investments in electrification
Changes in energy production, transmission and consumption are unprecedented, both in size and schedule. By 2035, the energy sector is planning to invest EUR 40 billion – more than any other sector – to achieve the carbon neutrality target. As the electricity system plays a key role in the energy transition, a large part of investments will be linked in one way or another to the electricity system. The investment need for distribution networks is approximately EUR 1.2 billion per year, of which Caruna’s share is approximately EUR 200 million.
