Review by the President

Pohjolan Voima’s operations in 2009 were successful and flourished in all sectors. The Group’s total electricity supply was 21.3 TWh, covering 26% of the total electricity demand in Finland. A special mention should be given to the all-time record high production of 14.5 TWh at the Olkiluoto nuclear power plant, owned by our subsidiary Teollisuuden Voima.

During the report year, Pohjolan Voima’s newest bioenergy-based power plants in Kerava and Lappeenranta were completed. Both investments have been success stories. The plants were commissioned just before spells of low winter temperatures and high electricity prices. Natural gas that had become more expensive was replaced with Finnish fuels; their supply has an extensive positive effect on employment.

Towards carbon-free production

The share of Pohjolan Voima’s carbon-neutral electricity was 72% of the total production. In spite of a slight decrease on the previous year, the future trend is clear. We are prepared to increase the share of our emission-free production to 90% during the next three or four years.

The year 2009 was characterised by a difficult financial situation on a global scale, and industrial electricity demand decreased from the earlier record years. As part of our long-term development efforts, there were several projects under preparation in our Group, but no significant new investments decisions were made. The main reasons for this were the general uncertainty concerning the economy and the limited progress made in energy policy.

Decisions on energy policy called for

Achievements in energy and climate policy in 2009 were negligible: a global climate agreement was not reached in Copenhagen, decisions for boosting the use of bioenergy and hydropower were not made, the almost two-year-old application for a Decision in Principle on Olkiluoto 4 is still waiting for a political decision, and the preparatory work for a feed-in tariff for wind power was delayed. These unsolved questions constituted an obstacle to Pohjolan Voima’s projects and in the energy sector as a whole. The electricity supply in Finland relies too heavily on imports – we need decisions in energy policy.

A praiseworthy and essential policy reform was to focus efforts on fighting off climate change to 2050 instead of 2020. In the energy sector, reforms are slow and require investments worth several billion euros. Miracles cannot be performed in just ten years; however, over the next forty years, the possibilities to introduce almost carbon-neutral energy production in Finland are entirely realistic. At the same time, however, this means increasing energy costs. The final bill depends mostly on whether it is possible to increase nuclear energy and whether cost-effective solutions in renewable energy will prove successful.

Pohjolan Voima prepared to keep growing

The future of Pohjolan Voima looks good. I am convinced that the Finnish Government and the Parliament will make a positive decision on Olkiluoto 4. Wood-based energy production in the Group can be significantly increased given that tailor-made solutions for supporting it are available. The demand for increasing hydropower and constructing more flood water reservoirs is still acute, and I believe that the energy policy will find its correct direction in this respect as well. During 2010, reform of energy tax will be prepared, hopefully removing the windfall tax threat and relieving the tax burden, currently higher than in competitor countries, on energy-intensive export industry operating in the global market. This would make possible a new, much hoped for boom in industrial investments in Finland.

Pohjolan Voima’s effective energy production and construction projects and project studies helped to keep the company developing and growing. I wish to thank our employees, shareholders and partners for the accomplishments of the past year.

Timo Rajala
President & CEO
Pohjolan Voima Oy