Sector Outline Finland: Energy Storage

As decentralised and intermittent renewables grow, storage becomes essential for grid stability and peak management. In the coming years, most capacity will come from dedicated battery energy storage systems (BESS) and Power-to-X solutions, addressing both intra-day and seasonal variations.

Energy Storage value chain

A thriving battery economy is one cornerstone of Finland’s industrial strategy. Strong metallurgical expertise, ample natural resources, and advanced recycling technologies support the build-up of domestic production and refinery capacity for battery chemicals and materials. This gives Finland the unique capability to map the entire battery value chain – sustainably.

Beyond batteries, decommissioned mines serve as suitable brownfield sites for pumped hydro, compressed air and solid mass storages. Given the prominent role of district heating, also investments into thermal storages can be utilised in scale. A recent case in point is a massive cavern storage in the capital region boasting an 11.6 GWh capacity, but storages for heat and cold have decades of history in serving the networks.

BESS projects

The Finnish BESS market is expanding rapidly, driven by the surge in wind and solar capacity that creates volatility and curtailment risks, alongside frequent negative and zero-price hours that make storage essential for flexibility, arbitrage, and peak-shaving. Although the installed capacity is still modest, BESS projects represent the single largest asset class in terms of connection enquiries received by the TSO, Fingrid, with enquiries covering as much as 25 GW. BESS projects are developed both as stand-alone projects, and as hybrid arrangements co-located with wind and PV assets.

Currently, standalone BESS assets primarily earn revenues from participation in the reserve markets, which compensate for maintaining reserve capacity, regardless of activation. Reserve markets are nevertheless limited and expected to become increasingly saturated in upcoming years. Growing volatility in electricity prices, including prolonged zero and negative price hours, make day-ahead and intraday arbitrage an increasingly attractive complement to ancillary services.

The trend is toward stacking multiple revenue streams, and BESS increasingly deploy AI-driven optimisation strategies for maximizing income. These platforms use self-learning algorithms, price and weather forecasts, and grid-status data to dynamically allocate capacity across reserve and wholesale markets. Pooling different assets classes is also gaining traction, as this approach enhances flexibility, improves bidding strategies, and stabilises revenue streams.

Most existing BESS projects operate on a merchant basis, which gives the owner full flexibility to optimise income across different markets and capture the full upside potential. However, growing market volatility and financing constraints are driving increased interest in long-term agreements that secure contracted revenues. Options include tolling agreements, where a third party pays a fixed fee to use the asset and assumes full market risk; floor agreements, which guarantee a minimum revenue level while allowing the owner to share in on any upside; and hybrid models, which combine a contracted component with merchant exposure.