Alternative Energy & Power 2023 Comparisons

The power industry in Finland consists of a combination of state-owned companies and private investor-owned companies. The principal laws governing the system of ownership of utilities and energy systems in Finland are the Electricity Market Act (386/1995) and the Natural Gas Market Act (508/2000). However, please also see 1.3 Foreign Investment Review Process and 1.4 Law Governing the Sale of Power Industry Assets.

The Finnish Energy Authority and the Finnish Competition and Consumer Authority are the two main authorities monitoring and supervising compliance with applicable legislation by utility operators and other actors on the energy markets. Further, the Finnish Radiation and Nuclear Safety Authority supervises operators in the nuclear energy sector.

Finland’s electricity market has been open to competition since 1995. Finland’s electricity network is connected to the Norwegian, Swedish, Estonian and Russian electricity networks. Historically, Finland has imported electricity from Russia, but the Russian electricity import has been suspended since May 2022 due to restrictions imposed by sanctions. The Finnish national electricity production does not suffice to cover the national electricity demand in all peak load situations and Finland is therefore a net importer of electricity. The imported share of electricity was 20% of the total amount of electricity consumed in 2021.

The Finnish natural gas market opened to competition in January 2020. Natural gas is supplied to the Finnish natural gas network via the Balticconnector line between Finland and Estonia. Finland has historically relied on importing gas from Russia. In 2021, approximately 25% of all natural gas consumed in Finland was imported from Russia. However, as with electricity imports, gas imports from Russia were also suspended as of May 2022.

Generation

Finland’s energy production is quite decentralised in relation to many other European countries. Electricity generation in Finland derives from four main sources: nuclear power, hydro power, bio-energy and fossil fuels (see also 2.3 Supply Mix of Electricity). Especially the amount of electricity produced by wind power has steadily increased since 2010 and is expected to continue to increase over the coming years.

Finnish energy-generation facilities are owned largely by privately owned actors. However, the Finnish state holds a significant stake (approximately 51%) in the energy company Fortum Corporation, operating both electricity production plants, including the Loviisa nuclear power plant, as well as district heating facilities and combined power and heat plants (CHP). Apart from Fortum Corporation, the Finnish state is also the sole owner of Gasum Ltd, one of the major Finnish players in the gas markets.

Other major Finnish energy-generation actors include the following:

• Helen Ltd (fully owned by the City of Helsinki), focusing on electricity and district heating production;
• UPM Energy Oy, a privately owned company and part of the UPM group, active with electricity production and trading; and
• Industrial Power Corporation (in Finnish Teollisuuden Voima Oyj (TVO)), a Finnish energy company jointly owned by several Finnish industrial private and publicly owned companies. TVO operates the Finnish Olkiluoto nuclear power plant with three reactors.

The electricity-generation market also includes several energy companies specialised in renewable energy production, such as wind and solar power.

Transmission

The Finnish national electricity transmission system operator (TSO) is Fingrid Plc, whose main owners are the Finnish state and the National Emergency Supply Agency (jointly holding over 50% of the shares). The Finnish natural gas TSO is Gasgrid Finland Oy, fully owned by the Finnish state. The unbundling of Gasgrid Finland Oy occurred on 1 January 2020, in connection with the opening of the Finnish natural gas markets for competition.

Finland applies the ownership unbundling model for electricity and gas TSOs, and the TSOs are regulated in the Electricity Market Act and the Natural Gas Market Act. The Finnish Energy Authority supervises compliance with the aforementioned legislation (see also 5.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities).

Distribution

Finnish electricity and gas distribution system operators (DSOs) are in general either municipality-owned or private-owned entities. Electricity distribution in Finland is carried out by some 75 holders of a permit for operating an electricity network, of which 54 were in 2021 legally unbundled DSOs. Major electricity DSOs include privately owned Caruna Oy and Elenia Network Plc, as well as municipally owned Helen Electricity Network Ltd, while private-owned Auris Gas Distribution is a large natural gas DSO.

Pursuant to the Electricity Market Act, an entity operating on the electricity market shall, in general, legally unbundle any electricity network operations (either transmission or distribution networks) from other electricity business operations and its electricity business operations from its other business operations. The unbundling requirements do not apply to actors with only minor operations.

The distribution network operations of the natural gas network in Finland are currently not subject to legal or operative unbundling requirements due to the distribution system operators’ number of customers falling below 100,000 customers. However, gas distribution system operators need to comply with accounting unbundling requirements set out in the Natural Gas Market Act.

