The European Commission (EC) has approved state aid to support the development of a large-scale pumped hydro energy storage (PHES) system in Finland. The $27.5 million investment grant will be used to build and install a 75MW/530MWh PHES at a disused metal mine site. It is located in Pyhäsalmi, about 470 kilometers north of Helsinki.
SEVO, a subsidiary of Finnish energy company EPV, is developing the hydro energy storage facility. The site was Europe’s deepest base metals mine until its recent closure. SEVO intends to complete the project by the end of 2025.
The European Commission announced earlier this week that the project met the criteria for state aid under its rules. The commission concluded that the PHES plant would facilitate economic activity. It would also create an incentive for private investment in a project of public interest.
The Commission also determined that its impact on competition and trade within the European Union (EU) would be limited, owing to the increased use of renewable energy, which is a shared EU goal.
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Construction of the hydro energy storage system in Finland
Meanwhile, the grant funding approved covers only a portion of the project’s costs. The project is anticipated to create jobs and other societal benefits. Thus, the EC determined that any distortive effects on EU competition and trade would be outweighed by positive effects.
SEVO plans to convert the mine into a PHES plant that will participate in both spot and balancing markets. According to the EC, its seven hours of stored energy can directly replace gas-fired balancing units on the system.
Using power generated cheaply from abundant renewable energy sources like the wind during off-peak demand to charge the system and then discharging to help the network meet peak demand later will also save money versus fuel costs for petrol power plants. It is the European Commission’s latest ruling on energy storage-friendly state aid.
