Home to expansive forests, rich water resources, and Europe’s northernmost capital city, Finland boasts an electricity sector with a wide
. Although nuclear power makes up the largest share of electricity generation, Finland’s electricity sector is largely decarbonized, with
over the past decade. The nation’s electricity sector is further characterized by having a high per capita consumption rate and, in 2021 and 2022, high price volatility as a result of the ongoing
.
Electricity production
Finland is one of the leading countries worldwide in terms of
nuclear power share in domestic electricity production, with the source accounting for roughly one-third of its power output in 2022. While nuclear has been a crucial part of Finland’s power mix since the 1970s, recent years have seen considerable growth in the country’s
electricity production from renewable sources, in particular wind. These developments are in line with Finland’s climate targets, namely the Climate Change act, enforced in 2022, which aims to achieve carbon neutrality by 2035.
Electricity consumption
Finland is among the
leading per capita electricity consumers worldwide, with an average of roughly 13 megawatt-hours consumed per person per year. The Scandinavian country’s high consumption results partially from its long and cold winters, which see peak electricity demand. Additionally, the country is home to several energy-intensive industries, including paper and pulp manufacturing and metals, which are key contributors to the national economy. In fact,
Finland’s industrial sector accounts for a 40 percent share of
this country’s total electricity consumption, amounting to nearly 87 terawatt-hours in 2021.
Spikes in electricity prices
Though Finland’s sources of electricity production are diverse, the country was not immune to the steep increases in electricity prices seen throughout Europe since mid-2021.
Average monthly electricity wholesale prices skyrocketed, nearly quadrupling between August 2021 and 2022. From rising natural gas prices, lower-than-average wind energy output, a drought throughout Europe, and increased electricity demand, the supply shortage was further aggravated in the first months of 2022 by the Russia-Ukraine war. By May 2023, the electricity prices had dropped to pre-pandemic levels and amounted to roughly 26.5 euros per megawatt-hour.
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