Finland Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in finland, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Energy
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Overview

Finland is one of the world’s northern-most industrialized nations and Finland’s energy consumption per capita and energy needs are high due to its energy-intensive industry, cold climate, and high standard of living.

Finland does not have its own fossil fuels – coal, oil, or natural gas – but it does have wood-based fuels, rich reserves of peat, and extensive wood resources. The Government of Finland has set an objective to make Finland carbon-neutral by 2035 and carbon-negative soon after that. The key pillar of Finland’s national climate policy is the Climate Change Act from 2015. The Act was updated in 2022 and sets new emission reduction targets for 2030 (down by 60 percent), 2040 (down by 80 percent) and 2050 (down by 90 percent, but aiming at a cut of95 percent), compared to the levels in 1990.   The scope of the Act has been extended to cover the land use sector and also includes a target for the land use sector on stronger carbon sinks. According to the Annual Climate Report, additional measures are needed particularly to strengthen the carbon sink of the land use sector to enable the achievement of the Finnish land use sector’s obligation set at the EU level.  Finland’s Climate and Energy Strategy and Medium-term Climate Change Policy Plan was also updated in September 2022. It focuses on the green transition and the phasing out of Russian fossil energy and lists enabling new technologies, especially small and modular reactors (SMRs), as a reliable form of energy production, replacing new development of fossil fuels. The aim is to also utilize SMR technology to bring electricity to remote locations or to, for example, meet the needs of hydrogen production.  Finland’s June 2023 government program states that the Finnish Government will reform the Nuclear Energy Act and its associated regulations by 2026 at the latest to facilitate the construction of SMRs.

On an international scale, energy production and usage in Finland are efficient. Energy-intensive industries have long played a large role in the Finnish economy, spurring the development of efficiency-driven energy systems.

Finland is a world leader in smart grid technology. This is due to the early adoption of related technologies such as household-specific, remotely readable, accurate electricity consumption metering and real-time power grid failure monitoring. This has led to improved energy use information for customers and real-time billing. Finland is now moving towards the next step of smart grid technologies to meet the increased volume of small-scale generation, customer-level energy storage, electric vehicles, and controllable loads with the intention of putting consumers “at the heart” of their energy and efficiency measures.

To attract investment, Finland is creating test platforms (smart networks, renewable energy, energy efficiency, sustainable and smart energy solutions and systems and their related products and services) that are internationally attractive.

Finland has long had significant energy ties to Russia. In the wake of Russia’s invasion of Ukraine, Finland started reassessing its energy relationship with Russia, seeking to terminate existing arrangements and to identify alternatives for future projects. Imports of electricity and pipeline gas from Russia ceased in May 2022, and in the spring and summer 2022, imports of Russian crude oil were stopped. Today it is still possible to import Russian gas to smaller LNG terminals in Finland as companies with long-term contracts to purchase such gas remain bound to them. Small volumes of nuclear fuel from Russia are still being imported for use in the Loviisa Nuclear Power Plant, though Finnish authorities have actively sought to identify alternate sources of nuclear fuel for the country’s nuclear sector.

Leading Sub-Sectors

Nuclear

Finland’s nuclear power operators are: Fortum Oyj, a Finnish state-owned energy company and operator of the Loviisa NPP; TVO Oyj (Teollisuuden Voima Oyj), operating the Olkiluoto NPP (OL1, OL2 and OL3); STUK, the Nuclear Safety Authority is the regulatory body in charge of supervising radiation and nuclear safety in Finland.

As of April 2023, Finland has five operating nuclear reactors in two power plants all located on the shores of the Baltic Sea. Three of the reactors are located in Olkiluoto,of which OL1 and OL2 are ASEA-Atom, Boiling Water Reactors and OL3 is an AREVA NP, Siemens AG, ERP (European Pressurized Water Reactor. The other two operating generators are VVER-440 V213 (Western I&C system and containment) Pressurized Water Reactors located at the Loviisa nuclear plant. The reactors provided 28 percent (11 TWh) of the total electricity generated in the country in the January-June 2023 time frame. There are no inactive reactors in Finland.

A sixth nuclear power plant, the Hanhikivi 1 NPP project in northern Finland, to be operated by Fennovoima, a consortium of 67 companies, and co-owned by RAOS Voima, a subsidiary of Russian Rosatom was in the works. The project was plagued by scheduling delays and cost overruns, however, and in May 2022, Fennovoima terminated the contract between Fennovoima and RAOS for the supply of the Hanhikivi 1 NPP, and withdrew the Hanhikivi 1 NPP Construction License Application.

In April 2023, a Memorandum of Understanding (MoU) was signed between Finland and the United States on nuclear energy and nuclear waste management to intensify cooperation between administration, companies and research institutes in Finland and the United States. The MoU emphasizes closer cooperation in nuclear energy technologies, nuclear waste management and final disposal of radioactive waste, new types of nuclear reactors such as Small Nuclear Reactors (SMRs), nuclear safety, and nuclear fuels.

Finland sees SMRs as a strong potential option for developing clean energy production and is developing an EcoSMR ecosystem for the development of SMR technologies, both for domestic use within Finland and for export to SMR projects globally.