The Finnish Energy Authority supervises compliance with the aforementioned legislation (see also 6.2 Obtaining Approvals for the Construction and Operation of Electricity Distribution Facilities).

Supply

Electricity supply has traditionally been handled by electricity producers. However, Finland has seen a trend of energy companies divesting their electricity supply business to entities that do not have their own power generation. Power supply companies are generally either municipality-owned or private-owned companies. Large players include Fortum Corporation, Helen Ltd and Väre Oy. The natural gas supply market consists of private-owned companies, of which state-owned Gasum Ltd and private-owned Auris Energy Ltd are two major players, and Rohe Solutions Ltd an emerging supplier.

Energy supply is subject to only limited regulation. The Electricity Market Act and Natural Gas Market Act set out regulations for, inter alia, informing the Energy Authority of applied pricing terms. Further, the supplier with the largest market share in a specific area is subject to a legal obligation to supply electricity or natural gas to an end-user in that respective area. In other respects, an electricity or natural gas supplier may freely choose its customers. In addition to the energy market-specific regulation, suppliers must also adhere to consumer legislation, mainly the Consumer Protection Act (38/1978), which sets out requirements for reasonable agreement terms and reasonable pricing.

See 1.1 Law Governing the Structure and Ownership of the Power Industry.

A few legislative restrictions on foreign investments into critical entities or real property apply in Finland, all with the main purpose of securing national defence interests. No specific legal incentives encouraging foreign investments into Finland apply. See also 2.2 Electricity Imports and Exports.

Screening of Foreign Corporate Acquisitions

The Finnish Ministry of Economic Affairs and Employment monitors foreign investments into Finnish entities pursuant to the Act on the Screening of Foreign Corporate Acquisitions (172/2012). The purpose of the Act is to allow the Ministry to limit the influence of foreigners and foreign entities in certain Finnish companies in case important national interests lie at hand. Companies subject to screening pursuant to the Act include companies active in the defence industry and companies providing critical services or products to Finnish authorities. Advance confirmation must be sought from the Ministry of Economic Affairs and Employment for foreign acquisitions of companies subject to the legislation. The term “foreigners and foreign entities” refers to persons or entities residing outside the EU or EFTA.

Restrictions on Real Estate Transfers

The Finnish legislation includes two pieces of legislation restricting the acquisition of real property by foreign persons or entities, as set out below. It is worth noting, however, that these acts only affect direct real property acquisitions, and do not, therefore, affect indirect ownership changes in, for example, entities holding rights to or owning real property in Finland.

The Finnish state’s right of pre-emption

According to the Act on the State’s Right of Pre-emption in Certain Areas (469/2019), the Finnish state has a right of pre-emption in a real property transaction if the acquisition concerns a real property which is needed to ensure national defence, border control or border security, or in order to be able to control and safeguard territorial integrity. The state’s right of pre-emption provides the state the right to redeem the property sold (including any movable property included in the target of the transaction) at the same price and the same terms as the original acquisition. The Act does not apply in the territory of the province of Åland. The decision on the exercise of the right of pre-emption is made by the Ministry of Finance.

Special permission

The Act on Transfers of Real Estate Requiring Special Permission (470/2019) requires that buyers from outside the EU and EEA need to obtain a permission for acquiring real property in Finland. The permission is sought from and granted by the Ministry of Defence. Permission for the acquisition of a real property unit may be granted if the transfer is not deemed to complicate the organisation of the national defence, the surveillance and safeguarding of territorial integrity or the assurance of border control, border security or the maintenance of emergency stocks of critical supplies.

There are no explicit restrictions regarding the sale of power industry assets or businesses in Finland. However, also see 1.3 Foreign Investment Review Process and 2.5 Surveillance to Detect Anti-competitive Behaviour.

With respect to operations subject to authority permits, the relevant permits would need to be transferred to an assignee in connection with a sale of a power industry asset (see 4.2 Obtaining Approvals for the Construction and Operation of Generation Facilities, 5.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities and 6.2 Obtaining Approvals for the Construction and Operation of Electricity Distribution Facilities). However, in general, transfers of permits to actors continuing the operations of the initial permit holder only require notifying the relevant authority of the transfer.

In Finland, the Energy Authority is responsible for ensuring that the Finnish electricity and natural gas markets operate in accordance with applicable laws and particularly the Electricity Market Act, Natural Gas Market Act and the REMIT Regulation (Regulation (EU) No 1227/2011). The Energy Authority also operates as the national supervisory authority for energy wholesale markets.

