Sector Outline Finland: Renewable Heating

Given Finland’s geography and climate, heating naturally plays a key role in the energy sector. The system rides on centralised production solutions and biofuels, characterised by industrial self-supply and a comparatively low share of oil and gas-fired boilers in residential use in favour of district heating and direct electricity.

While heating traditionally relied on fossils to meet demand and ensure security of supply, the balance has shifted heavily towards renewables over the past two decades. In the early 2000s, peat, coal, and natural gas still dominated district heating, yet today they account for less than one-third of total fuel use, while renewables have nearly doubled their share in the last ten years. Although the statutory coal phase-out deadline is 2029, Finland effectively ended coal use when the last coal-fired plants were decommissioned in spring 2025.

The largest individual source in the current heating mix are wood fuels, representing nearly a half of the heat production for district heating, and three quarters for industrial applications. Amongst the industry, the traditionally large but still growing share of renewable fuels, mostly black liquor, is attributable to the forest industry’s role as one major consumer. In further support of the transition, power utilities are increasingly electrifying their processes and actively investing in heat pumps, flue gas scrubbers and electric boilers.

Finland, alongside the rest of the Nordics, is a leader in district heating, boasting one of the highest per capita usages globally. The country has developed an extensive and efficient district heating network that is continuously upgraded and expanded. This system effectively integrates various energy sources and allows for the utilisation of waste heat from industrial processes, including Power-to-X facilities and data centres.