EDITORIAL

Where are you headed, Finland?

One of the hottest topics of public debate this year has been our country’s resilience. The full-scale war that has been ravaging Ukraine for over four years has, for all its horror, provided a great deal of insight into how and for what we must prepare. Preparedness must begin in everyday life, developing the ability to handle even minor disruptions while protecting against the worst-case scenario. 

Our energy system is quite stable, but that doesn’t mean we can say it could withstand a major disruption. Furthermore, geopolitics and the need to reduce dependencies are strong drivers for reforming and electrifying our country’s energy system into a more decentralized model.

Finland has all the capabilities needed to develop a resilient energy system. Work is already underway at various levels of government and is supported by universities, research institutes, and companies. Now we need to strengthen cooperation among the different stakeholders. This newsletter highlights challenges, but also solutions. One solution model is the ResilEast program, which we have mentioned before; it primarily offers solutions to support eastern Finland’s resilience, security, and vitality. 

It is important to note that the eastern border regions play a critical role in the security of Europe as a whole. The European Commission has also recognized the threats facing these border regions and their difficult economic situation. We and all of Europe must be able to respond to hybrid and security threats and focus on developing our security and resilience, while ensuring the conditions for growth and regional well-being. 

ResilEast has been identified as a highly viable solution in meetings with politicians, civil servants, and other key stakeholders. It is particularly important that the Chambers of Commerce of Eastern and Northern Finland support this initiative. Furthermore, a significant step forward is the newly established ResilEast network of Members of Parliament, which takes a cross-parliamentary view that extends beyond individual electoral terms. Even the European Commission has recognized ResilEast as a good national-level pilot in its own program work. So there’s already a lot of buzz around it!

Here in Finland’s Hydrogen Valley, we have spent the spring developing our own government program objectives in anticipation of next year’s elections. We have actively communicated our message to decision-makers across various political parties, and it has been received very positively. In summary, they are based on our strategic goals, including measures to develop energy infrastructure, ways to accelerate industrial investments, the implementation of the ResilEast program, and actions related to legislation and permitting, particularly concerning eastern Finland. These government program objectives are already being shared and will be refined along the way. If you’d like to hear more, please get in touch!

Thank you to all of you who are helping us achieve our common goal! The work continues, even though we’ll be taking a short break in July. You’ll soon hear more good news about a more resilient Finland!

Jami Holtari, Managing Director, Finnish Hydrogen Valley Association

Eeva Kalli, a member of Parliament who is involved in drafting the Center Party’s energy policy: 

ResilEast brings together key elements for Finland: regional development, the energy transition, security of supply, and national defense.

The energy policy debate is heating up as the pieces for the next government are being moved around the board at an accelerating pace. We asked Eeva Kalli, a Member of Parliament who is drafting the Center Party’s energy policy guidelines, what the Center Party thinks about the goals of the Finnish Hydrogen Valley Association, such as the utilization of biogenic carbon dioxide and the lifting of the wind power cap.

Electricity consumption is rising sharply. What energy policy measures will the Center Party take to ensure a sufficient energy supply?

Finland’s competitiveness can continue to be based on affordable, clean, and reliably supplied electricity. The Center Party’s position is that the growth of electrification and industrial investment should not be restricted; rather, the conditions for their success must be secured.

This requires, at the same time, an increase in clean electricity generation, a determined effort to strengthen the grid, and the development of the system’s control capabilities, demand response, and energy storage. We want to promote a diverse energy mix in which renewable energy sources and forms of production, nuclear power, and, in the future, the hydrogen economy complement one another. At the same time, production and consumption must be brought closer together than they are today so that the need for grid investments and the impacts of those investments remain under control.

How can we ensure that the backbone network does not become a bottleneck?

The Center Party considers it essential to strengthen the transmission grid throughout Finland. Grid investments must be evaluated from the perspectives of growth, security of supply, and regional balance.

The hydrogen economy, e-fuels, data centers, and new and emerging industries require a predictable outlook on grid capacity availability. Fingrid’s investments must be based not only on current demand but also on a strategic outlook for the future.

Should Fingrid’s investment program be guided more strongly by regional policy considerations than it is now?

Decisions on grid development should not be based solely on current market demand, but also on where Finland’s future growth, energy self-sufficiency, and security will originate. Regions play a significant role in strengthening all of these areas, and this must also be taken into account in investment plans for the transmission grid.

Should new, growing industrial consumption and renewable energy production be integrated and largely disconnected from the main grid?

Complete disconnection from the main grid is neither realistic nor even desirable. Instead, the Center Party supports a model in which large-scale energy-intensive investments are encouraged to be built in conjunction with energy production facilities and to actively contribute to balancing the power system.

In particular, in hydrogen production, data centers, and the manufacture of electric fuels, local energy clusters should be promoted, where production, consumption, storage, and potential further processing form an integrated whole. However, the transmission grid remains the backbone of the entire system.

Who will pay for the increase in electricity consumption?

The costs incurred by the investment should primarily be borne by those who benefit from it. At the same time, however, it must be recognized that a robust power grid is an investment in national competitiveness and security of supply.

Therefore, costs must be allocated fairly, so that network users bear the costs in accordance with the "user-pays" principle, while society contributes to network investments that strengthen Finland’s overall competitiveness, security of supply, and regional development.

What kind of regulatory changes are needed?

Electricity market legislation must be developed in such a way that demand response, energy storage, and the hydrogen economy can contribute more effectively to balancing the electricity system and facilitating investments.

Land use and zoning policies should facilitate the coordination of energy production, consumption, and industrial investments more smoothly than at present. Permitting processes must be predictable, operate on a one-stop-shop basis, and be internationally competitive.

