Energy from Oulu - peat and wood

The city of Oulu is known for its electronics and Nokia company, but as well it is a city of peat. In Oulu peat is used more, than in any other part of Finland. You can see three high chimneys in a landscape of Oulu city. Toppila CHP is located in the northern part of the city. This CHP belongs to Oulun Energia company. In the southern part - power station of Stora Enso company, and in northeast - power plant of Kemira company. These power stations produce the main part of the energy used in Oulu. On Toppila and Kemira power stations the main fuel is peat, and Stora Enso power station uses peat as an important collateral kind of fuel. Annual amount of peat usage in Oulu is 4-5 TWh. It almost one fifth of total amount of peat used in Finland - about 25 TWh. The availability and cost of peat are the major factors for all three large energy producers.

In Oulu the main volume of energy is produced from peat and wood fuel.

Energy production in Oulu

Tapani Kurkela, Oulun Energia executive director: Our main idea is to produce energy with the help of local fuel resources, such as: peat, wood, water, wind and different sorts of waste. We produce about 86 percent of energy with the help of peat; it is our major type of fuel. Use of peat is economically efficient here, as we have a lot of peat in Northern Osterbotnia.
"Oulun Energia" Heat production in 2004 has made 1458 GWh, 96% were produced by Toppila power plant. Electricity production in 2004 has made 2200 GWh, 52% were produced by Toppila power plant . The share of fuel peat (3842 GWh) came up to 86%, wood – 13%, and heavy oil – 1%. Oulun Energia company produces heat for Oulu city and the neighboring areas. he significant part of electricity is sold through the distribution network of Oulun Sähkönmyynti company, and a little more than half - in the city of Oulu and in Kiiminki commune .
Matti Pihko, Stora Enso, chief of energy department: Peat is the major external type of fuel for us. We use it as an addition to the biological residues arising as a by-product at our factories. Peat is a good fuel to use together with wood waste and sawdust. It makes possible to use wood fuel of bad quality for the purpose of energy production.
Stora Enso factory, Oulu Heat production - about 4000 GWh 3700 GWh of the total volume is steam and electricity and the rest is used in own technological process. Consumers are: Stora Enso pulp-and-paper factory, and other enterprises located at the territory of the factory. Some heat is delivered to the Oulu city heating system. 80 percent of heat is produced with the help of own wood fuel and bark. The rest of 20 percent are produced using imported fuel from which peat is the major type. Annual peat use comes up to 600 GWh. Besides that power plant is using imported sawdust, bark, wood chips, as well as heavy oil and liquefied gas is used .
Leo Pikkarainen, Kemira, chief of energy department: Peat is one of the major kinds of fuel for us. It is necessary for us, we rely on its availability and price. Earlier we were harvesting peat for ourselves, but now we have leased peat production areas to separate private companies.
Kemira company, Oulu Heat production - 600-800 GWh. Heat is produced, basically, for steam, which, in tern is necessary for methane acid and hydrogen peroxide manufacturing . Electricity is produced for own needs. eat is the basic type of fuel its share in used fuel comes up to 70-80%. Besides it wood fuel, heavy oil and coal is used.

Demand for wood exceeds the supply capabilities

Energy production companies in Oulu are not using only from peat for their activities. Stora Enso produces the basic part of the energy from biological residues arising as a by-product at their factories . Oulun Energia company is in turn the largest consumer of wood fuel besides large timber industrial companies. Wood fuel consumption could be increased, but there is not enough wood at the market.

Tapani Kurkela from Oulun Energia has explained, that company produces about 15 percent of energy with the wood fuel. Use of wood last years has increased by 4,5 percent and the share of wood constantly increases every year. However, opportunities for this purpose are limited, as availability of wood in Northern Osterbotnia is not the best. Collateral production of the wood industry is already used for a long time, so to increase wood chips usage is the only opportunity to increase use of wood fuel.