Further, the Energy Authority oversees protection of consumers with respect to the energy sector by monitoring compliance with relevant laws and regulations. The Consumer Ombudsman co-operates with the Energy Authority to ensure lawful marketing practices and pricing.

In addition, the responsibilities of the Energy Authority include, for example:

• monitoring the pricing of network operators over four-year periods, including calculating and monitoring each network operator’s reasonable rate of return;
• maintaining a comparison tool for comparing electricity sales conditions between suppliers;
• handling registrations, permits and control related to emissions trading, as well as approving emission trading verifiers; and
• managing the feed-in tariff scheme, organising auctions for renewable energy subsidies and infrastructure projects.

Fingrid Oyj, the Finnish TSO, ensures that electricity transmission network and electricity balance in Finland functions free of disturbance, and manages the national electricity balance and the national imbalance settlement, as well as provides imbalance power.

The past year has seen several changes in laws affecting the power industry. In addition to those listed below, a reform of the Land Use and Building Act (132/1999) (in force as of 1 January 2025) and a new Nature Conservation Act (9/2023) (in force as of 1 June 2023) impact especially the construction of energy facilities.

Windfall Tax

On 24 March 2023, a new Act on Temporary Windfall Taxes for the Electricity and Fossil Fuels Industries (363/2023) came into force. The law provides for two new temporary taxes:

• electricity-generating companies and companies selling electricity either directly to end users or for re-sale are subject to a temporary windfall tax of 30% on the profits from electricity sales activities for the fiscal year 2023, if and to the extent such profits exceed 10% of the company’s corrected equity amount; and
• companies whose business consists, to a large part (over 75%), of the fossil fuel sector are subject to a temporary tax of 33% on the profits for the fiscal year 2023, if and to the extent such profits have increased by over 120% compared to the average profit level during 2018-2021.

Expedited Handling of Permits for Renewable Energy Projects

On 1 January 2023, a combination of legislative changes entered into force, which require permitting authorities to prioritise the handling of environmental and water permit applications for certain green transition projects. In addition, administrative courts are required to handle appeals concerning these permits and certain land use plans concerning renewable energy projects urgently. These changes are in force until the end of 2026 (permit applications) and 2028 (appeals).

Changes to the Electricity Market Act

On 1 June 2023, certain changes to the Electricity Market Act came into force. These amendments include, for example, measures to prevent unfair contracting and marketing practices against consumers in the retail electricity market. Entering into an electricity supply agreement which follows price fluctuations on the spot market for electricity will, moving forward, be limited and, inter alia, require an explicit expression of intent by the end user. The use of advance invoicing in retail electricity sales has also been restricted.

Further, the latest changes to the Electricity Market Act limit network operators’ rights to engage in the energy storage business. The Energy Authority may, in certain cases, grant permission for a network operator to own and operate an energy storage facility, if the facility is considered a fixed network component or if the facility is necessary in order to ensure secure and reliable operation of the network.

In connection with the changes to the Electricity Market Act, a separate Energy Market Disputes Board Act (502/2023) will enter into force. The new Energy Market Disputes Board is intended to resolve disputes between electricity companies and corporate customers.

The Ministry of Agriculture and Forestry and the Ministry of the Environment have set up a cross-administrative working group to initiate the preparatory work on the legislation for land use change payment on construction and clearing of cultivation to minimise deforestation and climate emissions. A formal proposal of the related legislative amendments is expected to be presented during the autumn of 2023. If adopted, the levy will increase the cost of greenfield projects, especially with respect to projects requiring large areas of land.

In addition, a new government for Finland was appointed in June 2023, led by the Prime Minister, Mr Petteri Orpo. On 20 June 2023, the Orpo government published its programme for the upcoming four-year government period. The programme focuses on investments into clean energy solutions in order to decrease emissions. Emphasis is placed on achieving a market-based industrial transformation and encouraging investments into technologies enabling end-products with a high degree of processing. The government aims to create a stable and foreseeable investment environment without significant state-aid programmes and without weakening the industries’ competitiveness, while also avoiding further cost increases for residents and ensuring security of supply.

Public money will be directed primarily to RDI funding and streamlining permitting processes, as well as investments into transmission infrastructure. More specifically, RDI financing will make up 4% of Finland’s GDP, of which a significant part will be directed towards projects advancing the clean energy transition.

The Finnish government states in its programme that it is committed to the emissions reduction targets set on a national and EU level, and aims at ultimately achieving carbon negativity. The aim is to double the amount of clean electricity produced in Finland and encourage investments into, inter alia, green hydrogen, nuclear power, offshore wind and energy storage.

