Electricity market | The Finnish company says it has found a way to significantly improve the yield of solar panels

Solar panels are now so cheap that it is worth building solar power plants to fill fields and roofs in Finland as well.

In the middle of May, the panels were installed on the roof of Sanomatalo in the center of Helsinki. Co-founder of Solnet Group, which installs panels Arthur Kulvik has climbed onto the roof of the building that also houses Helsingin Sanomat’s editorial office to talk about the profitability of solar power.

“The prices of the systems vary a lot. For example, the location brings challenges and costs to Sanomatalo,” he says.

Raising the panels to the 40-meter-high roof required traffic arrangements in the core center, and panels have not been thought about in the design of the 25-year-old house either.

A square flat roof would be a much easier platform than the area broken by Sanomatalo’s skylight.

Challenging regardless of the location, installing the system is very profitable, according to Kulvik.

“The drop in panel prices and the development of power has been so drastic. The return on investment is at least around 12 percent and in many locations closer to 15,” says Kulvik.

The panels have been ordered by the German real estate company that owns Sanomatalo. According to Kulvik, the construction of large power plants is on average half cheaper than the installation of a typical detached house.

Solar power plants is therefore rising at a tremendous pace in Finland, even if hardly anyone would have believed it ten years ago.

The grid company Fingrid has already received solar electricity connection inquiries for around 90 gigawatts. It is almost 13 times the amount compared to the current wind power capacity.

Almost all subscription inquiries do not lead to construction, but many projects do come to fruition. HS said on Monday, that the EU directive coming into effect at the end of May will bring panels to the roofs of all public buildings. According to the directive, panels or solar collectors must be installed in all new public buildings by the end of 2026.

Huge solar parks are being built on land without directives.

“Panel technology is developing rapidly. Soon the walls of the buildings should also be covered with panels,” says Kulvik.

When solar power is generated in such quantities, the question arises where all the electricity is used. Regarding wind power, there is already talk of “cannibalization”, which refers to the fact that wind power eats its own profits, as it were.

When wind turbines produce electricity, the price is usually very cheap. And on the contrary, you typically get a good price for electricity when there is no wind.

The same phenomenon applies to solar power. Variations in production depending on the weather also cause challenges for the entire electricity system.

From here for this reason, Solnet has developed a service, by joining which any company that produces solar energy or owns batteries can participate in the so-called reserve market for electricity.

The reserve market maintained by the grid company Fingrid has many different products that balance the production and consumption of electricity from one moment to the next.

By entering into an agreement for the use of Solnet Manager, the owner of the power plant or batteries gives Solnet the authority to package their own production into reserve market offers.

“An individual power plant or battery is often too small to participate in the market, but by combining the holdings of many customers, we are able to participate in several different reserve markets throughout the day,” says Kulvik.

Fingrid has predicted that the need for control electricity will increase even tens of times in the coming decades, as more wind and solar power become available.

It is generally thought that easily adjustable production, such as hydropower, is suitable for the reserve market. What benefit can solar energy that varies according to the clouds have there?

According to Kulvik, solar power is well suited to the so-called down regulation. When electricity is produced in excess of the need, you get a payment from the reserve market for not producing electricity.

“For example, on a windy day in the spring and during a flood, hydropower cannot be reduced much. Then solar power is the one that can flex when too much electricity is generated.”

Batteries on the other hand, may be needed in sudden disturbances.

“At the same time, we integrate into the customer’s energy management system, which is already ready in most properties. You can also get consumption flexibility from there. For example, grocery store refrigerators are a typical item that can be adjusted.”

Kulvik promises that joining Solnet Manager will improve the return on solar power investment by about ten percent. During the power plant’s at least 25 years of operation, it accumulates a significant amount.

In addition to the technical implementation, Solnet acts as a balance sheet manager on behalf of its customers in the reserve market, meaning the company bears the risk that the offered quantities of different reserve products can be delivered.

Solnet earns its salary by taking its own margin between the yield of the reserve market and the amount billed to the customer.

“Everybody wins here.”

Kulvik founded Solnet together Kaj Kangasmäki with ten years ago.

Until now, the company has built solar energy systems for companies mainly in Finland, Germany and the Netherlands. The sale of energy stocks has also started properly this year.

For example, there is enough demand for batteries in the Netherlands. The country’s electricity network is in great trouble, and companies may have to wait a very long time for electricity connections.

“Although a company in the welding industry can acquire a battery with which it can cover short-term voltage spikes,” says Kulvik.

Pair years ago, Solnet’s founders took ownership and growth was financed by the private equity fund owned by the private equity investors Tesi and today by Evli. The goal is to grow and expand to new markets as well.

“Last year, the turnover was almost 30 million euros. 50 million will be lost this year. The result has been positive except for a couple of years, and even the loss years were completely planned,” says Kulvik.