At the EU level, Finland must work to ensure that regulations take our specific characteristics into account and do not hinder investment in clean industry through unnecessary bureaucracy.

How will the Center Party break the deadlock on wind power in eastern Finland?

The Center Party’s goal is to find a solution that allows for the construction of wind farms in Eastern Finland without compromising national security.

It is unacceptable that nearly one-third of Finland’s land area is effectively off-limits to wind power development. A solution must be sought in cooperation with the Finnish Defense Forces, energy sector stakeholders, and local communities, while drawing on the experiences of other EU countries bordering the eastern border.

What specific solutions are you proposing?

We support joint development programs between the government and the EU that introduce new radar technologies, sensor systems, and dual-use solutions that serve both defense and the energy sector.

In addition, the government must be prepared to contribute to investments that remove nationally significant security-related barriers to the implementation of energy projects.

How is the Center Party promoting the use of biocarbon?

Bio-carbon dioxide could be a significant competitive advantage for Finland. For example, the carbon dioxide streams generated by the forest industry could form the basis for a new high-value-added industry.

The Center Party wants to accelerate the capture, utilization, and storage of bio-based carbon dioxide, as well as related investments. The goal is to combine clean electricity, hydrogen, and bio-based carbon dioxide into new export products, such as synthetic fuels and chemicals.

Finland must advocate within the EU for bio-based carbon dioxide to be recognized as a strategic raw material, rather than merely an emissions issue.

Do you support a guaranteed price for biocarbon dioxide?

In principle, the Centre Party supports market-based solutions. However, temporary and technology-neutral incentives may be needed to kickstart initial investments. The Centre Party has not taken a position on specific incentive models.

If the guaranteed price model can be used to launch a new industrial sector that generates significant export, investment, and employment benefits for Finland, its use should be evaluated transparently as part of a broader package of investment incentives.

How is comprehensive security reflected in the Center Party’s energy policy?

The central goal of the Center Party’s energy policy is to strengthen independence and energy self-sufficiency. An energy system based on domestic renewable and clean energy is not only a matter of climate and economic policy, but also of security policy.

Decentralized, diversified energy production, robust power grids, domestic energy sources, and the development of the hydrogen and bioeconomies will strengthen Finland’s resilience to crises.

What is the Center Party’s position on the ResilEast program?

The ResilEast approach brings together precisely those elements that are currently of key importance to Finland: regional development, the energy transition, security of supply, and national defense.

The Centre Party welcomes the program’s objectives and considers it important that the strategic significance of Eastern Finland be recognized more strongly than at present in both national and European decision-making.

How is funding secured for the program?

Funding should be drawn from multiple sources, such as EU cohesion and regional development funds, clean transition programs, financing from the European Investment Bank, and national investments in infrastructure and security of supply.

Finland should actively advocate for an EU model in which energy and infrastructure projects that strengthen security in the Union’s external border regions are recognized as strategic European investments.

How can Finland become a major player in the hydrogen economy?

Building a hydrogen economy requires that the basic conditions of the operating environment are in place. In other words, first and foremost, there must be sufficient clean electricity available, and we must have a robust transmission grid and hydrogen transport infrastructure.

On the regulatory front, attention should be paid to removing barriers, at least with regard to permitting and the utilization of biocarbon.

In addition, we need an industrial policy that genuinely focuses on high-value-added products. Finland should not be content with merely producing hydrogen, but should aim to manufacture derivatives, synthetic fuels, chemicals, and new materials.

How can we ensure that Eastern Finland is included?

Eastern Finland offers a unique combination of the forest industry, bio-CO₂, expertise, and room for new investments. That is why the transmission grid, the development of wind power, hydrogen economy infrastructure, research and development investments, and the allocation of EU funding must also be strongly extended to Eastern Finland.

Decentralization, flexibility, and new technologies – the war has revolutionized the rules of the energy system   

The war in Ukraine has revealed the brutality of modern warfare, in which civilian and energy infrastructure have become primary strategic targets. Mykhailo Vydoinyk, Ukraine’s Ambassador to Finland, explains how the energy system is kept operational under constant drone and missile attacks, and how these lessons relate directly to Finland’s future hydrogen and energy architecture.

At the start of the war, Ukraine relied on traditional, largely centralized energy production. Russia’s tactic has been to destroy the country’s key energy production capacity—particularly large coal- and gas-fired power plants, as well as combined-cycle power plants. According to Ambassador Vydoinyk, it is impossible to fully protect traditional large concrete power plants from drone and missile attacks. When a single major hub is destroyed, vast areas are left without electricity and heat.

As a result of the war, the decentralization of the energy system has become Ukraine’s top strategic priority. Instead of large-scale facilities, small, local energy solutions are currently being built and procured across the country.

Ukraine is currently focusing on the rapid deployment of small, decentralized combined heat and power (CHP) units, as well as gas turbines and engines. 

– Such units are capable of responding quickly to spikes in demand and maintaining the balance of local power grids. Ukraine has signed a cooperation agreement with the Finnish company Wärtsilä for the delivery and installation of flexible engine solutions that support energy production across the country, Vydoinyk explains.

Since centralized district heating plants in cities have been targeted, Ukraine is seeking a solution in the form of portable, locally installed, mobile boiler systems. Their purpose is to maintain at least a minimum temperature in residential buildings during the war, so that underground piping and home radiators do not freeze and burst, which would cause billions of dollars in permanent damage to infrastructure.

