Factsheet: Production subsidies for renewable electricity

Production subsidies for renewable electricity

Key Information
Full name of Instrument & Measure (English): 
The Act on Production Subsidy for Electricity Produced from Renewable Energy Sources (1396/2010) & Decree on Production Subsidy for Electricity Produced from Renewable Energy Sources (1397/2010)
Full name of Instrument & Measure (native language): 
Laki uusiutuvilla energialähteillä tuotetun sähkön tuotantotuesta (1396/2010) & Valtioneuvoston asetus uusiutuvilla energialähteillä tuotetun sähkön tuotantotuesta (1397/2010)
Description: 
The Act on Production Subsidy for Electricity Produced from Renewable Energy Sources (1396/2010) and Decree on Production Subsidy for Electricity Produced from Renewable Energy Sources (1397/2010) set the requirements for wind, biogas, forest chips and woody biomass based power plant acceptance to subsidy mechanism and the levels of the subsidies. Wind, biogas and small-scale (< 8 MVA) woody biomass based electricity generation is supported by a feed-in tariff mechanism. The plants must be new to be eligible. The producer is paid a tariff, which is the difference between the agreed price and the spot market price of electricity (last 3 months’ average). For electricity produced in a woody biomass or a biogas CHP plant, an increased tariff is paid in the form of a heat premium if heat is produced for utilisation and the overall efficiency of the plant meets the required standards. Large-scale biomass based electricity production is supported by a sliding feed-in premium mechanism (paid on top of the market price). Existing plants are also eligible for this mechanism. The level of feed-in premium is dependent on the CO2 emission allowance price and the excise tax of peat. The applicable biomass types are limited to those ‘delivered directly from forests’ (branches, tops, stumps, small diameter wood, etc.). Thus, by-product biomasses such as residues from wood and forest industries (bark, sawdust, chips for pulp mills) are not eligible. For forest chips produced from wood suitable for forest industry (pulp or sawmills) and which originate from forest stands consisting of wood classified as ’large sized merchantable wood’, the tariff is 60% of the normal level. This regulation was adopted to ensure that wood suitable for forest industry will not be used as energy. The maximum duration for both mechanisms is 12 years.
Goal/Aim: 
Support renewable electricity

Sector/Topic targeted:

Responsible Authority: 
Energy Authority

Status:

Year Instrument & Measure Started: 
2010
Year Last Instrument & Measure was last Amended: 
2016