Although the government programme primarily sets out the main general focus areas of the government, it also includes a number of specific legislative or policy changes directly affecting the energy sector, including, inter alia, the following:

• preparation of a new national energy and climate strategy, a programme for decreasing emissions and updates to branch-specific, low-carbon roadmaps;
• creating a capacity mechanism for electricity generation;
• eliminating double taxation of all forms of energy storage;
• streamlining the permitting and appeal processes for investment projects by, for example, renewing the state administration by combining the current separate permitting and supervision authorities to one entity and moving towards a digital one-stop-shop for permitting;
• renewing the Nuclear Act (990/1987) and related regulation with the aim to streamline nuclear power projects and make construction of SMRs easier;
• extending the application of expedited permit handling legislation to certain hydro power projects and classifying them as projects which are in the public interest;
• clarifying the rules for constructing offshore wind power in the exclusive economic zone (EEZ) by amending the legislation concerning the EEZ and applicable permitting processes, as well as compensation and tax matters and the role of the Ministry of Economic Affairs and Employment in relation to projects in the EEZ;
• developing the DSOs’ electricity transmission pricing model to correspond with incurred costs, and granting the Finnish Competition and Consumer Authority the right to appeal against the Energy Authority’s decisions on the regulation model;
• developing a policy instrument by which large industrial-scale CO₂ emissions can be eliminated by the mid-2030s; eg, an auction or similar mechanism for negative emissions;
• amending the distribution obligation for renewable fuels by – eg, increasing the distribution obligation progressively during 2025–2027 and compensating the impact the increased distribution obligation has on fuel prices; and
• renewing and simplifying national planning and construction regulation, including preparing a reformed Land Use Act.

General Characteristics

Despite Finland’s relatively small population, the country has a high electricity consumption, due in part to its cold climate. Distinctive for Finnish homes is that they do not largely rely on gas heating, but rather mainly district heating or electrical heating.

Renewable energy sources account for about 40% of energy end-consumption in Finland. The most important form of renewable energy used in Finland is bio-energy, especially bio-energy derived from forest industry off flows and other wood-based fuels, but also wind power, geothermal power and hydropower play important roles.

It is also worth mentioning that Finland has a strong focus on development and research in the energy sector, especially in the areas of renewable energy, energy storage and smart grids. The country is home to several noteworthy energy research centres and universities, which collaborate with industry partners to develop innovative solutions for the power industry.

The Mankala Principle

Finland has a strong segment of energy companies owned by local municipalities. Typical for municipality-owned energy companies is that they operate under the so-called Mankala principle. It is estimated that approximately half of Finland’s electricity production is produced by companies operating under this principle.

The Mankala principle’s main objective is for the electricity producer (a limited liability company) to operate at cost price, with the shareholders financing the company through charges that cover the costs of the company, while the shareholders receive, in return, the electricity produced by the company. It is characteristic for Mankala companies to not generate profit, and the arrangement is therefore tax neutral.

The Finnish wholesale electricity market is not subject to price regulation. However, the Finnish Energy Authority supervises the electricity market based on the Act on Supervising the Electricity and Gas Markets (590/2013), as well as the market operator’s observance of the Electricity Market Act and the REMIT Regulation. For example, all wholesale electricity sellers providing electricity to consumers or other small buyers must notify the Energy Authority of their agreement terms and pricing. Freedom of contract applies to electricity supply agreements (see also 1.1 Law Governing the Structure and Ownership of the Power Industry).

The leading wholesale electricity marketplace in Finland is that maintained by Nordpool AS, providing both day-ahead and intra-day electricity trading. However, alternative marketplaces are also available.

Actors operating on the wholesale electricity market must also ensure the balancing of the electricity system by either appointing or acting as a balance responsible party. The ultimate responsibility for the balancing of the system lies with the TSO Fingrid Oyj. Finland constitutes one price and balancing area.

Imports and exports of electricity to and from other jurisdictions are permitted in Finland. Imports and exports of electricity between Finland and its neighbouring countries are generally market driven. The electricity transmission interconnections through which Finland currently transfers electricity are set out below.

Sweden

There are four interconnectors from Finland to Sweden. According to Fingrid’s report from 2022, Finland imported approximately 16 TWh of electricity from Sweden, which corresponds to approximately 17% of the total consumption in 2021. Approximately 1 TWh of electricity was exported to Sweden in 2021.

A new 400 kV transmission line between Finland and Sweden (the Aurora Line) is under construction as a joint project between the Finnish and Swedish TSOs. The capacity of the Aurora Line is expected to be approximately 900 MW when transmitting electricity from Finland to Sweden and 800 MW when transmitting to Finland.