The numbers on paper don't reflect the harsh reality

Russia’s systematic attacks on power plants, power grids, and substations are also forcing Finland to reassess the security of supply and crisis resilience of its energy system. In Finland and elsewhere in Europe, there is a strong belief that the transition to wind and solar power automatically increases energy self-sufficiency and thus crisis resilience. The experience of Ukraine brings a new perspective to this discussion. 

A significant amount of nominal wind and solar power capacity has been built in Ukraine. However, during the war, it has become clear that weather-dependent renewable energy is not sufficiently reliable in a crisis situation. 

– “Although the figures for renewable energy look impressive on paper, in reality, during the winter season, actual production from wind and solar power accounted for only about 10 percent—or even less—of the country’s electricity needs,” says Vydoinyk.

In a wartime scenario, the energy system requires, above all, adjustable and reliable baseload power, as well as rapid balancing power to stabilize the grid. Since wind and solar power cannot guarantee frequency support for the system, they must be supplemented by battery storage, gas solutions, and, in the future, hydrogen technology. 

In the spring, Ukraine has been able to harness hydropower thanks to high water flows, but Russia quickly learned this as well and began targeting hydropower plants as well as large substations critical to the power grid. It is an ongoing race.

The Hydrogen Economy and Gas Infrastructure: A Vision for the Future

Before the full-scale war broke out in 2022, Ukraine had an ambitious national hydrogen strategy. The country’s goal was to become the European Union’s leading exporter of green hydrogen. Despite the war, that vision remains alive and well, and it builds on the country’s existing infrastructure.

Ukraine has a vast natural gas transmission and storage system that is no longer used for the transit of gas from Russia. The pipeline network provides a ready-made infrastructure in which hydrogen and methane can be blended and transported to Central European markets, such as Germany.

According to Vydoinyk, hydrogen will play a key role in the reconstruction of a new, greener, and more self-sufficient Ukraine. 

– Hydrogen and advanced battery technologies offer a solution for balancing the seasonal fluctuations and production peaks of renewable energy, even under exceptional circumstances, although these technologies remain expensive for the time being.

Ukraine is collaborating with the American company Westinghouse on nuclear power and has succeeded in completely phasing out Russian nuclear fuel. Ukraine is also interested in small modular reactors (SMRs), a topic that has been discussed with Fortum as well.

Protecting critical infrastructure from drones is difficult

Near the front lines, Russia is using small FPV drones—some of which are assembled from components ordered from Amazon—with a range of 20–30 kilometers. FPV (First Person View) refers to a drone that the operator controls via a real-time video feed. These devices, costing a few hundred euros, carry explosives and crash directly into street-side transformers. 

Since transformers cost millions and have long lead times, destroying them with low-cost drones is extremely effective for an attacker, both economically and tactically. Without power, radars, sensors, and communication systems near the front lines go dark, leaving the defender blind.

The threat is not limited to the traditional conventional warfare that Vydoinyk is warning Finland about.

– Saboteurs or terrorists can order drone components from an online store in any country, assemble the devices at home, manufacture explosives using chemicals available on the market, and strike at critical infrastructure—such as the Porvoo refinery or power stations – without having to cross borders militarily.

Underground infrastructure

All critical infrastructure that can be moved underground should be placed there during the construction phase. Finland is well-positioned to do this thanks to its rock construction expertise.

Ukraine has built concrete walls and sarcophagi up to 4–5 meters thick around its large transformers to protect them from shrapnel and direct hits. This is a slow and extremely costly process, but it is necessary.

– In addition to concrete, steel mesh (similar to a type of “fishing net”) is installed around the substations. When a missile or drone first strikes the steel mesh, its explosive force is significantly reduced before it hits the actual concrete wall or equipment, Vydoinyk explains.

Protecting infrastructure requires a multi-layered approach: air defense, anti-drone systems, and continuous, shared situational awareness between civilian operators and the military.

“Don’t wait for the war to end.”

Ukraine is currently receiving substantial international financial packages, such as the EU’s €50 billion package, a significant portion of which is being directed directly toward repairing energy infrastructure and preparing for future winters.

Ambassador Vydoinyk sends his regards to Finnish companies in the energy and cleantech sectors. 

– Don’t hesitate to come to Ukraine right now. The country urgently needs energy solutions that can be deployed quickly, are smart and portable, as well as mobile boilers and distributed network control technology. Companies that want to be part of Ukraine’s reconstruction and benefit from this massive market should establish a local presence and build partnerships at the horizontal level starting today.

Vydoinyki acknowledges Finland’s traditionally high level of preparedness, but the drone and sabotage threats of the new era require us to remain constantly vigilant and at the forefront of technology.

According to Vynoinyk, the hydrogen economy offers enormous potential in both wartime and peacetime. Decentralized electrolysis plants, local hydrogen storage facilities, and the ability to produce synthetic fuels and electricity locally reduce dependence on individual large transmission lines and centralized hubs.

– Resilience cannot be limited to nominal energy capacity on paper. It requires concrete decentralization, mechanical and digital protection, multiple parallel energy sources, and the ability to operate in island mode when the national grid is disrupted. 

Harriet Lonka, Chief Security Officer, challenges the siloed and mystified approach to security 

Comprehensive security has become one of the most popular terms in security policy. This concept, which has taken on a somewhat mystical quality, is frequently invoked in speeches, strategies, official communications, and international contexts as a self-evident Finnish strength. Harriet Lonka, director of the Northern Savo Comprehensive Security Cluster, takes a critical view of the phenomenon.

According to Longa, the core of comprehensive security does not lie in some mysterious Finnish expertise, but rather in the practical question of how to ensure that society functions under all circumstances.

