The Finnish hydrogen sector
Finland has a longstanding tradition in the industrial use of hydrogen. The current annual production for industrial purposes is approximately 5 TWh (status 2020), the majority of which is produced through steam methane reforming. Main use-cases are in oil refining and biofuel production, chemical industry, mining and ore refining. Additionally, circa 800 GWh of by-product hydrogen is yearly generated in industrial processes and used in industrial boilers, for district heating, and as process gases. With increased hydrogen demand on the horizon, the available production capacity must be multiplied and existing capacity transformed to rely on electrolysis or carbon-capture technologies.
Transition to green hydrogen
The vastly decarbonised electricity production sector and functioning electricity transmission system provide strong foundations for economically feasible hydrogen production via electrolysis. Although the regulatory environment has so far left some details open, the general atmosphere is favourable towards green hydrogen projects. Energy security and self-sufficiency considerations together with aspirations to build economic growth on carbon neutrality and domestic green industries are central incentives for both private and public sector actors.
The two recent years have witnessed the unveiling of an unprecedented number of green hydrogen projects in Finland, with substantiated investment plans for upcoming years reaching an aggregate of several billion euros and many more projects being visioned and developed lower down the pipeline. Finland’s first industrial-scale green hydrogen and methanation plant entered construction in late 2022. With its ca. 20 MW capacity, the facility upon commissioning more than triples the country’s electrolysis capacity. In its wake, the Finnish hydrogen landscape with its planned hydrogen valleys in North, Southwest and Southeast Finland is quickly becoming a home for a variety of green transition projects, many of which are expected to be commissioned already in 2024-2025.
Pioneering business cases
Finland’s emergent hydrogen projects are characterised by close cooperation between pioneering hydrogen/P2X-focused developers and traditional local energy companies. Hydrogen demonstrations and full-scale installations alike are being developed in urban industrial areas in connection with existing power generation or chemical plants. This sector-coupled approach enhances competitiveness of the hydrogen value-chain by enabling the harnessing of exhaust gases for on-site CO2 extraction and the use of waste heat for district heating.
As no dedicated market for hydrogen has yet been created, the vast majority of projects under development rely on green hydrogen as feedstock for integrated e-fuel facilities. Further solutions explore the role of hydrogen in energy storage and system flexibility services, as well as production of downstream chemicals and fertilisers such as ammonia. Future prospects in these fields are estimated to be even brighter: although the market development is subject to significant uncertainty, Nordic hydrogen is considered to be well on the road to being cost-competitive compared to fossil-based solutions by the end of the decade.
Project development in Finland calls for working dialogue with local stakeholders, energy companies, grid operators, municipalities and environmental authorities. Key development activities include environmental assessments, securing of land rights and electricity supply, spatial planning and permitting, as well as the conclusion of project agreements.
Finland has no "one-stop-shop" permit for hydrogen electrolysers, and the permitting practices are just starting to develop. Several individual permits and statements from different state and municipal authorities are required, with limited procedural coordination in place.
Green hydrogen development, however, enjoys some of the procedural privileges and supportive measures for renewable energy. This includes a recently adopted procedural priority to green transition projects between 2023-2028 in administrative courts and the Regional State Administrative Agency.