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WP2 DH report

Results: Drivers and Barriers for Flexibility in the District Heating-Electricity Interface 5.3. Country Profile: Finland 28 5.3.1. Main Drivers and Barriers CHP, heat storages and – to a very small extent – heat pumps, are all present in Finland. Investment subsidies are generally available for non-fossil-based units. Biomass is generally untaxed, which, all things being equal, increases the comparative advantage of fuel-based units compared to P2H. Coal is discussed to be phased out within an unknown timeframe, potentially affecting large CHPs. Table 7: Framework conditions for flexibility in the DH‐electricity interface in Finland  FINLAND  Framework conditions for CHP  Absence of  mandatory  procurement  of electricity  Absence of  feed‐in  tariffs  Absence of  feed‐in  premiums  Presence of  market  pricing for  electricity  Presence of  power  capacity  payments  Presence of  other  subsidy to  CHP  Presence of  tax  exemptions  for fuel to  electricity  production  Presence of  energy, CO2  or other tax  reductions  Presence of  grid  connection  discounts  Absence of  tariffs levied  on CHP for  feeding into  grid  Framework conditions for P2H  Absence of  PSO on  electricity  (when used  for heat  generation)  Absence of  Grid tariffs  on  electricity  (when used  for heat  generation)  Absence of  other levies  or taxes on  electricity  (when used  for heat  generation)  Presence of  reduced  electricity  tax on  electric  boilers  Presence of  reduced  electricity  tax on heat  pumps  Absence of  regulatory  priority to  heat from  waste, RES,  biomass or  geothermal  Presence of  subsidy for  heat pumps  Presence of  subsidy for  electric  boilers     Framework conditions for general resources  Absence of  heat price  regulation ‐  price caps  Absence of  heat price  regulation ‐  flat tariff  structures  Absence of  heat price  regulation –  profit caps in  commercially  owned DH  Absence of  operational  practice of  generation  following  demand  Absence of  tax  exemption  for RES  fuels  Absence of  subsidies  for HO  boilers             5.3.2. Flexibility Options in the DH system In 2014, DH supplied 46% of all heat in Finland. 72.4% of this came from CHP-plants, while the remaining 27.6% was supplied by HO technologies such as boilers. Fuel diversity is rather high, as seen in the following distribution: bioenergy 31%, coal 24.6%, natural gas 22.3%, peat 14%, heat pumps & industrial reaction heat 2.5%, oil 2.1%, other 3.4%. Information regarding grid connection has not been identified. 5.3.3. Framework Conditions for CHP Current Aspects CHPs are operating on the power market. Biomass-based CHPs are subsidised with a heat premium, in addition to their revenue on the power market. Investment subsidy is generally provided to RE-based technologies, under which CHPs smaller than 10 MWFUEL input can receive 10-15% investment-support, when they are based on biomass. Biomass for CHP-based energy production is not taxed, while the heat share of the energy produced by fossil fuels is taxed. Compared to other


WP2 DH report
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