Lonka was involved in evaluating the first Finnish security strategies as early as the early 2000s. According to him, the Strategy for Securing Society’s Vital Functions (YETTS), published in 2003, was created primarily as a tool for cross-governmental cooperation.

The goal was to develop a cross-ministerial strategic framework that would identify the key priorities for national preparedness. These included, for example, command and control systems, the operational capacity of the healthcare system, energy networks, and digitalization.

The original idea was ambitious. The strategy was not intended merely to identify key security themes, but also to coordinate their funding across ministerial budget boundaries. Nationally important preparedness priorities could have been jointly funded across different administrative sectors. However, the idea was never implemented.

In Longa’s view, this highlights a fundamental feature of Finnish administrative culture: cross-administrative objectives often clash with administrative structures and sector-specific territorial boundaries.

Strategic thinking has gradually disappeared

According to Longa, the biggest problem with security strategies has been the gradual erosion of their strategic nature.

– A strategy is not just a list of tasks or objectives. A strategy should include mutually agreed-upon priorities and clear objectives that various stakeholders commit to achieving. In practice, security strategies have become collections of task lists compiled from the individual areas of responsibility of various ministries. Each administrative sector brings its own tasks to the table, which are compiled into a single document, but no genuinely shared strategic process emerges, Lonka asserts.

As a result of these developments, the content of these strategies often resembles a list of the statutory duties of government agencies more than an actual strategy.

Ultimately, the most significant achievement of the security strategies has been the strengthening of cooperation at the civil service level. In particular, the Security Committee—composed of the permanent secretaries of various ministries—has provided a forum where senior officials from different administrative sectors have been able to develop a shared understanding of changes in the security environment. 

The biggest problem is siloing

The biggest structural challenge facing Finland’s security system is the siloing between ministries. Although there is much talk of comprehensive security, practical action constantly runs up against administrative boundaries. Ministries have their own jurisdictions, their own resources, and their own interests. Cooperation is not impossible, but it requires constant coordination.

– In the field of security, this is particularly evident when multiple sectors are required to operate simultaneously. Energy security, security of supply, cybersecurity, transportation systems, communications networks, and civil protection form a whole that cannot be effectively managed from the perspective of a single sector.

Competition for resources among different areas of security has intensified in recent years. Although this phenomenon is human nature, it can also weaken the overall system’s ability to function. This raises the question of whether the current ministry structure is still the best possible way to lead society in an increasingly complex security environment?

Lonka refers to the Government’s reform initiatives from 2007, which examined the so-called unified Government model. Sweden serves as a particular point of comparison.

– In Sweden, the government operates as a unified whole under the leadership of the prime minister. This makes the structure more flexible and easier to adapt when, for example, the administration needs to be reorganized to meet the changing demands of the operating environment.

In Finland, by contrast, ministries have a strong degree of autonomy. Each ministry prepares its own agenda and brings it to the decision-making process based on its own priorities. This system can easily lead to situations where the overall picture remains fragmented, and at the same time, it makes it very difficult to reform the system.

According to Longa, a more unified management model could speed up decision-making, provide a clearer overall picture, and reduce duplication of effort.

The idea behind the National Security Agency

Lonka also highlights another structural problem. In his view, expertise is too heavily concentrated in the ministries.

– The primary role of ministries should be the preparation of legislation and providing policy guidance. The actual expertise, analysis, and monitoring of the operating environment should be the responsibility of expert agencies and research institutes. The COVID-19 pandemic demonstrated how important it is for the system to be able to produce independent expert information in rapidly changing situations, Lonka explains.

According to him, a more efficient central administration could be both more competent and leaner. There are also organizational options for improving security of supply and overall security. In connection with the assessments conducted by the Security of Supply Center, consideration has been given to the possibility of establishing a national security agency in Finland based on the Swedish model.

– Over the years, various aspects of security in Sweden have been brought together under a single umbrella. Emergency response, disaster preparedness, security of supply, and numerous other security-related tasks now form a more cohesive whole than before.

In Finland, these responsibilities remain scattered across several ministries and agencies. According to Longa, discussions about administrative structures are often perceived as dry and technical. There is too little discussion, even though, in practice, this concerns society’s ability to function in crisis situations.

Comprehensive security is, above all, about preparedness

Lonka challenges the notion that comprehensive security is treated as a separate or new security model. It is, above all, a matter of preparedness.

The societal security strategy is, in practice, a national preparedness strategy. Its purpose is to ensure that key societal services and functions remain operational during disruptions and in emergency situations.

“Preparedness simply means that every actor identifies its own critical functions and ensures their continuity even during a crisis,” Lonka summarizes.

The Ministry of Agriculture and Forestry must oversee primary production, water management, and food supply chains. The energy sector must ensure energy production and the operation of power grids. Municipalities must ensure the continuity of services. Businesses must maintain their operational capacity even during disruptions. The basic principle is the same regardless of whether the disruption is caused by a cyberattack, a widespread power outage, a pandemic, terrorism, a natural disaster, or a military crisis.

The hydrogen economy is integral to society's ability to function

In Finland, discussions are currently underway regarding energy investments worth billions, new energy networks, hydrogen production, strengthening the transmission grid, and the green transition in industry. At the same time, efforts are being made to ensure future energy security.

From Longa's perspective, the issue is not just about energy or industry, but about society's ability to function.

Hydrogen projects, power transmission grids, data centers, ports, logistics solutions, and critical infrastructure will play an increasingly important role in national preparedness in the future. Their design must take into account not only economic competitiveness but also operational capability in various disruption scenarios.

