CO 2 FREE ELECTRICITY The CO 2 -emission-free electricity produced by UPM Energy helps UPM comply with the UN Business Ambition for 1.5°C.
OUR DIRECTION •Profitable growth in zero-carbon electricity generation
•Solutions for industrial energy excellence •Embracing the decarbonisation of society
Hydropower and nuclear power, which generate no CO 2 emissions, constitute 98% of UPM Energy’s electricity production in Finland, making it one of the benchmark producers in Europe. Hydropower is valu- able in securing balance for an increasingly volatile market, whereas nuclear power can provide a reliable baseload capacity for the system. The electricity generated is sold to Nord Pool, the Nordic power market. UPM Energy directly trades physical electricity and its derivatives. We also provide indus- trial electricity consumption and flexibility services to industrial consumers and other energy companies. We have a unique position on the mar- ket, thanks to our considerable experience in industrial electricity consumption and producer of low-emission electricity.
Focus on hydropower generation UPMEnergy’s hydropower generation levels in 2020 were good. During the year, the hydrological balance in Finland was good, due to warm and rainy weather. The annual generation of nuclear power was at a normal level. Due to the COVID-19 pandemic, we had to take significant measures in order to pre- vent transmission of the disease and secure the continuity of our operations. The main aim of these measures was to secure that the hydropower plants were under 24-hour surveillance and control. In July, UPMEnergy sold its share in Kainuun Voima to Kajaanin Energia- tuotanto, owned by the city of Kajaani in Finland. Due to the sale, UPMEnergy’s zero-carbon production capacity rose from 90% to 93% of the total capacity.
Growth in CO 2 -emission-free electricity generation UPMEnergy is investing in power gen- eration that is free of CO 2 emissions. The largest ongoing project is the construction of Teollisuuden Voima’s (TVO) Olkiluoto 3 EPR nuclear power plant unit. According to the updated schedule, regular electricity production at the plant will commence in February 2022. UPM’s share of the capacity of the plant unit is approximately 500MW through Pohjolan Voima. UPMEnergy is carrying out a renova- tion andmodernisation of the Kuusankoski hydropower plant (on the left). The project will be completed in 2022. Market-based solutions drive change in the energy market and new electricity transmission lines help form a closer con- nection between Nordic electricity markets
OUR STRENGTHS •Competitive, zero-carbon electricity generation asset portfolio •Strong track record in physical and financial electricity markets •World-class expertise in the optimisation of industrial energy consumption
Comparable EBIT, EURm
Capital employed (average), EURm
Comparable ROCE, % Personnel on 31 Dec.
Zero-carbon energy generation plays a key role in the pursuit of a carbon- neutral society.
Comparable EBIT decreased due to lower electricity sales prices. Hydropower generation was higher. In Finland, Sweden and Norway, 2020 was the warmest year on record.
HYDROPOWER GENERATES FLEXIBLE POWER
power is the only renewable energy source used to balance the variations in demand for electrici- ty that is easy to adjust and store. Hydropower offers a more sustainable option as a source of balancing power as companies abandon coal-fired condensing power plants. Hydropower plant production can be started, adjusted and stopped quickly and used to bal- ance production and consumption. Hydropower is also a cost-effective way to produce electricity. The plants have a long service life with low operating costs.
and the markets of continental Europe. A strong CO 2 emission trading scheme should be the main tool for the decarbonisation of the energy sector. Thanks to its zero-carbon electricity production, UPMEnergy holds a strong position on the energy market, which is facing a big change. Measures to restore fish stocks Emission-free hydropower does, how- ever, impact the environment by altering river flow rates and their ecosystems. This impact is mainly mitigated through fishery fees in accordance with permit conditions, with these funds being used by authorities
to aid in the reintroduction of fish and the promotion of research into migratory fish stock restoration. In addition to the statutory fishery fees that compensate for the effects of production, we take voluntary measures to protect and restore migratory fish stock. Our migratory fish programme aims to dismantle migration barriers and test new ways to restore fish stocks all around Fin- land. The programme is based on collabo- ration with stakeholders. In the programme, we dismantled an old mill and a mill dam at the Sapsokoski rapids in Sotkamo in Finland, which opened up a
migration route to twelve riffles upstream of the site. UPMEnergy funded also the construction of a reproduction area for Saimaa landlocked salmon in the Pielisjoki river. The area was inaugurated in 2020. Reducing energy use and emissions to air on page 88 www.upmenergy.com
UPM has 8 hydropower plants and owns signif- icant shares of other energy companies’ plants. We are gradually renovating and modernising the Kuusankoski hydropower plant. The project will be completed by the end of 2022. Technology has improved so that modern turbines and generator units generate signifi- cantly more power from the same amount of water. The average energy production volume is estimated to increase by more than 8% from the current annual volume of 180 GWh to around 195 GWh. This is roughly equivalent to the amount of electricity used by 800 electrically heated single-family houses in a year.
In addition to improved efficiency, modern hydropower technologies are also better for the environment. Hydropower plants respond to the increasing need for renewable energy. Hydro-