The overall aim of the SET project has been to support decision makers and companies to recognize ways for Finland to benefit from the ongoing energy transition. As the common theory base of SET are the transition theories the research questions were grouped using the broadly known figure depicting the multi-level perspective.
The context of energy transition is very broad and therefore the focusing was defined in a scoping paper of the project (Heiskanen, Ahonen, Airaksinen, Jalas, Kangas, Kivimaa, Lovio, Temmes 2017). In renewable energy production the main focus was on solar energy, the energy use studies of SET mainly concerned buildings and heating, but also mobility was studied – these sectors are significant in the coupling of different sectors of the energy system. In the studies on the management of intermittency of energy production the main focus was on demand response, but both storages and Power-to-X were looked into. The rest of this report is organized following the research objectives of the project listed in the original research plan on page 6. The report does not cover all publications of the project, but concentrates on the publications central to the research objectives.
The first research objective was to analyse the disruptive technologies affecting the energy transition.
This work was carried out mainly in WP1 and WP2 and the focus was in solar energy and power-to-X (especially power-to-food), as well as energy efficient buildings and heating systems. In addition, the general technology development was assessed by a two-stage Delphi study amended by workshops (Ahonen et al. 2018; Dukeov, Hynynen, Sillman 2020). The results show that the expectations on the technologies increased during the lifetime of the project and that the challenges increasingly lie in organizational innovations and systemic aspects (Dukeov et al. 2018; Reda, Ruggiero, Auvinen, Temmes. submitted).
In the beginning of the project the general interest concentrated on renewable energy production (Apajalahti et al. 2017; Simola et al. 2018), but the significance of various technologies allowing the management of intermittency of energy production increased during the project as anticipated in the scoping paper. These include storages (Lovio and Tuomi 2018 (in Finnish); see also the studies on buildings and heating, which discuss storage as heat), demand response (Annala et al. 2018) and power-to-X-technologies. The environmental evaluation of power-to-food showed that given clean electricity is available the life cycle impacts of this protein are lower than those of soybean or Quorn (Sillman et al. 2019, 2020).
The potential of buildings and communities in mitigating the emissions is well established. Connected to the task of concept solutions for net/nearly zero energy buildings nZEB, we developed concepts for combining solar energy and storages, e.g. in deep wells (Reda and Zarrin 2019), as well as a novel concept on fossil-free district heating (Rinne et al. 2019). In addition, we extended the concept of nZEB towards energy positive districts (Rehman et al. 2020) and developed new methods for evaluating the self-sufficiency and the energy balance in the physical and virtual balancing boundaries of districts (Laitinen et al. 2019, Laitinen et al. 2021) and found the benefits of energy sharing in a community of buildings using optimum control methods (Vand et al. 2021).
The second objective was to find out how different sectors can benefit from the transition.
One of the key factors in benefitting from transitions, is being part of the first movers and being prepared for disruptive change. Thus, lessons were drawn from some of the leading countries in the renewable energy transition – Denmark, Germany and the UK – and the different pathways how existing energy systems are and will be disrupted (Johnstone et al., 2020). In addition, the role of public policies and institutions in steering change and achieving international leadership in the energy transition is vital. Public policies and institutions were studied in several contexts both in Finland and in other countries.WP3 focused on the role of industrial policy in energy transitions noting the important – while often implicit – role of industrial visions, industrial policy governance and instruments, and employment concerns in shaping energy transitions different in different countries (Johnstone et al., 2021 ). Further, the results suggest that policy development is facing three phases of energy disruption (renewables disruption, mobility disruption, and cross-sectoral disruption) (Johnstone et al., 2020) proceeding in slightly different phases is different countries; these disruptions are not only technological but encompass (to differing degrees in different countries) disruptions in markets, regulations, energy ownerships and actors, and culture (Johnstone et al., 2020; Kivimaa et al., 2021). Early awareness and preparation for these disruptions can alleviate tensions and work towards just energy transitions.