“This is precisely the original idea behind comprehensive security: cross-agency cooperation and the identification of shared priorities go hand in hand,” Lonka points out.

Comprehensive security is not some mysterious Finnish specialty. At its core lies the question of how society’s critical functions can continue under all circumstances. When energy flows, water services function, communications remain operational, businesses are able to continue their operations, and citizens receive the services they need even in crisis situations, comprehensive security is realized in practice.

“Investments in the green transition, the hydrogen economy, and energy security are now more closely intertwined,” Lonka sums up.

Petteri Laaksonen of LUT: Reforming Finland’s energy system requires a new way of thinking

The current debate on energy and security in Finland is united by one common factor: the operating environment is changing faster than the structures can keep up. According to Petteri Laaksonen, Research Director at LUT University, both the development of the energy system and security solutions suffer from the same problem—siloing.

As the operating environment changes, Finland cannot build the energy system of the future using outdated models. We must find more new and collaborative solutions than ever before in the areas of security of supply, defense, and infrastructure development. 

An example of finding joint solutions can be found in Muukko, Lappeenranta. Measurement systems have been installed on wind turbines in the area to analyze disturbances caused by electrical systems. The goal is to create a testing environment where companies can evaluate the performance of their own air monitoring sensors under real-world operating conditions.

– New research projects are in the works that will explore, for example, the use of low-cost sensor and drone solutions for environmental monitoring. The goal is to determine how effectively various targets can be detected and monitored, Laaksonen explains

The administrative structure hinders synergy among projects

In Finland, parallel systems are being built without sufficient coordination, which, according to Laaksonen, is a major societal problem.

– A case in point is defense spending. If new infrastructure, cabling, power transmission systems, and telecommunications networks are going to be built anyway, they should be viewed as a single entity rather than as separate projects.

The same phenomenon is undermining many infrastructure projects. First, one network is built, then another, and later a third, even though joint construction would often be more efficient both financially and operationally.

“This isn’t a single problem but a characteristic of the Finnish administrative structure,” Laaksonen explains.

According to him, the security sector faces the same structural problems as the energy sector. Over the decades, Finland has built a system in which ministries operate within their own areas of responsibility. This makes it difficult to manage the big picture, and the efficient use of resources suffers as a result.

Laaksonen points out that, in emergency situations, nearly all critical systems ultimately rely on civilian infrastructure.

– Power grids, telecommunications, transportation, maintenance systems, machinery, and equipment are largely the same systems that society uses under normal conditions as well. Investments in energy and security should not be viewed as separate entities, but rather as parts of the same infrastructure that strengthens societal resilience.

The future of Eastern Finland is being built on the ResilEast approach

LUT University, in collaboration with the University of Eastern Finland, has applied for funding for a project aimed at assessing Eastern Finland’s actual industrial potential, energy needs, and conditions for business location.

The goal is not merely to produce technical calculations, but to build a comprehensive picture of what kind of industrial and energy policy future could be created for the entire region of Eastern Finland. A wide range of cities and regional actors are involved in the project. Support for the project has been provided by Joensuu, Lappeenranta, Kotka, Mikkeli, and Kouvola, among others. According to Laaksonen, the breadth of regional interest indicates that there is a genuine need for the development of Eastern Finland.

One of the key challenges relates to the availability and price of electricity, and Fingrid has also highlighted the regional imbalance in Finland’s power grid. Unless the power system in Eastern Finland is strengthened, the region’s competitiveness will be significantly weakened.

According to Laaksonen, this is not a technically unsolvable problem.

– Solutions do exist, but implementing them requires political decisions and a new approach to investment planning.

The call for a new way of thinking has also propelled the ResilEast program into the conversation about the vitality of Eastern Finland.

Lessons from Ukraine and data centers are driving the need for reform

This new way of thinking also extends to international projects. LUT is currently preparing a project related to the reconstruction of Ukraine’s energy system. Three flagship projects are involved in the preparation. The goal is to chart a development path for the reconstruction and development of Ukraine’s energy system and to increase cooperation with the Ukrainian government, universities, and international technology companies.

Ukraine’s experience underscores the importance of decentralization, flexibility, and resilience in the energy system. These same issues have also become a priority in Finland.

According to Laaksonen, one of the biggest energy policy issues in the coming years relates to data centers. The growth of artificial intelligence, cloud services, and digital services is rapidly increasing electricity consumption. Data centers typically operate at a steady load around the clock.

The problem arises in situations where electricity is in short supply. If large data centers continue to consume electricity at full capacity even during winter peak demand periods, the market price of electricity could rise to extremely high levels.

– Some estimates predict that the price of electricity could rise to as much as 1,000 euros per megawatt-hour in situations where demand significantly exceeds supply. The consequences would be felt throughout society. Industry would have to cut back on production, and household energy costs would rise sharply, Laaksonen predicts.

However, the solution is not to oppose data centers—quite the contrary. According to Laaksonen, data centers are an important part of the future economy, but they must be integrated into the energy system in a new way.

– The biggest challenge is understanding that the energy system of the future isn’t just a scaled-up version of the current system. We need new building blocks; it’s about creating an entirely new structure.

High-voltage power lines and underground hydrogen storage facilities are part of the solution

One of the new elements is private high-voltage power transmission lines, which allow generation and consumption to be directly linked without all the electricity having to pass through the national grid. This is due to the large volume of electricity that needs to be transmitted. At the same time, high levels of consumption and electricity generation must be located close to one another.

With these, large wind and solar power plants could be connected directly to hydrogen production facilities, data centers, steel mills, or methanol production plants. This would reduce the need for investments in the transmission grid and lower the uncertainty surrounding consumption-related investments.