Renewable Energy

Finland is one of the world leaders in the utilization of renewable sources of energy, especially bioenergy -wood and wood-based fuels. The key target in promoting renewable energy is to reduce greenhouse gas emissions and move away from an energy system based on fossil fuels. Renewable energy sources already represented 43.1 percent of energy end-consumption in 2021 and Finland has currently set a target of 51 percent for the share of renewable energy (gross final consumption) in compliance with the EU Renewable Energy Directive. The share of renewable energy in Finland’s gross final consumption is second highest in the European Union.

The use of renewable energy is influenced by Finland’s own energy and climate policies, the obligations and policy decisions under European Union climate and energy legislation, which have the EU committed to achieving climate neutrality by 2050. These are binding for Finland, impacting the market opportunities.

The most important forms of renewable energy used in Finland are bioenergy; fuels from forest industry side streams and other wood-based fuels, hydropower, wind power, and air and ground-source heat pumps. Bioenergy is also generated from biodegradable waste and side streams of agriculture and industrial production and from municipal waste. Solar electricity has a growing role especially where on-site energy generation substitutes for energy bought from the grid. Solar heating is used as a supplement to the main heating system.

According to Statistics Finland’s preliminary data for energy, the total consumption of energy in 2022 amounted to 1.29 million terajoules (TJ), which corresponded to a drop of just under five percent compared to 2021. The mild winter weather and a strike conducted by workers with the Paperworkers Union at the beginning of 2022 reduced the demand for energy. The consumption of natural gas was halved from 2021 due to the stop of Russian pipeline gas imports in May 2022. The share of renewable energy continued to grow, being 41.8 percent of total final energy consumption. Fingrid, Finland’s grid transmission system operator, is developing Finland’s main grid to provide a platform for a clean, emission-free power system with the flexibility to incorporate multiple resources in terms of frequency, transmission, and voltage management.

Wood-based fuels: Bioenergy has a key role in the production of renewable energy. Bioenergy production is largely integrated into the forestry and forest industry. In recent years, energy derived from wood fuels has accounted for around one fourth of Finland’s total energy consumption. Most wood fuels are by-products of the forest industry, including black liquor derived from the pulp-making process and bark, sawdust, and other industrial wood residues. Logging residues and other low value biomass from harvesting operations are also used for energy generation.

In 2022, wood fuels covered almost 29 percent of total energy consumption and they were the most used energy source.

Hydro power: Emission-free electricity generated by hydropower presented 16.3 percent of the total share of electricity generation in 2022. The installed hydropower capacity currently is 3,200 MW with no significant change foreseen to occur in the coming years.

Wind power: Wind power construction in Finland began later than in many other European countries. However, in recent years wind power construction has gained momentum and national construction and production statistics have set new records year after year. At the end of 2022, there were 1,393 installed wind turbine generators in Finland, with a combined capacity of 5677 MW. The volume of wind power production increased by 41 percent in 2022, and the use of wind power as a source of electricity was at a record high (11.6 TWh). Covering 14.1 percent of the overall electricity consumption, wind power eclipsed wood-fuelled electricity and became the third largest source of electricity.

Geothermal energy: Geothermal energy (or geo-energy as it often called in Finland) has taken remarkable jumps forward during the last five years. A heat pump boom started with air-coupled heat pumps, which are still popular and remain the most sold. But the trend is shifting more and more to Ground Source Heat Pumps (GSHPs) both in small scale/residential use and in large scale projects. Geo-energy is expected to take an even greater share of the renewable energy palette in the years to come.

Solar:  Despite its northern location, Finland gets roughly as much sunshine as countries such as Germany or Denmark on an annual basis. In the summer, the long days and nearly round-the-clock sunlight compensate for the dark winters.  Finland’s advantage is its low atmospheric temperature, which improves the efficiency of solar photovoltaic cells. The colder it gets, the better the solar panels work.  The main technical challenges in Finland are related to intermittency of available solar energy (day-night and summer-winter cycles), particularly in the Arctic region. The share of solar power capacity in Finland grew by over 60 percent in 2022, but the share is still a modest proportion of the nation’s total power generation.

Opportunities

  • Finnish Wind Power Association: Wind power projects
  • Wind Finland, October 4, 2023, in Helsinki is the biggest wind power seminar in Finland, gathering over 500 participants from over 12 countries.
  • EcoSMR: Internationally networked Finnish ecosystem dedicated to the development of small modular reactors (SMRs)
  • Finnuclear Association, 2023 Directory
  • TED (Tenders Electronic Daily) online version of ‘Supplement to the Official Journal’ of the EU, dedicated to European public procurement. Finnish energy companies use open tenders as required by European Union (EU) regulations
  • Energia, October 22-24, 2024, in Tampere is the largest biennial energy industry trade event. Focus on energy transition; energy production, power transmission and storage
  • EnergyWeek, March 11-14, 2024 in Vaasa focuses on renewable energy, smart energy, and gas energy. Focus on digitalization, batteries and storage, circular economy, future smart cities, energy regulation, business, and innovation

Resources

  • Statistics Finland, Energy 2022
  • Statistics Finland, Environment and Natural Resources

Information

Interested parties may contact Commercial Specialist Riikka.Aho@trade.gov (local contact)