Finland has shown substantial leadership in how public policy has developed taking a systemic and experimental perspective in supporting a future sustainable and intelligent mobility transition. Mobility as a service (MaaS) is a concept, which is anticipated to change the transport system significantly, and is a Finnish success story in terms of how innovation and transport policies have in combination successfully supported early innovation development and removed market barriers, creating international leadership and attention (Kivimaa and Rogge, 2020). The MaaS case shows the importance of visioning, networking and learning for an innovative development with the support of policy experimentation and institutional change.
One part of the institutional setting of the energy transition is the power market, where the increase in renewable power is shown to increase the significance of the short-term markets compared to the traditional day-ahead power market (Spodniak, Ollikka, Honkapuro 2021). Institutional entrepreneurship was found to support the transition by e.g. mobilising allies, creating common understandings of new system configurations, and creating legitimizing narratives of new institutional arrangements such as distributed energy systems (Heiskanen, Kivimaa, Lovio 2019).
The emerging business ecosystems were first screened by forming a database of companies in WP2 (Uuden energian yritysten tietokanta – Smart Energy Transition, in Finnish) which shows that there are hundreds of companies that consider themselves to benefit from the transition. The emergence of a new field of business – solar energy- was shown to happen through multiple actions by numerous actors in various arenas (Lovio 2017, in Finnish). The energy service companies for buildings were found to take the role of a keystone actors and develop ecosystems around integrated solutions by combining the diverse capabilities and new, more transition-oriented motivations of finance providers and other actors (Lazarevic et al. 2019). The main analysis of business models was carried out in demand response businesses (Ruggiero et al. 2021; Kangas et al. 2021), which shows that demand response businesses are developed both by new entrants and incumbents by somewhat varying business models.
One significant step in the implementation of transitions is investments, which also create new business for various technology providers both in Finland and other countries. Investments were studied from various angles. Incumbent energy companies were found to legitimate renewable energy investments through corporate strategy and future outcomes (Patala et al. 2017) and private MNEs were found to be more active, risk taking, and less reliant on host country subsidies in investing in novel technologies than state owned MNEs (Patala et al. 2021). In addition to large companies, new groups of investors are needed, for example consumers (Heiskanen, Jalas, Juntunen, Nissilä 2017). Altogether investments in the energy transition were found to suffer from uncertainties in the market and the distributed nature of investments (Temmes et al. submitted). Beyond finance, activities by citizens as users and consumers were found pivotal to energy transition in small scale renewables in which citizens invented new to the world designs, gave extensive peer help, intermediated solutions and market information to each other and in so doing helped the markets to mature (Hyysalo 2021).
The competence gaps of energy transition were identified in pilots through developing a database of over a 100 low carbon pilots (Energiakokeilut – Smart Energy Transition, in Finnish), and analysing a number of them in detail in WP4 because society can benefit from lessons learned from the introduction and adoption of novel solutions. The studies on experiments have identified interconnections between features of Finnish energy experiments, and how these features constitute clusters of evolving technologies highlighting the directions, in which the energy sector in Finland is evolving, and producing knowledge that can support policy making for future technology guidance (Matschoss and Repo 2020). Through the in-depth analysis of selected cases we found that deployment-related learning is mostly local and decentralized and creates tacit knowledge that is difficult to disseminate and upscale. While the results show various means of transferring learnings from pilots to further experimentation (Heiskanen et al. 2017), the challenge is also to disseminate lessons from failures in experimentation in order to support broader societal learning (Happonen et al. 2020, in Finnish). The concept for learning from failures with the related support material and manuals was given to the Finnish Low carbon municipalities (HINKU) -network of the Finnish Environment Institute for future use. The requirements for polytechnic and vocational education based on the competence gaps were summarized (Ohrling, Heiskanen, Matschoss 2021, in Finnish). Research results on low carbon experimentation have been disseminated to the general public in form of a board game (‘Kokeilula’) that was designed together with the science museum Heureka and introduced to the museum visitors in connection of special events in Heureka.
