Regulatory update for hybrid projects brought before the Parliament

Building energy storage systems behind the same connection point with wind and solar farms may soon become a reality, as the called-for legislative change enabling such hybrid connections takes significant steps forward. On 28 November 2024, the Finnish government issued a proposal (HE 197/2024) for the necessary amendments to the Electricity Market Act (588/2013), with the intention of having them enter into force at the earliest possibility.

Enablement of hybrid connections

As the Finnish electricity mix has shifted towards renewables, the implications of increasingly weather-dependent and variable production profiles are starting to take their toll on the energy system. In the ever-greener grid, storage capacity is gaining central importance as the tool of choice for coping with the resultant volatility while ensuring grid resiliency.

Investments into co-located battery energy storage systems in Finland have, however, so far been hindered by the regulatory restrictions on connecting such hybrid projects to the national grid. While power lines for connecting electricity production into distribution and transmission networks are exempt from the licensing and geographical monopoly generally applicable to the electricity grid, pooling production units and storage facilities behind the same connection point has so far not been permissible within this framework.

With limited exceptions in place for intra-property grids and small-scale production, hybrid arrangements have generally been considered a fully-fledged “electricity grid” and, as such, the prerogative of players with system operator status. Coupled with the requirement to further develop the grid, allow access for third-party players, and unbundle power transmission from other operations in a financially self-standing manner, such standing has been both unattractive and unattainable for many renewable developers.

With the now submitted proposal, the Finnish government intends to modify this approach by permitting storage and production to jointly use the same power line for connecting to the national grid without triggering licensing requirements and system operator obligations. The update is crafted with a view to promoting the use of on-site storage solutions for balancing the electricity system and improving its flexibility.

Further clarity to connection obligation

Alongside allowing a single connection to serve more diverse units without becoming a licensable electricity grid, the government proposes to expedite the build-out of new connections by clarifying the timeframe within which system operators must connect users to their networks.

Even under the current law, system operators are under an obligation to connect technically apt users within a reasonable timeframe and develop their electricity grid to meet connection capacity demand. To streamline this requirement, it would in the future be underlined that the permissible timeframe is case-dependent based on the needs of the user and the grid investments required.

The current rules on a 24-month deadline for having the connection up and running, calculated from the conclusion of the connection agreement, would remain in place for connection to the transmission and high-voltage grids, with a six-month deadline introduced for other distribution networks. These timeframes should regardless not be viewed as the benchmark for an acceptable connection time: on one hand, exceeding the deadlines would be permitted when necessary due to the scale or technical complexity of the connection, and on the other, the reasonable connection time could under many circumstances be significantly shorter.