Managing Director's Review

The year 2022 was exceptional and challenging in many respects. While the pandemic was finally coming to an end, Russia’s war of aggression on Ukraine began to cause turbulence to the European energy market. The war caused Europe to end the import of Russian energy, which led to an energy crisis. The effects of the war have been reflected both in the availability and prices of fuels and in the volatile electricity market, without forgetting the human suffering and tragedy the war has caused.

Prices of natural gas, wood fuels and electricity increased significantly. The whole of Europe quickly began to detach itself from Russian fossil energy, and our operating environment changed radically.

The unstable global situation and energy crisis were also reflected in Turku Energia’s results, which declined significantly from the previous years. The decline was influenced by the lower than anticipated result of district heating as well as the challenging situation in the electricity market and its impact on the heavily negative result of electricity sales.

The significantly lower results compared to previous years were also partly due to the write-down of the EUR 20 million investments made in the Fennovoima project between 2007 and 2022, as Fennovoima terminated their contract on plant delivery for the Hanhikivi 1 nuclear power plant with Russian Rosatom in May. Turku Energia's share of Fennovoima’s majority shareholder, Voimayhtiö SF, is 3.79 per cent.

Turku Energia's turnover, on the other hand, grew as the result of the high wholesale prices of electricity. Turku Energia's electricity generation affiliates yielded positive results. Turku Energia Sähköverkot also gave a good result. Our customer numbers also increased both in the private and corporate sectors.

The carbon-neutral future is already here

The energy crisis accelerated the transition to renewable and carbon-neutral energy production. Turku Energia has already been making determined investments in green energy for two decades. In 2022, we already produced 78% of our district heating locally with renewable energy sources. Despite the challenging year, we also managed to reduce the specific emissions of district heating by 14 per cent from the previous year. The goal is to have our electricity and heat production carbon neutral by 2029. The energy crisis has not affected that goal; we are moving forward on schedule. In December 2022, we announced additional investments in wind power through the Siikajoki wind farm of our affiliated company Suomen Hyötytuuli Oy. When the project is completed, the share of wind power in Turku Energia’s annual electricity procurements will increase to 33 per cent from the current 20 per cent. At the end of 2022, we also made the decision to invest in a flue gas scrubber for the Artukainen steam generation plant, which will improve the plant's efficiency and further reduce the carbon dioxide emissions.

Reliable electricity and heat in all situations

Turku Energia is responsible for the supply of electricity and district heating for more than 200,000 residents in Turku area. As an energy company, we are also responsible for socially critical functions; one of our most important tasks is to ensure the security of supply and prepare for crises and disruptions. We must be prepared to work efficiently in all situations, such as in pandemics similar to that of the previous years or in the current uncertain global situation.

We have been systematically preparing for crises and disruptions, and we regularly practise for exceptional situations. As a city energy company, we are prepared for technical disruptions, extreme natural phenomena, embargoes, vandalism, sabotage, war, cyberattacks, pandemics, and their various combinations.

In 2022, our security of supply was once again at an excellent level. Turku Energia Sähköverkot Oy transferred electricity to its customers in a very reliable manner, and the average interruption time of electricity supply was exceptionally short in 2022. The security of supply for district heating was 99.99%.

In autumn 2022, the potentially cold winter combined with the question of the sufficiency of electricity import and production capacities required electricity transmission companies to prepare for shortages of electricity. We have also prepared for this situation. During the autumn, we carefully reviewed our operating procedures and communications in preparation for shortage situations. Thankfully, the shortages were avoided, and we did not have to resort to rotating power cuts in Turku. This is thanks to the mild weather, the better than estimated sufficiency of gas in Europe and, of course, the national 'Down a Degree' campaign which encouraged the citizens to save energy even if their consumption was not affected by the price of electricity. Our own customers also made an effort in saving energy. For example, 7.7 per cent less electricity was consumed in the area of Turku Energia Sähköverkot in November 2022 compared to November 2021.

Turbulent electricity prices

The price of electricity was exceptionally high throughout the year. The electricity market did not treat our customers equally; some fixed-term contracts ended at the time of peak prices while some of our customers had renewed their contracts while electricity prices were still low. We also had to make changes to our product offering and temporarily suspend the sale of certain products. In our communications we focused on, among other matters, clarifying the electricity market. Many of our customers opted for exchange electricity contracts in which electricity consumption can be regulated and concentrated on the cheapest hours. The energy crisis also affected our district heating customers, and increases in prices could not be avoided. Thanks to the use of renewable energy sources and our local energy production, we were still able to keep the increases moderate compared to a situation where we would have continued coal-based production.

Our customers are at the heart of our strategy, and we want to provide comprehensive energy solutions that improve energy efficiency and reduce our customers' carbon footprint. In 2022, demand for solar panels increased significantly, and the charging solutions for electric vehicles also attracted interest from both housing companies and private individuals. For our housing company customers, we developed new services to further improve the energy efficiency of district heating.

New premises support multi-location work

Coronavirus restrictions were being lifted in spring 2022, and our personnel were able to enjoy our new facilities at Itäharju in Turku that support multi-location work. The facilities have been designed specifically for the employees of Turku Energia, and the wishes and views of our personnel have been taken into account in the process. The facilities support transparency and personal encounters while also providing spaces for focusing on more demanding tasks. Remote and hybrid work are here to stay, also for us at Turku Energia. But we must not forget the importance of face-to-face encounters. Of course, some of our personnel work on tasks that do not enable remote work. I would like to express my gratitude to our entire personnel, who have done exceptional work throughout the challenging and transformative year of 2022.

Thank you to our customers and partners for the past year! The energy crisis is not yet over, and economic uncertainty, inflation and the geopolitical situation are still affecting the daily lives of us all. We want to be a reliable energy partner for our customers even in uncertain times, and with our comprehensive energy solutions, we wish to make our customers’ lives easier.

Timo Honkanen
Managing Director
Turku Energia