The sight at a map shows us that in our case geographical location is an important fact concerning wood chips. In comparison with the continental cities, seashore reduces area of wood chips production by almost half. Already now wood fuel in Oulu is transported on distances up to 100 km, and collateral production of sawmill factories even for longer distance if it is economically viable. One of the difficulties is that wood fuel could be imported both from Kainuu and Koillismaa , but these regions are far away from the Oulu city.

The main purpose of Stora Enso company is further long-term increase of wood share in biological fuel used. Regarding our boilers combustion technology, we could completely replace peat with wood, but it is not enough wood on the market in Oulu region. We have a lot of wood fuel consumers in Oulu. We can see a serious competition on the wood fuel market, that, in turn, rises the price. The price is increased also by transportation charges as wood fuel is brought in Oulu from other regions.

Leo Pikkarainen has told, that a share of wood fuel in Kemira company in the best times was 15 percent max. Nowadays the amount of wood fuel used, is less, as the collateral products having a reasonable price is not present any more. Kemira cannot use wood chips, as conveyors and feeding devices in their power plants are not suitable for this type of fuel.

At the power plants of Stora Enso company first of all by-products from cellulose factories are used as a fuel. Peat is the major kind of imported fuel.

Coal and heavy oil as an alternative

The summer of 2004 was unusually bad for peat production, and the beginning of the beginning of this year has forced the largest manufacturers of peat in Oulu region to seriously think about alternative source of energy. The amount of wood for these purposes is not enough; therefore there is only a heavy oil and coal left.

Tapani Kurkela has stressed, that it is necessary to warm Oulu under any conditions. If there is not enough peat or it is too expensive, first of all we shall refuse from manufacture of condensed electricity. In the future we can make 20-30 percent of energy with the help of wood and waste products or even more if not to produce condensed electricity.

Coal is necessary for replacement of the rest amount of peat. We have examined this option too and have purchased the trial coal license for Toppila power plant. Second, more expensive option is the heavy oil. More expensive type of fuel, certainly, increases the cost of heat and electricity.

Stora Enso company can also replace peat with the heavy oil, but that, certainly, is an expensive pleasure. Opportunitiy to use coal as a fuel is discussed, but any decision or plan is not made yet.

Kemira company can also replace peat with only heavy oil and partly by coal. But heavy oil is an expensive decision.

The price and availability are the deciding factors

In the future energy will be produced in Oulu with the help of peat but it will depend on consumers. Price and availability will be a deciding factor for volume of peat harvested in Oulu region.

Cost of the emission licenses for peat and coal is approximately identical, so the price and availability are determinative in nowadays. The amount of fuel peat used, mostly depends on the exchange electricity cost. Oulun Energia company recently has produced extremely much of condensed electricity because of flooding in Norway and cold winter. Electricity price reduction in Northern countries and increase of the price of peat reduces this manufacture, says Tapani Kurkela.

Wood chips in the future most likely will replace peat, but Northern Osterbotnia it will depend a lot on the transportation cost. Waste products are the second major energy source which potential is equal to wood fuel . Replacement of peat with imported fuels is not a reasonable economic method as we are speaking about important local renewable resources.

Major changes in fuel usage are not expected in the nearest year . Energy production remains practically at the current level, and peat will be used, as before, though we intend to increase a share of wood fuel, - tells Matti Pihko from Stora Enso.

Availability of peat, its influence on taxation and emission trading is necessary to take into account too. At the present moment it is impossible to state with confidence what exactly will take place. Decision should be made after 2008 when the next step of the energy price change is expected.

Cost and availability of used fuels it the most important thing. Taxation and other payments connected to the type of fuel used, also strongly influence at the situation. Use of fuel extends, if its price does not increase too rapidly in comparison with alternative types of fuel. Too expensive fuel strongly influences on the price of energy and increases production costs.

Leo Pikkarainen stresses that Kemira company will use peat in the future. It was the reason how our boiler operation time was calculated. It is 15-20 years.

Peat from Northern Osterbotnia

Peat used in Oulu region, is usually transported from the peat production areas located at a distance of about hundred kilometers from city. Situation is the same in all Northern Osterbotnia .

