Renewable energy and smart grids market in Finland

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

Finland does not have its own fossil fuels, but it does have wood-based fuels, rich reserves of peat, and extensive wood resources. The government has set an objective of carbon-neutrality by 2035, with carbon-negativity planned for shortly after.

After the launch of Olkiluoto-3 unit in April 2023, the share of nuclear in the power mix increased by 7% (to 42%). The green transition involved enabling new technologies, especially small and modular reactors (SMRs). Biomass has a growing share of the energy mix (9% growth since 2010 to 32%). About 3 gigawatts (GW) of wind projects are currently under construction.

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
• real-time power grid failure monitoring

This has led to real-time billing and improved energy use information for customers. Finland is moving into the next stage of smart grid technology development to handle the growing volume of small-scale generation, customer-level energy storage, electric vehicles, and controllable loads. The goal is to place consumers at the center of the country’s energy and efficiency measures.

Finland offers an open and welcoming market for Canadian goods, services, and investments, with few barriers to trade. However, the overall size of the Finnish domestic market is relatively small. Consumers have high expectations in terms of product innovation, design, quality, and price. High taxes, regulatory red tape, and labor inflexibility still pose challenges to new business.

On August 1, 2021, Finland amended its Electricity Market Act to strengthen supervision of the electricity and natural gas sectors.  The amendment reduced the maximum allowed profit of distribution companies and limited the scale of price increases. The allowed return on capital was lowered to 4%, resulting in a profit decrease of about 40% in 2022 compared to 2020. Following these changes, several energy companies have taken legal action against the government under the 1998 Energy Charter Treaty, which allows firms to challenge policies that negatively affect their investments.

The Finnish Business Environment has a mix of stability and innovation, and the economy is relatively strong with good infrastructure and advanced technology.

The following values are especially important when doing business in Finland:

• teamwork
• punctuality
• direct communication (honesty and clarity)
• equality (companies often have flat hierarchies, fostering creativity and innovation)
• work-life balance (Finland was ranked the happiest country in the world for the eighth year in a row in 2025)

The Finnish Corporate Tax is 20%, which is lower than many European countries. value-added tax ( VAT) is usually 25.5%, but some goods and services have lower rates.

Government assistance programs support the economy in many areas, making it easier for startups to find funding.

There are no current or planned subsidies for new production related to renewable energy. There are also no new tendering rounds under the Finnish premium system, which ended in 2019. Around EUR 35 to 40 million in subsidies are granted each for energy investment and study projects in renewable energy and energy efficiency. The support has been especially targeted at sectors outside the emissions trading scheme.

Finland is one a world leader in the utilization of renewable energy sources, especially bioenergy. A key objective of promoting renewable energy is to reduce greenhouse gas emissions and break away from the fossil fuel-based energy system. Finland is on target to be fully self-sufficient in electricity by 2025. By 2035, Finland's electricity balance is projected to have a surplus of 15 terawatt-hours.

Renewable energy sources account for more than 40% of final energy consumption in Finland. Under the National Energy and Climate Strategy for 2030, the goal is to increase the share of renewable energy to over 50% of final energy consumption by 2030.

Bioenergy is the most important form of renewable energy in Finland, especially energy from forest industry side streams and other wood-based fuels, hydropower, wind power and geothermal heat. Other production methods based on renewable energy have also increased significantly in recent years. Wind power has grown quickly, and solar power is also increasing, especially in places where self-produced electricity is used instead of power from the grid.

For more information on renewable energy and smart grids in Finland, contact nordicommerce@international.gc.ca.