The policy transition has been found to be gradually developing from weak overall targets to increasing coherence of policies. However, there is still a significant cognitive dissonance between expectations of various stakeholders and actual policy measures. The change in policies resembles the socio-technical transition that is described by the multi-level perspective, but the findings in SET show that a policy transition is not simply one element in the changing regime, but a complex transition process in its own right (Hildén, manuscript) . Transitions are known to require complex policy mixes and we contributed to this line of research by studying the characteristics of policies in the energy transition. Stickiness of policies or strong commitment to certain renewable energy technologies was found to be an important part of policies for transition as actors require predictability, but it also entails a risk for lock-in (Berg, Lukkarinen, Ollikka 2020).
Policies for improving the energy performance of buildings need to target both technology development, business models and user practices. Policy mixes in energy efficiency were studied in connection to integrated energy service companies and the disruptive influence was not yet evident (Kivimaa, Kangas, Lazarevic 2017). Because of the complexity of the field the role of intermediaries is important especially at times when political attention is low (Kivimaa, Primmer, Lukkarinen 2020; Murto et al. 2019). Even if demand response businesses are gradually developing (see above), the policy measures needed for full implementation were found to include better incentives for consumers and better standards for demand response automation (Annala et al. 2018). Kangas et. al (2021) highlight how progressive policies for automated demand response have created opportunities for new entrants and affected the dynamics between incumbents and entrants.
The third objective was to co-create solutions for the smart energy transition together with various stakeholders.
The most extensive co-creation process of SET project was the re-designing of transition arenas for mid-range planning with the first exercise in 2017 (Hyysalo, Marttila, Perikangas, Auvinen 2019a) and toolset development (Hyysalo, Marttila, Perikangas, Auvinen 2019b). Altogether six transition arenas were organized during the project (Hyysalo, Marttila, Temmes…. 2017; Lukkarinen, Marttila, Saarikoski… 2020) and three more are being planned at the time of writing this report.
In addition to the transition arena SET has been closely engaged in discussions with policy makers and thereby contributed to an informal co-creation process at the policy level. SET has partly jointly with the other SRC projects, organized meetings with ministerial policy makers. This informal co-creation has been supported by policy briefs (e.g. Airaksinen et al. 2017, Hildén et al. 2018, Temmes et al. 2019) and discussion notes that have contributed to the policy processes, including the intermediate term climate plan.
The district heating vision was broadly discussed with various stakeholders including energy companies, technology providers and policymakers (Reda et al. submitted). Such solutions are recently applied in many pilots and cities such as a district in Oulu (EU project where VTT participates), Aalto University campus in Otaniemi and Vatajankosken sähkö in the town of Kankaanpää. One of the winning proposals in the Helsinki Energy Challenge (https://energychallenge.hel.fi/beyond-fossils) to find solutions for the decarbonization of the district heating in the city of Helsinki . The “BEYOND fossils” concept proposal took the district heating vision forward into an energy transition management model based on clean heating auctions.
Solutions for mitigating the learning challenges found in the case pilots of WP4 were sought for in three workshops targeted especially to funding bodies and policy makers. One solution suggested was knowledge sharing of failures in experimentation in informal settings. Six such events were organized in Helsinki, Joensuu, Lappeenranta, Pori and Turku during 2018-2019 (Happonen 2020, in Finnish). The research results on competence gaps were disseminated to the Finnish National Agency for Education through the participation of the researchers in the three education foresight processes related to energy (2017), forestry (2017) and climate change (2020), as well as through several presentations to members of parliament.
References
The full reference list of the project – including the papers cited here – are available here and the SET impact report is available here.