In addition to integrating production and consumption, the energy system of the future will require large-scale underground hydrogen storage facilities. These underground storage facilities could become a cornerstone of the energy system, enabling the storage of electricity as hydrogen for periods of up to a month. When renewable electricity is abundant, the energy is converted into hydrogen and stored. As electricity production fluctuates, the hydrogen storage maintains steady industrial production. This solution would reduce fluctuations in electricity prices, alleviate investment uncertainty, and create stability for both energy producers and hydrogen users.

“Building rock caverns is not a technically impossible task. Finland has strong expertise in rock engineering, which can also be leveraged to meet the needs of the hydrogen economy,” says Laaksonen.

In addition to hydrogen, the energy system requires significantly more battery storage capacity as well as new energy storage solutions. The role of batteries will grow considerably from current levels, but their business model is based on a broader market context than just short-term balancing power. The largest change in terms of scale in the industrial sector is the use of bio-carbon dioxide as a raw material in the chemical industry. 

The energy system of the future will be significantly more complex than today’s, yet at the same time more flexible. The key question is how quickly Finland can build a new system that combines energy self-sufficiency, industrial growth, the hydrogen economy, data centers, and security of supply into a single, functional whole.

Once the measurement data has been analyzed, it can be used in equipment manufacturers’ testing and product development. Several companies have already expressed interest. According to Laaksonen, discussions are underway with several companies, and research collaboration is progressing in parallel with the development of the test platform.

National Emergency Supply Agency: 

Hydrogen could increase the flexibility of the energy system

Changes in Finland’s security environment have brought security of supply more prominently into the energy and industrial policy debate. Although the hydrogen economy is often seen as a future solution for strengthening energy self-sufficiency, the National Security Supply Center does not foresee a significant role for hydrogen in national security of supply in the coming years.

The National Emergency Supply Agency’s strategy for 2024–2027 takes into account the changed operating environment. The strategy addresses three key threat scenarios: military threats, widespread influence operations, and serious disruptions to the global economy. At the same time, it emphasizes that preparedness is not limited to individual threats, but extends from cyber disruptions to pandemics and from extreme weather events to supply chain disruptions.

From an energy supply perspective, Finland’s strengths lie in its diversified production structure and long tradition of preparedness. However, there are plenty of challenges. When it comes to fossil fuels, Finland remains dependent on imports, and in the electricity system, the growth of weather-dependent production has reduced the system’s flexibility reserves.

– A sufficient amount of weather-independent and adjustable electricity generation is essential for society to weather serious disruptions with as little impact as possible. For this reason, the National Emergency Supply Agency has secured a power generation reserve at the Meri-Pori power plant for nearly three years, saysHeini Tirri-Kokkonen, Senior Preparedness Specialist at the National Emergency Supply Agency.

Hydrogen's role in ensuring energy security will become clearer in the future

At present, hydrogen plays a limited role in Finland’s overall energy security. According to the National Emergency Supply Agency, it is unlikely that hydrogen will become a significant pillar of energy security by 2031. However, hydrogen’s potential should not be underestimated. 

– If hydrogen and its derivatives can be used to replace imported fossil fuels or critical raw materials in applications where alternatives are scarce, this could significantly reduce Finland’s dependence on imports. At the same time, the hydrogen economy could bring much-needed flexibility to the energy system in particular, Tirri-Kokkonen estimates.

There is still uncertainty surrounding the progress and timeline of the development of fuels based on hydrogen and renewable electricity. The role of hydrogen in ensuring security of supply depends on how hydrogen solutions are implemented in sectors critical to security of supply.

According to the National Emergency Supply Agency, opportunities must be identified early, assessed realistically, and capitalized on when the solutions are competitive even under normal conditions. Security of supply and effective business operations form the foundation upon which security of supply is built.

Synthetic fuels can enhance self-sufficiency

The utilization of bio-based carbon dioxide and the production of synthetic fuels are also seen as having the potential to strengthen Finland’s self-sufficiency. E-fuels and biofuels produced in Finland could help reduce dependence on fossil fuel imports.

What is crucial, however, is that production is based on economically sustainable business practices. In addition, it is necessary to carefully assess whether the necessary expertise, technology, and supply chains can be found domestically or through reliable partners.

– Even though the energy transition is moving full steam ahead, fossil fuels will still be needed for a long time to come in certain applications, as well as for backup and peak-load power. We must not forget their importance in preparing for crisis situations, says Tirri-Kokkonen.

Storage is one of the cornerstones of security of supply

In Finland, statutory emergency reserves of fossil fuels must cover at least five months’ worth of demand, which is an exceptionally high level by international standards.

When it comes to hydrogen, the situation is different for now. Hydrogen is technically more challenging to store than many traditional energy sources, and Finland does not yet have large-scale long-term storage facilities for hydrogen. In the future, we will need to determine to what extent it is worthwhile to store the energy source itself and to what extent we should focus on ensuring the continuity and resilience of production chains.

Tirri-Kokkonen emphasizes that crisis resilience must be taken into account as early as the planning stage of new solutions.

Six priorities for strengthening energy security

The National Emergency Supply Agency has identified six key areas that Finland needs to focus on in the coming years. They are

• ensuring a sufficient supply of electricity that is not dependent on weather conditions
• ensuring investments in grid resilience
• securing domestic fuel supply chains (particularly wood)
• greater consideration of domestic and European supply chains in operations critical to security of supply
• the use of fossil fuels in crisis situations
• Domestic production of e-fuels and synthetic fuels.

Reforming the energy system requires a predictable and long-term operating environment.

