Arctic Smartness decentralised bioenergy solutions

• Energy topics: Bioenergy/Cogeneration/Combined Heat and Power/Self-sufficient farms/communities
• S3 domain: Arctic Smart Rural Communities
• Innovation type: Managerial/Social
• Level of Good Practice implementation: Regionalm dolor 

The Arctic smart rural community cluster is actively working on decentralised bioenergy solutions in rural Lapland. The cluster is established as one implementation activity of the Arctic S3 strategy, which aims at sustainable utilisation of arctic natural resources. The goal of the cluster is to decrease dependency on fossil fuels and create local supply for sustainable production of biofuels, heating and electricity by refining the biomass from forest and non-food agriculture sources. With modern technology, an individual farm or a whole village can be transformed to become almost energy-independent with moderate investments.

The challenge is to increase the local biomass feedstock utilisation based on sustainable bioenergy production in the farms and villages of Lapland. Decentralised bioenergy production in rural area is framed within  sustainable regional development and SME support activities; it  aims at reaching self-sufficient energy production in communities (farmers, energy SMEs and public premises). This is seen as an efficient way to improve living conditions of members of rural communities. Local energy production creates a local market for biomass replacing the consumption of fossil fuels, for which capital leakage from the communities is huge. Arctic smart rural community cluster supports a holistic model of circular economy including energy self-sufficiency and food production. Energy production consists of comprehensive utilisation of local resources and bio-based feedstock including forestry and farming residues. Higher value products are included in the value chain, but the biggest benefit (input-output ratio) for the community is achieved by producing biofuels, electricity and heating.

The cluster was initiated by ERDF project Arctic Smartness Portfolio in 2015 led by Regional Council of Lapland together with four other regional clusters. The coordination of clustering continued with Arctic Smartness Excellence ERDF project led by University of Lapland. Work started in Summer 2015 and in Summer 2016 the cluster earned the bronze label provided by European Secretariat for Cluster Analyses. Cluster development continues, and during 2017 the focus has been even more on enhancing the business interface. Integration and active participation of local SMEs has been successful and work continues during the second half of the year. The cluster aims at having new RES investments implemented in Lapland during the next couple of years.

The cluster is led by a Cluster Manager Johannes Vallivaara with a wide experience in business development and financial consultation of rural business sectors in Lapland. The Cluster Manager is supported by an expert from the Regional Council of Lapland, in charge of the regional development part and by another expert from the Applied Science University of Lapland, leading the knowledge development part.

The cluster has a “decentralized energy” thematic group consisting of 26 members from business life, municipalities, educational organizations, and developers. The thematic group has created a Lapland’s decentralized energy program which is a strategic tool for development work in field of decentralized energy development. The cluster’s target groups are companies or people who are planning to establish a business in energy production or energy savings industry.

Cluster work is based on regional cooperation and strong coordination with all relevant stakeholders in the value chain, interested to develop the decentralized energy solutions. The cluster has solid operations on energy based regional programme of decentralised renewable energy solutions implementation. It also implements other initiatives such as the cooperation with the vocational institute Lappia in view of developing energy entrepreneurship in the environment of self-sufficient farm (biogas CHP, water treatment and plans for liquefied biogas refining process). In addition, communities’ understanding of the potential of decentralized renewable energy solution for the local economy has been increased. This has generated an interest to invest in new small production units.

The energy-related activities in the cluster are funded through local ERDF and EAFRD. In addition, energy-related initiatives have received funding from the Ministry of Agriculture and Forestry.

Furthermore, each organization involved in implementing decentralized energy program has put own budget into the projects.

Public funding sources

• ESIF T01 (research and innovation) 
• ESIF T04 (low carbon economy)
• ESIF other or ESF
• National Funds

Results achieved

The cluster has achieved a status of trusted and successful partner in European cooperation. Wide interest around EU and wide recognition have led to a situation where strategic focusing plays a bigger role. Cluster had set clear standards for cooperation and the ultimate goal is to improve regional conditions and work with local SMEs in Lapland with EU support. Local entities have been actively taking part to future planning and on-going activities like creating a decentralised renewable energy solutions programme for Lapland. Rural entrepreneurs in the communities and SMEs operating on bioenergy (heating mostly) have been interested in cooperation and the expectation is that this interest will be growing. Investment plans have been made for communities and financing potential has been mapped for several potential cases during the past two years.

Future perspectives

It is expected that rural communities will take ownership of their energy production to a larger extent than before thanks to this cluster cooperation model. Also, other parties outside of the cluster are interested to support the common goals of more self-sufficient Lapland in energy production.

Governance practices on regional level. Partners and stakeholders' willingness to cooperate comes naturally. Raw material availability and sustainability. Mapping data and knowledge has led to investments. SMEs network established and growing.

Most important difficulties

Sparse population causes long distances in Lapland. Lack of critical mass and skills to create mutual understanding and goals is challenging. With minimal resources need for focus and allocation is crucial but this can cause inefficiency and slow down the development due to varying opinions. Believing and understanding of real potential and attitude of taking ownership of development in the region has been a challenge for the communication around the rural communities.

Lessons learned

Cluster operations must be based on real needs of SMEs, especially needs of entrepreneurs who are capable of investing and growing their business based on arctic natural resources sustainably. Also, enterprises suffering from structural challenges, like limits of legislation when implementing decentralised RES, are in the focus of the cluster. Pilot investments have a crucial role. Leading the way as pioneer has to be taken account seriously in the region. Wide support for first investors of new business models. In practice, this means for instance securing the supply of biomass with regional cooperation activities and regional policy planning.

• Regional cooperation model for other rural and sparsely populated areas
• Governance of cluster and implementation for energy development
• Resource efficiency in existing pilot cases like Lappia vocational institute farm (CHP and water treatment etc.)