Ahonen, T., Marttila, T., Dukeov, I. & Jalas, M. 2018. Understanding Smart Energy Transition: Insights to the Future Energy Technologies and Their Market Disruption in Finland. In Saarinen R. & Wilenius M. (eds.) Futures of a Complex World: Proceedings of the Conference “Futures of a Complex World”, p. 197-206 (FFRC eBOOK; Vol. 2018, No. 2).
Airaksinen M., Heiskanen E., Hildén M., Kivimaa P., Laitila P., Auvinen K. & Honkapuro S. 5/2017. Politiikkasuositus: Rakennusten kysyntäjousto ja energiatehokkuus luovat perustan puhtaalle energiajärjestelmälle
Annala, S., Lukkarinen, J., Primmer, E. Honkapuro, S., Ollikka, K., Sunila, K. & Ahonen, T. 2018. Regulation as an enabler of demand response in electricity markets and power systems. Journal of Cleaner Production 195, 1139-1148.Available: https://doi.org/10.1016/j.jclepro.2018.05.276
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Patala, S., Korpivaara, I., Jalkala, A., Kuitunen, A., & Soppe, B. 2019. Legitimacy under institutional change: How incumbents appropriate clean rhetoric for dirty technologies. Organization Studies, 40(3), 395-419. Available: https://doi.org/10.1177/0170840617736938
Reda, F. & Zarrin, F. 2019. Northern European nearly zero energy building concepts for apartment buildings using integrated solar technologies and dynamic occupancy profile: Focus on Finland and other Northern European countries. Applied Energy 237, 598-617. Available: 10.1016/j.apenergy.2019.01.029
Rinne Samuli, Auvinen Karoliina, Reda Francesco, Ruggiero Salvatore & Temmes Armi. 11/2018. Discussion Paper: Clean district heating – how can it work? Aalto University publication series BUSINESS + ECONOMY, 3/2019. Available: http://urn.fi/URN:ISBN:978-952-60-8722-1
Ruggiero, S., Kangas, H.-L., Annala, S., Lazarevic, D. 2020. Beyond the niche-regime dichotomy: Business model innovation in demand response firms. Environmental Innovation and Societal Transitions 39, 1-17. Available: https://doi.org/10.1016/j.eist.2021.02.002
Sillman, J., Uusitalo, V., Ruuskanen, V. et al. 2020. A life cycle environmental sustainability analysis of microbial protein production via power-to-food approaches. International Journal of Life Cycle Assess 25, 2190–2203. Available: https://doi.org/10.1007/s11367-020-01771-3
Spodniak, P., Ollikka, K. & Honkapuro, S. 2021. The impact of wind power and electricity demand on the relevance of different short-term electricity markets: The Nordic case. Applied Energy 283, 116063. Available: https://doi.org/10.1016/j.apenergy.2020.116063
Temmes. A, Heiskanen E., Auvinen K., Hildén M., Hyysalo S., Jalas M., Lovio R. 2/2019. Politiikkasuositus: Puhtaita energiaratkaisuja on edistettävä määrätietoisesti
ur Rehman, H., Hirvonen, J., Jokisalo, J., Kosonen, R., & Sirén, K. (2020). EU Emission Targets of 2050: Costs and CO 2 Emissions Comparison of Three Different Solar and Heat Pump-Based Community-Level District Heating Systems in Nordic Conditions. Energies, 13(16), 1-29. Available: https://doi.org/10.3390/en13164167
Vand B., Ruusu R., Delgado BM., Hasan A. 2020. “Optimal management of energy sharing in a community of buildings”. Applied Energy. Accepted.
The papers under review process are the following:
- Hildén: The dynamics of a policy transition (unpublished manuscript)
- Reda, Ruggiero, Auvinen, Temmes: Towards low-carbon district heating: addressing the socio-technical challenges of the urban energy transition (under review in Energy)
- Temmes, Heiskanen, Matschoss, Lovio: Mobilising mainstream finance for a future clean energy transition: The case of Finland (under review in Journal of Cleaner Production)
