Finland's green transition: What deal teams need to watch now

Finland offers a reliable regulatory environment for renewable energy and green transition investments and has attracted a rapidly grown pipeline of green transition investment projects, with the value of announced development initiatives reaching up to EUR 300 billion according to the Confederation of Finnish Industries. While the share of fossil fuels in the energy mix has already fallen sharply, the national target to reach carbon neutrality by 2035 remains firmly in place. At the same time, the latest figures from Fingrid, Finland's transmission system operator, indicate that electricity demand is entering a period of growth, driven in particular by data centres and electrification, opening up new opportunities for renewables developers. Against this broader context, this article covers some of the recent developments that we think deal teams should consider right now when evaluating prospective investments in Finland.

The data centre boom is expected to create additional demand for green electricity

The data centre capacity is estimated to multiply in Finland during the upcoming years, with Finland having attracted a large number of industrial-scale data centre development projects within the past few years. The reasons are familiar: cold climate that cuts cooling costs, strong availability of affordable renewable energy, a reliable grid with relatively good availability for connection capacity, and until recently, a favourable electricity tax rate for large data centre consumers.

The scale of this build-out, combined with increasing investments in electricity boilers, has been estimated to generate a step-change in electricity demand, which would open significant opportunities for renewable energy developers. According to Fingrid, if all development projects that have signed grid connection agreements were to be fully completed, this would increase Finnish electricity consumption by nearly 40% compared to 2025 levels, although Fingrid estimates that reaching this scale would likely take at least five years and connection agreements do not necessarily guarantee full realisation. Regardless, the new data centre capacity will need firm but green electricity, and players who can offer long-term supply through power purchase agreements or co-located generation may be well-placed to benefit, in addition to which balancing power will be increasingly required for the electricity system to smooth out price fluctuations.

Grid access remains relatively strong, but not evenly

Finland is still generally seen as one of the easier places in Europe to get a large project connected to the grid, and the Finnish transmission system operator Fingrid's own figures show just how much interest there is: from July 2025 to June 2026, it has received connection enquiries totalling around 68 gigawatts for consumption, 13 gigawatts for new production, and 32 gigawatts for energy storage. 

That said, the picture is not uniform across the country. Grid capacity in certain parts of southern Finland, where demand is growing the fastest, has tightened, and Fingrid has had to pause new connections in some areas pending network upgrades. Fingrid's ten-year grid plan published in late 2025 estimates EUR 5.2 billion investments in reinforcing the network during the ten-year-period, which may ease this over time. For more information, please visit Fingrid's website.

Asset classes emerge from battery storage to new nuclear story

Finland’s grid-connected electricity storage capacity has already reached approximately 1.05 gigawatts, with significant additional capacity expected to connect in the coming years. Battery energy storage systems (BESS) have moved from pilot projects to a genuine transaction market and, over the past year, we have seen a steady interest and deal flow in BESS, both on a stand-alone and co-located basis. The commercial logic is straightforward: as wind and solar make up a larger share of the electricity mix, prices swing more and batteries that can provide grid balancing services and monetise on price arbitrage have become increasingly attractive.

Equally noteworthy is the growing momentum behind small modular reactors (SMRs). Earlier this year, Fortum announced a deepened collaboration with Steady Energy for the development of SMRs, involving a EUR 2.1 million equity investment by Fortum in Steady Energy, and Helen is considering investing between EUR 1 billion and EUR 5 billion in SMR capacity in the upcoming years, with environmental impact assessments being progressed for three sites in Helsinki. This is happening alongside a broader reform of the Nuclear Energy Act, passed by the Finnish Parliament during summer 2026 and intending, among other things, to make the licensing regime more technology-neutral and better suited for smaller reactor designs. What this means for deal teams is that, while SMRs are still an early-stage asset class in Finland from a transactional perspective, the capital committed so far is significant, the regulatory direction is supportive and, in the future, we should expect to see more SMR development projects within the Finnish energy asset development base.

Plans to extend tax credit scheme for green transition

Finland's previous fixed-term tax credit scheme for large green transition investments was open for applications in 2025. Around 40 projects, worth a combined EUR 2.3 billion in tax credits, qualified. The extent to which those credits can be used in the coming years depends on the level of actual qualifying costs incurred and the availability of corporate income tax liability against which the credits can be offset.