Estonia

There are two interconnectors between Estonia and Finland. These connections have a total transmission capacity of 1,000 MW. The interconnectors between Finland and Estonia integrate the Nordic and Baltic energy markets. According to Fingrid’s report from 2022, Finland imported approximately 0.5 TWh of electricity from Estonia in 2021 and exported approximately 6.7 TWh to Estonia in the same year.

In 2022, Estonian Elering AS and Fingrid Oyj signed a memorandum of understanding to start planning for a third submarine cable (Estlink 3). Estlink 3 is expected to carry a capacity of up to 1,000 MW.

Norway

There is a 220 kV interconnector between Norway and Finland, the technical capacity of which is around 100 MW. According to Fingrid’s report from 2022, Finland imported approximately 0.3 TWh of electricity from Norway in 2021 and exported approximately 0.02 TWh to Norway the same year.

Russia

There are five electricity transmission lines between Russia and Finland. However, electricity imports from Russia have been suspended since May 2022 due to sanctions restrictions.

In 2022, the electricity production mix in Finland was divided as follows (share of total electricity production, percentage):

• nuclear power: 35.0;
• hydro power: 19.3;
• wind power: 16.7;
• biomass: 17.4;
• coal: 5.6;
• peat: 2.5;
• natural gas: 1.5;
• waste: 1.2;
• solar power: 0.6; and
• oil: 0.2.

There are no legal concentration limits regarding the percentage of electricity supply that is controlled in the market by any one entity in Finland.

The main national regulator of the wholesale energy market in Finland is the Energy Authority. The competence of the Energy Authority includes monitoring compliance with the REMIT Regulation. According to the REMIT regulation, a penalty must be imposed for breaches of the prohibition of market manipulation. In Finland, the Energy Authority can impose an administrative penalty fee for market manipulation, the amount of which is determined case by case on the basis of an overall assessment carried out by the authority.

All electricity market participants must also adhere to the Consumer Protection Act and the Competition Act (948/2011). The Finnish Competition and Consumer Authority and the Consumer Ombudsman acting under the Competition and Consumer Authority supervise market participants’ adherence to the aforesaid legislation.

The Finnish Competition and Consumer Authority also has authority to investigate and intervene with non-compliance of the Competition Act, such as unlawful anti-competitive behaviour and cartels. The Competition and Consumer Authority is entitled to conduct investigations in a business operator’s facilities (so-called “dawn raids”). Market actors, as well as individuals are obligated to provide relevant information to the authority. The primary sanction for unlawful anti-competitive behaviour is a penalty fee imposed by the Competition and Consumer Authority. The amount cannot be more than 10% of the relevant entity’s global turnover, but shall be based on a case-by-case determination, taking into account the nature, extent, reprehensibility and duration of the breach.

The Finnish Climate Act (423/2022) imposes obligations primarily on public authorities and lays down provisions on public climate change policy planning, as well as related monitoring. The most important goal of the Climate Act is to ensure that Finland achieves carbon neutrality by 2035 at the latest. New emission-reduction targets have been added to the Act for years 2030, 2040 and 2050.

In autumn 2022, the Finnish government published its national climate and energy strategy “Carbon neutral Finland 2035 — National Climate and Energy Strategy”. The National Climate and Energy Strategy outlines actions for Finland to fulfil the EU climate obligations for the year 2030 and achieve the Climate Act’s targets for greenhouse gas reductions of 60% by 2030, as well as the 2035 carbon neutrality target. The strategy focuses, for example, on the green transition.

The new Building Act (751/2023), which will enter into force on 1 January 2025, will require building permit applicants to submit a climate declaration with the application, setting out, inter alia, the planned construction project’s carbon footprint. The intention is for the government to issue a decree setting out binding limits for any building’s carbon footprint. However, such a decree has not been issued to date.

According to the Act on Prohibiting the Use of Coal in Energy Production (416/2019), the use of coal as a fuel for electricity or heat generation will be banned as of 1 of May 2029. The coal prohibition is also linked to the implementation of the National Energy and Climate Strategy (see 3.1 Climate Change Law and Policy).

Owners of energy-production facilities using coal are not entitled to automatic compensation for the prohibition imposed by the Act. However, investment aid is available for investment projects that aim at phasing out the use of coal in energy production and increasing the use of renewable energy or enhancing energy savings or energy efficiency. The investment aid scheme is in force during 2020-2025 and is based on the Government Decree on Investment Aid for Projects Replacing Coal in Energy Production (129/2020). Individual investment aid rounds are administered by Business Finland and the aid is granted by the Ministry of Economic Affairs and Employment.

