Getting back on track with clean investments in Finland

Finland is one of the best places in the world to expand wind power. In the end of 2024, the total wind power capacity in Finland was 8.36 gigawatts (GW). Capacity grew 20 % from the previous year.[1] Fundaments for strong future growth are also there: demand for clean electricity is set to grow due to energy and industry transformation as well as digitalization across all sectors.

While onshore wind power has dominated the renewable energy landscape in Finland, solar power capacity is also growing steadily. In the end of 2024, there was 123 MW of utility scale solar capacity installed [1] and over 200 projects are in different stages of development with an average size of 82 MW[2]. Solar projects are scalable and require relatively short development times. Solar power can also be paired well with wind power in hybrid projects, where adding solar capacity next to wind farm can improve the utilization of grid connection due to production profile synergies.

Battery Energy Storage Systems (BESS) are increasingly used for balancing the intermittent nature of wind and solar – both in power system level and locally. BESS can enhance grid stability, decrease power producer’s balancing costs, and be used for other industrial applications, such as peak shaving. Over 100 MW of BESS capacity is operational today, and hundreds of megawatts of new capacity in planning or under construction.[2]

Project financiers view wind and solar power as a stable and attractive investment, yet to secure predictable long-term revenue streams power purchase agreements (PPA) with electricity off-takers are typically required. BESS projects are also compelling due to their potential for high returns, derived mainly from growing demand for grid stabilization. Investment opportunity is evident – at least as long as the prices in ancillary service market remain high.

Increasing demand for clean energy creates the business case to invest in supply side. In the short term, the biggest off-takers for clean electricity will be existing industries, district heating sector and datacenters – in the longer-term hydrogen producers will come into play with substantial power demand.

Finland offers attractive sites for data centers due to its cool climate, robust infrastructure and demand for excess heat, that can be utilized in district heating networks. These facilities require significant amounts of electricity. Companies like Google, Meta, Amazon and Microsoft are reducing their environmental impact by powering their data centers with clean electricity which is in ample supply in Finland. Latest good news was Google’s plan to expand its data center infrastructure in Finland[3] – investment in Muhos and Kajaani regions could exceed 1 billion euros.

In the district heating sector, electric boilers and heat pumps have become business-as-usual, replacing combustion-based heat production and requiring massive amounts of electricity. Industrial players are also seeking means to reduce the use of fossil fuels in their processes; electrification is often seen as an attractive option in companies’ investment strategies.

Electrification of large-scale hydrogen production has faced headwinds globally[4] when projects were cancelled or put on hold during 2024 – this has been the case also in Finland. However, several small projects are proceeding and have progressed further from the investment decision[2]. Hydrogen will shape industrial renewal in selected applications in longer term, while in the near future, the demand for clean electricity is driven by more mature technologies, where the business case is robust.

When entering 2025, the outlook for green transition looks cautiously optimistic. Long-term gains of investing in capital-intensive green transition projects are starting to outweigh short-term financial hurdles. Interest rates are finally heading downwards, which means that the cost of capital is starting to make sense in the investment calculations. Inflation in Europe and the US has also decreased to a more sustainable level making it easier to forecast costs even though labor and material costs have not fully returned to the pre-2021 level.

Overall, more M&A activities can be expected during 2025. Private equity investors with broad investment horizons and strong balance sheets are looking to meet their clean investment mandates and build project portfolios that create value in long-term. Capital funds hold record amounts of uncommitted capital[5] ready to be deployed prior to their planned investment period closings.

Finland offers excellent investment opportunities for both supply and demand side of clean energy; both are needed for green transition to proceed. While recent years have been challenging for investors, the outlook is increasingly positive. Rejlers is well positioned to support project developers and investors in all project stages. Rejlers’ wide pool of experts have a track record in advisory services as well as in design, engineering and project deliveries. Our expertise covers the whole energy value chain: production, storage, distribution and end-use.

[1] Tilastot – Suomen uusiutuvat ry
[2] Vihreiden investointien dataikkuna – Elinkeinoelämän keskusliitto

[3] Google plans ”historic” data centre expansion in Finland | Yle News | Yle
[4] US and European hydrogen stock prices collapse as prospects deflate

[5] Private equity dry powder growth accelerated in H1 2024 | S&P Global Market Intelligence

The author Aki Pesola is the Vice President of Technical Management Consulting at Rejlers. He has extensive experience in developing the energy and industrial sectors through the use of new, sustainable technologies.