Finland

Key facts

Finland is 28% electrified

Finland imports 4.2% of its energy consumption and produces 83 153 GWh a year; [1]

The Finnish electricity to gas price ratio is around 0.8 for industry and they do not track the households price ratio. [2]

The Finnish electricity mix is composed of
  • Nuclear
  • Wind
  • Hydropower
  • Biofuels
  • Coal
  • Solar PV
  • Waste
  • Other

Current state of electrification

Residential buildings in Finland

Buildings

  • Buildings represent the biggest part of electricity consumption with 21.8% for commercial and public services and 29.8% for residential
  • Finland has 1.9 million heat pumps installed. [3]

Industry

  • Industry represents 44.6% of the Finnish electricity consumption [4]
  • The sectors that consume the most electricity are: [5]
    • Pulp, paper, and paperboard manufacturing: 11.5 to 13.0 TWh | 46% to 50% of industrial electricity
    • Metal production and processing (steel, stainless steel, copper, and zinc): 5.5 to 6.5 TWh | 22% to 26% of industrial electricity
    • Chemical and petrochemical industry: 2.0 to 2.5 TWh | 8% to 11% of industrial electricity
Transport — from the design

Transport

  • Transport represents 1.8% of the Finnish electricity consumption [6]
  • The data for the total number of vehicles comes from Statistics Finland [7]
  • The electric fleet is composed of [8]
  • 177 734 electric vehicles (+17 796 year on year). — this represents 5.01% of the ~3.55 million passenger cars on Finnish roads.
  • 6 827 light commercial vehicles (+711 year on year) — this represents 5.01% of the ~3.55 million passenger cars on Finnish roads.
  • 1 116 electric buses (+8 year on year) — this represents roughly 8.93% of the ~12 500 buses on Finnish roads
  • 234 electric trucks (+14 year on year) — this represents roughly 0.25% of the ~95 000 trucks on Finnish roads
  • 4 494 light electric vehicles (+300 year on year) — this represents roughly 1.45% of the ~310 000 motorcycles and mopeds (light vehicles under 4 wheels) on Finnish roads

Grid and flexibility

Transmission & Distribution

Overall, Finland’s electricity transmission and distribution grid is in very strong shape, but it is navigating localized bottlenecks due to a rapid surge in renewable energy.
However, structural congestion challenges are emerging along specific corridors. A vast majority of new onshore wind generation is concentrated along the west coast and in the north, whereas heavy industrial demand and population centers remain in the south. This geographical mismatch creates significant north-south transmission bottlenecks. To manage stability, Fingrid has had to temporarily restrict or manage new inverter-connected generation on the west coast while rushing grid reinforcements. [9]
Fingrid is executing a massive grid development plan (investing roughly €2 billion between 2026 and 2029 alone) to build 3,800 km of new 400 kV transmission lines. [10]

Storage

The total installed battery energy storage system (BESS) capacity connected to the grid in Finland is approximately 1.6 GW . [11]  
~3,100 MW of flexible conventional hydro capacity (primarily in Northern Finland) used for balancing and system reserves. [12]
Substantial thermal heat storage facilities (such as the Vaskiluoto 40 MW / 8,000 MWh thermal storage in Vaasa and Helen’s underground cavern heat storage in Mustikkamaa/Vantaa). These systems allow district heating utilities to run industrial heat pumps and electric boilers during low or negative electricity price periods, effectively acting as massive indirect electricity storage.

Smart meters

Finland has a smart meter penetration rate of over 99% [13]

Support schemes

Electric Vehicles (EVs)
Car Tax Exemption & Company Car Benefit Reductions [14]

100% exemption from registration car tax for fully electric passenger vehicles. Reduced fringe benefit taxable values (EUR 170/month reduction for BEV company cars plus an additional EUR 120/month deduction if the employer covers operating costs).

EV Charging Infrastructure Subsidies [15]

30% to 35% direct investment support for establishing public and semi-public charging infrastructure, covering standard AC chargers (>11 kW) up to higher-power DC fast-charging installations.

Heat Pumps & Residential Upgrades
Oil Heating Replacement Grant [16]

EUR 4,000 direct capital grant for single-family homeowners transitioning away from fossil oil heating systems to air-to-water heat pumps, ground-source heat pumps, or district heating connections.

Kotitalousvähennys (Household Tax Credit) [17]

Up to 60% tax credit on labor costs (capped at EUR 3,500 per person/year) specifically for replacing old oil boilers, alongside a standard 35% labor tax credit (capped at EUR 1,600) for general energy efficiency and heat pump retrofits.

District Heating Electrification
Energy Aid for Heat Pumps & Waste Heat Recovery [18]

15% to 30% capital grants (administered via Business Finland / Ministry of Employment and the Economy) awarded to municipal heating providers and energy utilities integrating large-scale industrial heat pumps and waste-heat recovery loops into district heating networks.

Industrial & Business Electrification
Business Finland Energy Aid (Energiatuki) [19]

15% to 40% direct investment grants for commercial and industrial projects replacing fossil-fuel process heat with electric boilers, industrial heat pumps, or deploying advanced energy efficiency technologies.

Industrial Electricity Tax Relief (Class II Rate) [20]

Structural tax reduction lowering the excise duty on electricity for manufacturing, mining, and large-scale data centers down to the minimum EU allowable rate (€0.0005/kWh) to economically incentivize industrial electrification and fuel switching.