Please also see 3.1 Climate Change Law and Policy.

The EU Recovery and Resilience Facility (RRF)

Finland’s share of the RRF fund to be distributed to energy market participants is administered and co-ordinated by Business Finland. Some of the most significant public aids for the energy sector are the investment aids for energy-related projects. In March 2023, the Finnish government gave a new Decree on the General Terms for Granting Energy Aid  During 2023-2027 (replacing the previous similar decree). The decree determined that the energy investment aid shall be granted to investment and research projects aiming at advancing renewable energy production, energy savings or energy efficiency, utilising waste heat, as well as other ways to de-carbonise the energy system. Currently, EUR253.1 million has been reserved for energy aid grants in the state budget for 2023.

Construction

The principal law governing all construction activities in Finland, including construction of generation facilities, is the Land Use and Building Act. In addition, the Land Use and Building Decree 895/1999 sets out more detailed regulations on the matters regulated in the Land Use and Building Act and further detailed technical requirements for construction are set out in the National Building Code of Finland. The Land Use and Building Act is currently under reform and the construction-related provisions of the Act will be included in the new Building Act as of 1 January 2025.

In addition to the land use and building legislation, legislation concerning the need for environmental impact assessments (the Environmental Impact Assessment Act (252/2017)), environmental permits (the Environmental Protection Act (527/2014)) and water permits (the Water Act (587/2011)), as well as other environmental legislation (such as the Nature Conservation Act) may also become applicable when constructing a generation facility.

Operation

The operation of generation facilities is governed by the Electricity Market Act, the Natural Gas Market Act and the Nuclear Energy Act (990/1987). In addition, applicable environmental legislation must also be adhered to when operating generation facilities.

Environmental Impact Assessment

The Environmental Impact Assessment (EIA) process, governed by the Environmental Impact Assessment Act, needs to be conducted on projects that are likely to have considerable environmental impacts. These include, for example, production of natural gas, hydropower projects, nuclear power projects and wind power plants with at least ten turbines or a total power of at least 45 MW.

Projects other than those mentioned above may, however, also require an EIA if the environmental impacts can be considerable. The decision on the applicability of the EIA procedure is given by the local co-ordinating authority (ELY Centre).

The EIA process is divided into two phases:

• an EIA programme, which sets out the options for conducting the project and the impacts that will be assessed in the EIA; and
• an EIA statement, which includes the assessment of the environmental impacts.

Both the EIA programme and the EIA statement require public hearing. The EIA may also be conducted jointly with the zoning and permitting procedures.

Zoning

The construction of commercial generation facilities typically requires a valid land use plan. Land use plans and the planning process are governed by the Land Use and Building Act. Most commonly, generation facilities require a master plan, but a detailed zoning plan or a planning requirement decision may also be used depending on the area and the impacts of the project.

The zoning process for master plans includes the following:

• a participation and assessment scheme, which includes the preliminary objectives of the plan, the need for studies, the scope of the impact assessment and the organisation of public participation;
• a draft plan;
• a plan proposal; and
• approval of the plan by the municipal council.

The commencement of the zoning process and the participation and assessment scheme must be published. A public hearing must be held concerning the draft plan. The plan proposal shall be made available to the public and opinions from the necessary authorities and stakeholders shall be requested.

Permitting

The construction and operation of a generation facility may typically require one or several of the following permits:

• a building permit;
• an environmental permit;
• a water permit;
• an aviation permit;
• a permit for processing and storing of dangerous chemicals; and
• a statement from the Defence Forces.

A nuclear power plant requires a construction permit and a separate permit to use the facility. Nuclear energy facilities of material general significance require, in addition to the aforementioned permits, a principal decision granted by the government in favour of the facility.

Below is a summary of the most typical condition types imposed in certain main permits applicable to generation facilities.

Building Permit

Building permits concern the construction of the facility and set the terms and conditions for the location of the building and technical solutions used. Building permits also include those authority inspections which must be carried out.

Environmental Permit

If the facility is subject to an environmental permit, the environmental permit includes terms and conditions applicable to the construction and operation of the facility, which may include limits applicable to the operation, as well as restrictions on emissions. Environmental permits also typically include provisions concerning monitoring obligations, possible waste treatment and obligations in connection with decommissioning.

Water Permit

Water permits regulate a facility’s emissions and the environmental impacts of the facility in the relevant water area, as well as monitoring obligations. In addition, if the facility causes damage to fish populations or fishery, a water permit may set out provisions concerning fisheries fees and fisheries obligations.