– Stable legislation creates the conditions for investments whose planning, implementation, and operational lifespans extend decades into the future. The success of the energy transition is therefore not merely a technological issue; it requires consistent decision-making, Tirri-Kokkonen emphasizes.

The hydrogen economy offers opportunities to strengthen Finland’s energy security, but realizing these opportunities requires determined development efforts, functioning markets, and the ability to integrate new solutions into the overall security framework. 

MEMBERS INTRODUCED

The future of heavy machining is being built in Imatra

The Imatra industrial area is filled with the low hum of heavy lathes. Large lathes spin, cranes move parts weighing tons, and components are manufactured in the machining hall with precision measured in thousandths of a millimeter. This is where Imatran Koneistuspalvelu Oy operates.

According to entrepreneur and CEOAnssi Matkonen, the industry is constantly changing, and it is impossible to stay competitive without continuous improvement.

– The competition is getting tougher all the time. You have to stay on top of things. If you wait too long, someone else will beat you to it, says Matkonen.

Matkonen’s mindset is also reflected in the company’s history. Over the years, Imatran Koneistuspalvelu has invested in heavy machinery at a time when many others would have waited for the market to stabilize. Matkonen believes that in the machine shop industry, a strong position is built through foresight.

– We had to buy a new, large lathe before anyone else did. For a company our size, that was a really big decision—almost an impossible investment. But if you’re a step ahead of the market, the next step is already easier.

Getting laid off spurred me to become an entrepreneur

Matko’s journey into entrepreneurship began in 2009. At the time, he was working as a process engineer and was involved in projects in the machine shop industry, as well as in the commissioning and training for machine tools. The idea of becoming an entrepreneur took hold quickly.

– I wanted to quit my job, but they dragged their feet for a couple of weeks. Finally, I told them I was going to start my own business. 

The first company was CamPojat Oy, which focused on process design, programming, and industrial consulting services. Over the years, the business expanded into actual machining, and in 2012, Matkonen acquired Imatran Koneistuspalvelu Oy, which had been founded in 1983.

Matkos was firmly convinced that there was a market in Finland for a company specializing in the machining of large parts.

– I had seen the struggles of subcontractors and what large industrial companies need. I felt that there was a place in Finland for this kind of expertise.

Tons of steel and precision down to a thousandth of a millimeter

The size of the components produced by Imatra Machining Services varies greatly. Its customers include, in particular, equipment manufacturers in the paper, cardboard, and pulp industries, as well as maintenance providers in the process industry. The largest turned components can weigh up to 30 tons and be 13 meters long. 

Although the tracks are massive, precision is what matters most.

– When it comes to roundness, we need to achieve an accuracy of five thousandths of a millimeter. For straightness, we’re talking about hundredths of a millimeter. It doesn’t matter how large the part is—the tolerances still have to be met, Matkonen emphasizes

The machining processes are lengthy and require constant monitoring. Machining a single part can take anywhere from 50 to 200 hours. A large part may remain in the machine for two weeks, running in two shifts. A single machining process can take up to 160 hours.

This job emphasizes the importance of experience. There is no room for error, as both materials and working hours are valuable.

– The product sent to the customer has to be right the first time. Trust in our expertise is what matters most, Matkonen explains.

Competitiveness is the sum of many factors

According to Matkonen, competition in Finnish industry is not decided by price alone.

– It’s not enough for the price to be right. The customer has to trust that you can get the job done reliably and to a high standard. Your place in the customer’s supply chain is earned through consistent, long-term effort.

Competition is fierce, and the market situation is challenging, particularly when it comes to pricing. In many projects, prices are too low compared to what they should be. Cost-cutting is particularly evident in the maintenance sector.

– Companies are putting off repairs and investments. The repair backlog will certainly catch up with them at some point, Matkonen predicts.

He compares the current situation to 2016, when the market experienced similar uncertainty. However, that was followed by several good years. Cycles in the manufacturing sector are strong.

The role of corporate culture and responsibility is also becoming increasingly important in the engineering industry. Matkonen proudly shows off the machine shop: the aisles are tidy, the tools are organized, and safety protocols are in place. The company has put a lot of effort into improving quality and work practices.

– We’ve been audited for a long time. On large projects, clients scrutinize everything very carefully. One major audit stands out in my memory, particularly because the issues raised turned out to be minor. In practice, the only shortcomings were an insufficient number of bandages and the location of the eye wash bottle, Matkonen smiles.

The hydrogen economy is also of interest to machine shops

Although Imatran Koneistuspalvelu operates at the heart of traditional heavy industry, it also has its sights firmly set on the future. The company is part of the Finnish Hydrogen Valley Association’s network because Matkonen views the hydrogen economy as a significant new industrial sector. He believes that the hydrogen economy can generate new investments in the region and, as a result, create jobs for machine shops as well.

– Hydrogen is becoming an increasingly important part of the picture. If new hydrogen economy projects are launched in South Karelia, we want to be involved in their implementation. If new companies are established in the region, they will need machining, components, and maintenance services. We have the capability to manufacture a wide range of parts, from small to large.

According to him, building networks is particularly important at this stage.

– You need to be involved right from the start, when new projects are being planned. That’s when the collaborative relationships are formed that will later lead to business growth.

Matkonen also believes it is important that the hydrogen economy be seen as a shared opportunity for the entire region.

– There is currently a shortage of industrial jobs in Finland. Any investment that brings more work here is important.

A close-knit and international work community

One of the biggest challenges facing the engineering industry is the availability of skilled labor. In addition to Finnish staff, Imatran Koneistuspalvelu employs workers from Sri Lanka, Romania, and Mexico, among other countries. Recruitment often takes place through international networks and staffing agencies.

