In the past, Finland imported a significant portion of its electricity, primarily from Sweden, occasionally from Estonia and nearly 10 percent from Russia. However, the need for imports has been replaced by the addition of a new nuclear reactor and onshore wind farms.

In recent years, market participants have made substantial investments specifically in onshore wind farms.

"Today, we have more than eight gigawatts of onshore wind capacity. If we compare this to the size of the Finnish market, on a very cold and windy day, Finland consumes 14-15 gigawatts," Mikko Heikkilä, former head of strategic grid planning and current public relations manager at Finland's grid operator Fingrid, explained.

According to Heikkilä, Finland sees great potential in onshore wind power going forward. "Finland is one of the most sparsely populated countries in the European Union. This means there is a lot of open space and opportunities to develop new capacities, particularly for wind energy. Our wind conditions are not the best in the world or even in Europe, but they are still competitive," he said, adding that Finland's competitiveness is further supported by the ability to build relatively tall wind turbines, which are also more productive, making energy production cheaper.

The development of wind farms is also facilitated by local support. "People living nearby are generally in favor of them," Heikkilä noted. A key factor in this support, he explained, is the taxes paid to local communities, which they can use as they see fit. However, discussions are ongoing about whether a nationwide minimum distance should be established between wind farms and residential buildings.

Although Finland's western coastline has potential for offshore wind farm development, it remains significantly more expensive compared to onshore wind farms — nearly twice the cost. "Since onshore wind farms are built without subsidies, it doesn't really matter whether electricity is generated at sea or on land. We want the cheapest possible energy source," Heikkilä stated.

Industrial interest remains strong

Finland's electricity prices are among the lowest in Europe, surpassed only by Sweden and Norway. As a result, energy-intensive industries have shown significant interest in the Finnish market.

According to Heikkilä, Fingrid has received grid connection applications totaling approximately 60,000 megawatts, most of them in recent years and across a wide range of industrial sectors.

"Some industrial sectors still rely on fossil fuels, but in many cases, these can be replaced by electrification of processes," he said. Additionally, new industries are emerging, such as green steel production and the hydrogen industry.

"One major growing sector is data centers, and Finland has many data center projects underway. There are big players like Google and Microsoft, but also many other companies. The development of artificial intelligence requires significant power, and many market participants are looking closely at Finland. For example, Microsoft is evaluating the suitability of three locations in the capital region," he added.

Data centers generate a significant amount of heat, which could be repurposed for district heating. "For instance, in Espoo, where Microsoft is building a data center, the excess heat will be fed into the district heating network, allowing it to replace part of the current fossil fuel-based heating system," Heikkilä explained.

Fingrid expects Finland's annual electricity consumption to double over the next decade. "Currently, Finland consumes approximately 80-83 terawatt-hours per year. This level has remained relatively stable over the past 20 years, but due to the factors mentioned earlier, we predict that by 2034, annual consumption will reach around 160 terawatt-hours."

This will also require a significant increase in energy production. A large share of new generation capacity, particularly wind power, will be developed in northern Finland and along the western coast, where there is more space and fewer residents.

"Most consumers — both households and industries — are in the south, particularly around the capital region. This means we need to build a substantial number of power lines from north to south," Heikkilä said. He noted that approximately 6,000 kilometers of new power lines will be needed, with an investment of €4 billion over the next decade — up from the previous estimate of €1 billion.

"Building a new power line typically takes seven to eight years. That's why it's crucial to understand future expectations. We conduct studies, monitor industry developments and plan accordingly. We started accelerating investments a few years ago, so in the coming years, we will begin construction, with much of the work taking place over the next four to five years. But this goal is always shifting — we try to anticipate how future plans might change, whether we need to invest even more or slow down if developments don't progress as expected," he said.

Price volatility necessitating storage solutions

According to Heikkilä, Finland's energy market is highly diverse. While the state previously subsidized the development of wind and solar power, in recent years, the expansion of new generation capacity has been driven primarily by the free market.

"Wind energy accounts for a large share, nuclear power an even larger one and we also have a significant amount of hydropower, which is crucial for balancing the system. Additionally, there are combined heat and power plants in cities and industrial areas that use biomass or fossil fuels," Heikkilä explained.

Cross-border electricity connections are also important. In addition to Estonia, Finland is connected to central and northern Sweden. Currently, Finland and Sweden are building a new connection in the northern parts of both countries, which is expected to be completed by the end of this year.

The new link will play a key role in balancing the system, as northern Sweden's abundant hydropower adds flexibility to the electricity market. "In the future, we want to see even more connections. We are working on this with Estonia's Elering and Sweden's Svenska kraftnät. It is better to be part of a large market and use the entire European electricity system for balancing," he said.

A third key factor, according to Heikkilä, is storage capacity. Finland's system operator has received inquiries regarding the development of around 20 gigawatts of battery capacity, though only a few hundred megawatts have actually reached the planning or construction phase.

"On one hand, Finland has some of the lowest electricity prices in the EU, but at the same time, they are among the most volatile — this makes storage solutions more attractive. Additionally, battery technology prices have dropped significantly in recent years," he noted.

Battery technology is well-suited for short-term storage, ranging from a few hours, and plays an important role in providing flexibility throughout the day.

"In the longer term and across seasons, aside from the European electricity market, two factors are crucial. First, demand flexibility — much of Finland's electricity consumption can be adjusted, and over the past two years, we have seen both households and industries respond to electricity prices, which benefits the system. Second, even with flexible demand, strong interconnections and battery storage, we still need additional backup for those winter weeks when it is extremely cold, there is little wind or there are issues with nuclear power production or cross-border connections," Heikkilä explained.

To address this, Finland is developing a plan for a targeted capacity mechanism aimed at facilitating the construction of new power plants, such as gas-fired plants, that could be used in such situations. "I understand that this is also being discussed in Estonia, so we are likely moving in the same direction," he said.

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