Working group on non-fossil flexibility considers a model for promoting security of supply and flexibility of electricity market

The working group on non-fossil flexibility appointed by the Ministry of Economic Affairs and Employment has released its final report. According to it, flexible demand for and supply of electricity as well as various energy storages will be necessary to respond to the challenges of rapidly fluctuating electricity generation driven by increasing renewable energy production.

The working group on non-fossil flexibility appointed by the Ministry of Economic Affairs and Employment has released its final report. According to it, flexible demand for and supply of electricity as well as various energy storages will be necessary to respond to the challenges of rapidly fluctuating electricity generation driven by increasing renewable energy production. 

The working group states that the supply of capacity capable of long-term flexibility should be increased and the market entry speeded up by government measures within the limits allowed by EU legislation.

In case a support mechanism is implemented, the support should be in the form of investment aid based on competitive tendering, according to the report. Any technology capable of meeting the technical requirements, including the readiness to generate electricity independent of weather conditions, would be eligible for support. The report also takes a position on the minimum obligation model enabling the recovery of aid, the scoring of competitive tendering and the funding of the mechanism.

The working group was not able to thoroughly assess the effects or suitability of the proposals as regards state aid, but the report touches on these issues in some parts. Questions related to aid must be explored in further preparation and in state aid discussions with the European Commission.

The report presents modelled preliminary flexibility needs. Without new capacity, the loss of load expectation in 2030 would be nine hours per year, which clearly exceeds the national target of 2.1 hours. The target would be achieved by adding new capacity of around 800 MW. It is not possible to estimate in advance the amount of necessary aid, because the actual aid amount granted will be determined by competitive tendering. However, the working group estimates that the costs would total hundreds of millions of euros.

The increase in variable renewable electricity production has increased the variation in the supply available on the market, and as a result, affected security of supply and increased the fluctuation in electricity prices. Production may vary significantly within days, between days and at different seasons, sometimes unpredictably. Large fluctuations and unpredictability require new resources for the electricity system. 

One objective of the Programme of Prime Minister Petteri Orpo’s Government is to create a capacity mechanism to improve the security of electricity supply. For this reason, the Ministry of Economic Affairs and Employment appointed a broad-based working group to consider a model for implementing the non-fossil flexibility support scheme in September 2024. The Minister of Climate and the Environment at the time, Kai Mykkänen, explained the appointment of the working group as follows: 

”Growing production of clean electricity determined by the market will significantly increase Finland’s self-sufficiency. However, investments in variable renewable production also require more flexible demand and production capacity to maintain security of supply and to curb price fluctuations. This is important for both consumers and for attracting electricity-using industries to Finland.”

The EU Regulation on the new electricity market design imposes an obligation for Member States to define an indicative objective for non-fossil flexibility. The objective must be based on a report on the estimated flexibility needs. According to the Regulation, Member States may introduce a non-fossil flexibility support scheme in order to achieve this objective.

The Ministry of Economic Affairs and Employment requests comments on the working group's proposal on the lausuntopalvelu.fi Link to an external websitewebsite by 24.6.2025.

Inquiries:
Lyydia Ylönen, Special Adviser to Minister of Climate and the Environment, tel. +358 50 476 1341
Petri Hirvonen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 048 (Chair of the working group)