Sector Outline Finland: Onshore Wind

Finland’s journey in onshore wind energy has been a remarkable success story. In under a decade, wind power has transitioned from a niche technology to the most cost-competitive form of power generation and key driver in the country’s green transition.

Both 2022 and 2023 were record years in wind farm construction. In 2022, Finland ranked number two (2,430 MW)(7), and in 2023 number four (1,278 MW)(8), in Europe in terms of newly installed onshore capacity.

Despite the rapid expansion, the growth potential remains substantial. The Finnish transmission system operator (TSO) Fingrid estimates that by 2030 the installed wind capacity onshore and offshore will be 21,200 MW(9). While the west coast and Lapland remain hotspots, there is a growing trend of moving inland, including the eastern part of the country where significant efforts are being made to coordinate wind farm development with national defence needs.

Project sizes vary considerably from a few turbine projects to large wind farms in the hundreds of MW range. Individual turbines are comparatively big with the average capacity being more than 6 MW for operational projects, and 8 – 10 MW for projects under development.

One business model commonly used by utilities is the so-called “Mankala”-model, where electricity is supplied at cost price to the owners of the project company. Outside of these arrangements, revenues are typically secured by long-term power purchase agreements (PPA) with corporate and industrial offtakers or utilities. The ramp-up in clean hydrogen and Power-to-X projects, as well as data centres, are expected to create a whole new offtaker market over the coming years.

The rapid growth in variable energy production is not without challenges, and Finland has seen the first cannibalisation effects in recent years. Electricity prices have become increasingly volatile and are typically at their lowest at times of high wind power production. This has created difficulties for projects with baseload PPAs, which were still rather common in the Nordics until a few years ago. In addition, despite the generally stable grid, Finland has experienced the first instances of grid curtailment in local hotspots.

To mitigate the mismatch of production and pricing, developers are seeking to optimise their portfolio by combining different assets and revenue streams. The trend is towards hybrid projects that combine wind power with PV, energy storage and/or hydrogen production. Especially wind and green hydrogen are poised to grow together, mutually enabling and accelerating each other’s expansion.