Finland was among the first countries in Europe to open its wholesale electricity market to competition on 1 November 1995. In the European Union, the first Electricity Market Directive entered into force in 1997 with the objective of unbundling electricity generation, transmission, and sales, and enabling cross-border competition. Today, electricity generation and sales operate in a competitive market environment, whereas transmission remains a licensed regional monopoly regulated by national authorities.
Over time, the EU’s energy framework has been strengthened through several energy packages that have further deepened market integration, encouraged investment in cross-border interconnections, and reinforced consumer rights. In Europe, electricity market development continues primarily through market coupling, cross-border exchanges, and harmonised rules. The most recent EU electricity market reform, adopted in 2024, strengthens consumer protection, enhances market oversight, and clarifies the rules governing capacity mechanisms. The reform aims to safeguard the security of electricity and energy supply while supporting the EU’s climate and energy policy objectives.
Electricity market development at EU level is largely driven by regulatory and system-level considerations. However, market participants also have distinct development needs. The following outlines the key electricity market objectives of users as a basis for supporting economic growth in Finland.
Electricity Generation
Ensuring sufficient electricity supply under all conditions is essential for Finland’s competitiveness and security of supply. The development of electricity generation should focus on cost-efficiency, adequate capacity, and a diverse generation mix that guarantees security of supply even during periods of low wind.
Short-term price spikes in the day-ahead market remain a concern. Electricity must not become a luxury product under any circumstances; it must remain a basic commodity enabling industrial growth, the expansion of services, and the advancement of electrification in Finland.
Electricity Markets and Exchanges
Electricity pricing must be open and transparent, with sufficient competition and liquidity across different market segments. Buyers must have direct access to reasonably priced long-term contracts and effective risk management products. Transparent pricing mechanisms and open access to market data for researchers would strengthen confidence in competitive market functioning and in the accuracy of price formation.
Balancing energy accounts for an increasingly significant share of total electricity costs. Its pricing mechanism should be cost-efficient and real-time across the Nordic.
A recurring concern for electricity buyers relates to the Finnish EPAD (Electricity Price Area Differential), whose market lacks adequate liquidity. Considerable development is still needed for this product. Unfortunately, no Finnish authority currently considers the reliability and liquidity of the product to fall within its mandate, making constructive discussion on the issue in Finland difficult.
Electricity Transmission
The transmission network is the backbone of the electricity market, and its performance and cost levels have a direct effect on Finland’s competitiveness. The main grid must not become a bottleneck for growth, as is expected in Southern Finland in 2025–2026. Access to the grid must be smooth and predictable.
In the future, the allowed returns of the transmission system operator and other network companies must remain moderate — significantly below the returns of competitive market activities. From the perspective of electricity users, it is essential that authorities have sufficient resources to design and supervise a rate-of-return model based on the actual costs of network companies.