Finland is currently preparing a renewed scheme that is expected to follow largely the same criteria. As with the first scheme, the credit would be set at 20% of eligible investment costs, capped at EUR 150 million per group. Qualifying investments would include renewable energy storage, industrial decarbonisation, and clean-tech manufacturing. Notably, investments in electricity generation itself would not qualify, but battery storage would. The proposed new scheme would also broaden its scope to cover, for example, renewable transport fuels and long-duration electricity and heat storage, while introducing greater flexibility in how the EUR 50 million investment threshold is assessed. The new credit is expected to be open for applications in 2027.

From a practical standpoint, the tax credit application must be factored into the project timeline at an early stage: the application should be filed before entering into any significant project agreements and before commencing construction works.

Foreign investment screening is about to become stricter

Finland intends to replace its current foreign investment screening regime with a new act new Act on the Screening of Foreign Investments and Approval Procedures, expected to enter into force in spring 2027. Based on the draft Government Proposal issued in June 2026, the planned reform would:

• Bring certain greenfield investments, meaning investments made to establish an entirely new business operation, into scope for the first time, including certain large data centres (broadly, those with a potential capacity of 100 megawatts or more), energy infrastructure projects and electricity network operations, alongside ports, airports and strategic raw materials. 
• Expand the definition of foreign investors by removing the current exemption for EU and EFTA investors outside the defence sector, meaning that European renewable energy and infrastructure funds, not just non-EU/EFTA buyers, would be subject to a filing obligation. Based on the draft proposal, also funds under Finnish control would be considered foreign if the fund structure includes an intermediate company domiciled abroad.
• Introduce a mandatory pre-closing authorisation requirement for in-scope foreign investments, replacing today's partly voluntary notification system.

The planned Finnish FDI reform is driven by a materially changed geopolitical landscape and technological developments, as well as the ongoing revision of the EU Regulation on the Screening of Foreign Direct Investments. However, the proposed mandatory review of greenfield investments in Finland goes beyond the EU requirements.

For the energy sector, this is a notable expansion. A Finnish FDI filing obligation would arise for greenfield investments in energy infrastructure relating to (i) baseload and balancing power solutions (for example nuclear power and battery technologies), (ii) renewable energy schemes, and (iii) hydrogen developments once they reach the 100 megawatts capacity threshold, whether individually or cumulatively across a single investor's projects. In practice, a considerable proportion of new energy infrastructure investments in Finland are likely to be caught by the new screening regime. Currently, greenfield investments fall outside the scope of the regime but may be subject to approval requirements under certain sector-specific regulations.

In the Government Proposal, screening greenfield investments is justified by the fact that the effects of energy infrastructure projects may materialise already at the planning and investment stage, at which point the foreign investor may have the opportunity to influence the technical solutions, location, capacity and, consequently, the critical elements of the electricity system and energy production.

In addition, a new structured two-phase review process is also proposed, with a 45-day statutory timeline for the first phase, however, there would be no deadline for the potential more in-depth review. The planned changes are expected to potentially triple the number of applications handled in the following years from the current average of 30–40 annual filings. Energy is expected to be one of the sectors most likely to be affected.

What this means for deal teams: for energy and infrastructure transactions in particular, foreign investment screening needs to transform into a front-end deal planning question, including for greenfield developments and for European buyers who may not have previously been within the scope of the mandatory filing regime. We would expect this to affect deal timetables, conditions precedent and, in some cases, bidder selection, for cross-border transactions within energy and infrastructure.

Our takeaway

Finland's green transition pipeline remains genuinely attractive: strong renewable resources, significant expected growth in electricity demand, a supportive if evolving grid, continued tax incentives, and a growing set of asset classes to invest in, from batteries to small nuclear. But the regulatory environment is simultaneously developing on several fronts, so the practical advice for anyone structuring a transaction in this space is to bring energy policy, tax, and foreign investment screening questions into deal planning early on, rather than treating them as late-stage diligence items. In particular, the forthcoming change in the foreign investment screening regime means that foreign investors should factor authorisation timelines into deal planning.

If you have any questions or would like to discuss the topic further, please feel free to contact the lawyers listed on this page.