Amendments to Permit Provisions

The permit holder may apply for an amendment to most permits, for example in case the operations have changed since the time of the initial permit. In addition, permit authorities have certain rights to impose changes to permits pursuant to law if, for example, a facility causes harmful impacts on the environment which exceed those anticipated when issuing the permit.

Redemption

The Act on the Right of Redemption of Immovable Property and Special Rights (603/1977) sets out a right of redemption if redemption is required based on general need. The redemption right may not, however, be used when the land can be obtained in another way. Therefore, land access and right of use for the construction and operation of a generation facility is typically secured through bilateral agreements – eg, land lease agreement.

A redemption permit may be granted if the redemption is required based on general need. Redemption permits are granted by the government or the National Land Survey, and the redemption proceeding is executed by the National Land Survey.

Compensation

Compensation for a redemption is determined by the Act on the Right of Redemption of Immovable Property and Special Rights. The main guiding principle is that the property owner shall receive full compensation for the economic loss suffered due to the redemption. The redemption compensation consists of:

• compensation for the subject, which is equivalent to the market price of the property;
• compensation for harm, which is paid if there is permanent harm for the use of the remaining property; and
• compensation for damages.

Demolition Permit

The decommissioning of a generation facility requires a demolition permit under the Land Use and Building Act if the facility is located in an area of detailed zoning plan or a demolition permit is required by the master plan. A demolition is, however, not needed if the building permit for the facility requires the demolition of the facility.

Demolition permits set out case-specific requirements by the building inspection authority concerning the demolition works, such as practical arrangements on the site and handling of demolition waste. In addition, demolition permits typically set out requirements for appointment of persons responsible for the works towards the authorities, as well as authority notification and inspection obligations.

Where a demolition permit is not required, the demolition of the facility requires a notice of demolition to the building supervision authority. The Land Use and Building Act further requires that a building is demolished once it has been permanently taken out of use.

Other Decommissioning Obligations

If the facility owner holds the land area necessary for the facility based on a land lease agreement, the Land Lease Act (258/1966) sets certain requirements for the land lease holder to restore the leased land at the expiry of the lease term. Also, land lease agreements may include more specific conditions for the demolition of a facility.

If the generation facility is subject to an environmental permit or an obligation to register the facility pursuant to the Environmental Protection Act, the project owner is liable for investigating the impacts of its operations and also monitoring after the decommissioning of a facility. Typically, environmental permits require the facility owner to prepare and follow a decommissioning plan, including monitoring measures.

Decommissioning Bonds

Building permits may include obligations to set a decommission security for the decommissioning of the facility. It is also becoming increasingly common that the property owner and the project owner bilaterally agree on various decommissioning security arrangements.

Nuclear Power

The Nuclear Energy Act sets specific requirements for the decommissioning of nuclear power plants. The decommissioning of the plant shall be taken into account in the planning of the facility, and a decommissioning plan is required. The decommissioning plan needs to be approved by the Radiation Safety Centre of Finland. Operators of nuclear power plants are also obliged to finance the future costs of nuclear waste management and decommissioning during the operational lifetime of their plants.

The principal laws governing the ownership, construction and operation of transmission lines and associated facilities are the Electricity Market Act and the Natural Gas Market Act.

Electricity Transmission Lines

The Finnish electricity grid consists of the nationwide transmission grid, which is operated by the TSO Fingrid Oyj, and of regional distribution networks. The national transmission grid is fully owned and operated by the TSO. Pursuant to the Electricity Market Act, the TSO is obligated to develop the transmission grid and to provide safe, reliable and efficient electricity transmission.

Gas Transmission Lines

The Finnish natural gas grid consists of high-voltage transmission grids and low-voltage distribution grids. The transmission grid is operated by the TSO Gasgrid Finland Oy. The national natural gas transmission grid is fully owned and operated by the TSO, and pursuant to the Natural Gas Market Act, the TSO is obligated to develop the transmission grid and to provide safe, reliable and efficient gas transmission.

Electricity

Approval for grid operation

The operation of an electricity grid requires a permit that is granted by the Energy Authority. A transmission system operation permit can only be granted to one company, which currently is Fingrid Oyj.

Approval for grid construction

The construction of a high-voltage transmission line requires a project permit from the Energy Authority. The project permit shall be granted if the building of the powerline is necessary to secure the transmission of electricity.

In addition to the electricity grid permit, the construction of the electricity grid is subject to the same requirements as the construction of generation facilities. Please see 4.2 Obtaining Approvals for the Construction and Operation of Generation Facilities.