Targets

Overall target: Increase the share of electricity in final energy consumption from roughly 25% today to 50%-66% by 2040. [21]

Electricity generation capacity is projected to grow nearly three-fold by 2040 to support this cross-sector transition.

Buildings

  • Phase out fossil oil heating in all residential and commercial buildings by 2030 (and in public buildings by 2024). [22]
  • District heating transition: Accelerating the shift away from peat and combustion toward industrial-scale heat pumps, electric boilers, and waste heat recovery to reach zero-emission heating by 2035. [23]

Transport

  • Target: At least 750,000 electric passenger cars and 50,000 electric vans/trucks on Finnish roads by 2030. [24]

Industry

  • Target framework: Governed by voluntary sector-specific roadmaps (developed by industry associations like Finnish Energy, Chemical Industry Federation, and Technology Industries). [25]

Gaps and Challenges

A vast majority of new low-cost wind generation is built along the northern and western coasts, whereas major industrial demand and population centers remain in the south. This creates severe north-south transmission bottlenecks, leading Fingrid to temporarily restrict or actively manage new inverter-connected generation on the west coast while rushing €2 billion in high-voltage grid upgrades (2026-2029).

Transitioning basic metals, chemical refining, and pulp/paper facilities requires massive capital investment. While Finland offers Class II electricity tax relief, spot-market price volatility and high CAPEX create uncertainty without long-term corporate power purchase agreements (PPAs) or direct capital grants.

Transport represents only 1.8% of total national electricity consumption, making it the least electrified sector. While passenger EV adoption is expanding toward the 2030 target (750,000 EVs), heavy freight electrification faces high vehicle costs, depot charging bottlenecks, and grid capacity constraints along northern transit corridors.

Assessment

Buildings

On track

Over 1.9 million heat pumps installed, >99% smart meter penetration, and clear mandates to eliminate fossil oil heating by 2030 (2024 for public buildings).

Transport

Lacking

Accounting for only 1.8% of power consumption, electrification lags behind buildings and industry, requiring faster deployment in heavy-duty freight and charging infrastructure.

Industry

Lacking

High ambition and structured sector roadmaps exist, but major fuel switching (electric arc furnaces, hydrogen in chemicals) requires heavy up-front CAPEX and risk-mitigation tools.

Power system

On track

Over 81% clean power generation (39.2% nuclear, 25.3% wind, 17.2% hydro) with low reliance on fossil imports (4.2%), supporting long-term power growth.

Grids

Lacking

Strong overall grid quality and 1.6 GW battery storage, but acute north-south bottlenecks and west coast generation restrictions persist until Fingrid’s €2B grid expansion completes.

Policy framework

On track

Clear 2035 carbon neutrality target, structural Class II electricity tax relief, and targeted grant support through Business Finland and RRF funds.

  1. 1IEA, “Finland”, accessible here.
  2. 2European Commission, “Electrification Action plan”, accessible here.
  3. 3SULPU, “Heat pumps sales returned to a growth path. A rise of 10%. Pump sales in Finland already worth 10 billion.”, accessible here.
  4. 4IEA, “Finland”, accessible here.
  5. 5Statistics Finland, “Energy use in manufacturing”, accessible here.
  6. 6IEA, “Finland”, accessible here.
  7. 7Statistics Finland, “Transport and tourism”, accessible here.
  8. 8European Commission, “Alternative fuels observatory”, accessible here.
  9. 9Fingrid, Main grid transmission reliability rate excellent in 2025”, accessible here.
  10. 10Fingrid, “Main grid development plan 2026-2035”, accessible here.
  11. 11Abo Akademi, “A review od the current status of the energy storage in Finland and future development prospects”, accessible here.
  12. 12Fingrid, “the combined capacity of electricity storages in Finland now exceeds 1 000 MW”, accessible here.
  13. 13Wirepas, “The sauna can wait. The grid cannot.”, accessible here.
  14. 14Finnish Tax Administration (Verohallinto), "Car taxation", accessible here
  15. 15Accelerating to Zero Coalition, "Finland charging infrastructure support framework", accessible here
  16. 16Ministry of the Environment (Ympäristöministeriö) / ELY Centre, "Oil heating replacement grant for residential buildings", accessible here
  17. 17Finnish Tax Administration (Verohallinto), "Kotitalousvähennys (Household deduction for renovation and energy work)", accessible here
  18. 18Ministry of Economic Affairs and Employment (Työ- ja elinkeinoministeriö), "Energy aid for district heating decarbonization", accessible here
  19. 19Business Finland, "Energy aid for investment and audit projects (Energiatuki)", accessible here
  20. 20Finnish Tax Administration (Verohallinto), "Electricity tax and its categories", accessible here
  21. 21Ministry of Economic Affairs and Employment of Finland, “Energy and climate strategy”, accessible here.
  22. 22European Commission, “Energy Efficiency measure ‘phasing out oil heating in public buildings”, accessible here.
  23. 23Ministry of the Environment, “Finland’s national climate policy”, accessible hereµ.
  24. 24Finnish Government, “Roadmap for fossil free transport - measures to reduce transport emissions”, accessible here.
  25. 25Ministry of Economic Affairs and Employment of Finland, “Low carbon roadmaps”, accessible here.