Annual peat production in Oulu province comes up to 7-9 TWh. Oulu consumes about 4-5 TWh. Totally peat production, its transportation, and also direct and indirect activities connected to peat production makes about 2500-3000 man/years. Another significant social point of peat production is unemployment. The most part of the peat production areas are located in the depressed regions. Vapo and Turveruukki companies produce major part of peat in Oulu region. Turveruukki’s largest co-owner (89 %) is the city of Oulu. Besides that, some small manufacturers of peat are operating in Northern Osterbotnia .

National reserves

Usually every year Vapo completes peat production at about 1000 hectares of bogs in the Northern Finland. As Markku Pyykkönen says, it takes rather big efforts to replace cut-away bogs with the new ones, as the ecological licensing procedure lasts for 4-5 years.

There are lot peat bogs in Northern Osterbotnia. Their number is sufficient for peat production, nature reservation and other purposes. Geological reserves of peat bogs in the region are about 1 000 000 ha. According to the Geological Research center 225 000 ha. are available for peat production in this region. Nowadays 17 000-18 000 ha. i.e. 1,8 percent from all peat bogs are used for peat production. The largest peat manufacturer in provinces Oulu and Lapland is Vapo company. It caries out peat production on 14000 hectares, and Turveruukki company produces peat in Northern Finland and in Ylä-Savo on 6000 hectares. Besides that, Vapo has reserved 35000 ha. and Turveruukki 10000 ha. for peat production. The most part of these territories is located in Northern Osterbotnia . According to Turveruukki’s executive director Aulis Martinmäki and Vapo Energia’s department manager Markku Pyykkönen , from the long-term point of view it is important, that fuel peat requirements should be taken into account by the authorities of Northern Osterbotnia . Present level of peat production should be an initial point in these plans.

Long-term plans

If we are speaking about a share of biofuel used in the future, we must compare it with a present situation. Predicted growth of a gross national revenue foresees, however increasing of energy use. From my point of view if we can keep a share of domestic fuels at a present level, it will be good, - but it assumes preservation of peat use at a present level, - says Aulis Martinmäki.

In general, conditions for peat production in Northern Finland are good to make plans for the future. However, factors of uncertainty impact on peat demands in Northern Osterbotnia even more, than in the other regions of Finland. Emission trading standards are weakening profitability of peat, especially if we are speaking about condensed electricity. The significant part of peat in Northern Osterbotnia is used nowadays for these purposes, on Toppila power station in Oulu and on Fortum power station in Haapavesi. Fluctuations of the market prices influence on condensed electricity production. One more very important question in our quickly changing world is long time that is needed for the beginning of peat production on a new peat production area. Ecological and other licensing procedures last for 4-5 years. If license should be obtained for the territory of more than 150 hectares, environmental procedure will take 1-2 years more. Thus, for example, quick growth of the production rate at the beginning of operation period on the new peat production area is impossible, asserts Mr. Pyykkönen . It is necessary to make plans for the long term period, especially if to take into account, that usually peat production area is in operation for about 20-30 years. Licensing procedure, water protection system and preparation of a bog take a long time and need investments, therefore demand for peat should be sufficient to cover all preliminary costs - adds Martinmäki .

Wood supplements peat

Last years Vapo and Turveruukki have expanded the activity in the field of deliveries of wood fuel. Pyykkönen and Martinmäki together with the energy manufacturers from Oulu share the same point of view on the opportunities in this area.

Demand for wood fuel is more, than the offer and this situation is not improving. Wood industry by-products are used already now. Use of wood chips has increased a little, but opportunities here are limited, as thinning cuttings and final cuttings do not provide enough wood, - emphasize both interlocutors

We can’t confront these two types of fuel -- peat and wood, especially in Northern Osterbotnia. They supplement each other, their joint use is the most reasonable option from the point of view of fuel delivery and for other technical reasons, - emphasizes Martinmäki .