Gas

Approval for grid operation

The transmission system operator requires a permit granted by the Energy Authority, and the TSO permit can only be granted to one company. The TSO is currently Gasgrid Finland Oy.

Approval for grid construction

The construction of a gas transmission line does not require separate permits. It is, however, subject to the same requirements as the construction of generation facilities. Please see 4.2 Obtaining Approvals for the Construction and Operation of Generation Facilities.

Public Participation

The granting of operational permits or project permits does not require a public hearing or input from the public. However, as authority decisions, they are subject to appeal rights. An appeal can be made by the party subject to the decision or those whose rights, obligations or benefits are directly affected by the decision. See also 4.2 Obtaining Approvals for the Construction and Operation of Generation Facilities.

Project permits set out terms and conditions for the construction of the transmission/distribution line. A project permit may set requirements for the location of the transmission/distribution line, but this is not necessary. Typically, the project permit sets requirements concerning the technical aspects of the line.

Grid operation permits govern the operation of a transmission/distribution line. However, the permit does not typically set out terms or conditions concerning the operation itself, as these are set out in the Electricity Market Act or the Natural Gas Market Act, respectively. For distribution grids, the grid operation permit also confirms the geographical area of operation.

Please see 4.4 Eminent Domain, Condemnation or Expropriation Rights.

The electricity and gas TSOs in Finland are national monopolies. See also 5.2 Obtaining Approvals for the Construction and Operation of Transmission Lines and Associated Facilities.

Electricity

The Electricity Market Act requires that the transmission terms and charges shall be non-discriminatory and equal to all grid users, and they need to be reasonable when estimated as a whole. The TSO/DSO needs to publish their terms and charges and submit them to the Energy Authority, who shall approve the terms and methods for determining the transmission charges, as set by the Act on Supervision of the Electricity and Natural Gas Markets.

The electricity grid TSO/DSO may only raise the price of electricity transmission or distribution by a maximum of 8% compared to the previous 12 months.

Gas

Similar obligations as for electricity are included in the Natural Gas Market Act in relation to the non-discrimination, equality and reasonableness of terms and charges applicable to gas transmission. The gas grid TSO/DSO may raise the prices of gas transmission or distribution by a maximum of 15% compared to the previous 12 months. Likewise, the Energy Authority shall approve the terms and methods for determining the transmission prices.

Appeals

The decisions of the Energy Authority approving the terms and methods for determining the transmission price are subject to appeal rights. An appeal may be filed by the party subject to the decision or those whose rights, obligations or benefits are directly affected by the decision. However, the prices as such are not subject to appeal, but only the methods for their determination.

The Electricity Market Act and the Natural Gas Market Act oblige the TSO/DSOs to connect all users, generation facilities and storage in their operational area that fulfil the applicable technical requirements, to the grid. The terms and conditions for connecting need to be open, equal and non-discriminatory. The TSO/DSO needs to publish the terms and conditions and submit them to the Energy Authority, who shall approve them.

The principal law governing the construction and operation of electric distribution facilities is the Electricity Market Act.

Approval for Grid Operation

The operation of an electricity grid requires a permit that is granted by the Energy Authority. The permit may be granted if the applicant fulfils the set technical, economic and organisation requirements. The Energy Authority will decide upon the geographical area of responsibility of the DSO.

Approval for Grid Construction

Each DSO has the sole right to construct distribution grids in its geographical area of responsibility. However, the construction of a high-voltage (110 kV) distribution line requires a project permit from the Energy Authority. A project permit may be granted if the building of the powerline is necessary to secure the transmission of electricity. Permits are not required for the construction of lower voltage distribution lines.

In addition to the project permit, the construction of the electricity grid is subject to the same requirements as the construction of generation facilities. Please see 4.2 Obtaining Approvals for the Construction and Operation of Generation Facilities.

See 5.3 Terms and Conditions Imposed in Approvals for the Construction and Operation of a Transmission Line and Associated Facilities.

See 4.4 Eminent Domain, Condemnation or Expropriation Rights.

Each DSO has the sole right to construct distribution grids in its geographical area of responsibility, and only one DSO can provide distribution services in a specified geographical territory. The Energy Authority grants the electricity grid permit to each DSO and determines the geographical area. The geographical area can only be changed by the Energy Authority for a weighty reason. The DSO can however bilaterally agree on the change of responsibility with another DSO by giving notice to the grid users and the Energy Authority.

See 5.6 Transmission Charges and Terms of Service.