– We often have video calls with employees before they come here. We show them what the place is like and tell them straight up what the job entails. You can’t overpromise. You have to be honest about the job requirements right from the start.

According to Matkonen, international employees have adapted well to life in Imatra.

– One of the employees’ children is already singing Finnish children’s songs at daycare. I think they’ve settled in here just fine.

The employer’s role is particularly important when an employee does not have a support network of their own in Finland.

– If, for example, a car breaks down, the employer may be the only one who can help. We have provided cars for our employees to use so that their daily lives can run smoothly.

Matkonen also highlights the importance of spouses being employed. One of the company’s skilled employees moved to another town because his spouse could not find work in the area.

– That was really upsetting. He was a highly skilled employee. 

According to Matkonen, the industry is, after all, a small world where people switch roles over the years. Careers can easily span 50 years. A lot can happen in that time. That is why he believes in long-term cooperation and fair business practices.

– People should be treated well regardless of their position. Today, someone might be your customer, and in five years, they could be your boss or business partner.

NEWS FROM US AND THE WORLD

The ResilEast Program Joins the Parliamentary Network

The establishment of the ResilEast network has received strong support across party lines.Timo Suhonen, a member of Parliamentfrom the SDP,has beenelected chair of the ResilEast network. 

ResilEast is a national defense energy program that, if implemented, will create thousands of jobs, particularly in eastern Finland. The network was established to support the program, as sustainability, security, and energy security can serve as a new driver of growth in eastern Finland.  

Affordable green energy and bio-based carbon dioxide cannot be the exclusive privilege of western Finland. Eastern Finland has many untapped energy sources, but access to energy is a barrier to investment.  

– The ResilEast program consists of a chain of energy projects that form the backbone of nationwide industrial development. As a byproduct, defense capabilities can also be built, the most urgent of which include, for example, support for drone shields and military mobility in terms of visibility, data, and infrastructure. This could be implemented not only at a reasonable cost but also in a way that generates revenue for the national treasury, saysJari Sistonen, entrepreneur and founder of the ResilEast program.

ResilEast is a cross-term program that will also require the support of future governments. The program will generate prosperity in eastern Finland and is also in line with the guidelines of the EU’s program for eastern border regions.

Accordingto Jami Holtar, CEO of Suomen Vetylaakso ry, which is participating in the program, the interest shown by members of Parliament and Timo Suhonen’s enthusiasm for taking on the role of network chair represent a crucial step forward in the program’s implementation.  

– The broad participation of members of Parliament across party lines is a valuable asset in advancing the ResilEast program. I am very pleased that the program’s significance is recognized beyond the scope of a single election cycle, Holtari says.

Finnish Hydrogen Valley's Goals for the Government Program

A major achievement of the Finnish Hydrogen Valley advocacy working group is the completion of the association’s policy platform.The ResilEast program has received support from all major political parties.

The government program objectives drafted in the spring—Development of Eastern Finland—have been approved by the association’s board and are being taken forward. Discussions have been held with, among others, those responsible for the parties’ program work and key members of Parliament. The goal is to ensure that Eastern Finland’s unified message is reflected in the upcoming government program and supports investments in the region’s clean energy transition as well as the development of the hydrogen economy.

In our advocacy work, the ResilEast program has been a key focus over the past year. The program has continued to be developed by experts on a volunteer basis without separate funding. Its implementation requires both financial and parliamentary commitment. Funding has been sought and is being sought from sources including the government’s budget negotiations and regional councils.

The program has garnered the support of nearly all key stakeholders, including the Chambers of Commerce in Eastern and Northern Finland, with whom we are collaborating based on their recent energy and industry report. The Confederation of Finnish Industries (EK) and its member associations,Harri Broman, Special Envoy for Eastern Finland, as well as several municipalities and cities, also support the program’s objectives.

Support for the initiative can be found across all major political parties. During the spring, a dedicated ResilEast network was established for members of parliament to strengthen parliamentary cooperation across electoral terms. Ten members of parliament joined the network right from the start, and the program has also been presented to nearly twenty other members of parliament as well as Prime MinisterPetteri Orpo.

ResilEast has also attracted interest at the European Union level. In the European Commission’s program on eastern border regions, published this spring, ResilEast is mentioned as a pilot project at the national level. Finnish Members of the European Parliament met with during the year have likewise expressed their strong support for the program’s implementation. In addition, Sitra has been actively involved in supporting the preparation of ResilEast since last summer.

Webinars and member events will continue this fall

The Finnish Hydrogen Valley Association organized three webinars and a visit to the hydrogen laboratories at LUT University during the winter and spring. The visit to LUT University attracted about twenty members interested in the hydrogen economy. 

The topics of the webinars have included strengthening the transmission grid in eastern Finland, the social acceptability of projects, and corporate responsibility. Thank you to LUT University for hosting us and to our members Suur-Savon Sähkö, Savon Voima Oyj, Valveres, and the City of Hamina, as well as external experts from Fingrid, Kymen Sanomat, Google, and Professor of IndustryJukka Ruusunen, for their expert presentations during the webinars. 

Topics for this fall’s webinars include project funding and hydrogen value chains. If you have a topic in mind that you’d like to see covered in a webinar, please send an email to tommi.siikaniva@vetylaakso.fi

Work to strengthen the transmission grid in eastern Finland is moving forward

Fingrid is planning a 400+100-kilovolt power line connection in eastern Finland between Huutokoski in Joroinen and Kontiolahti. The environmental impact assessment process for the project is underway and is expected to be completed by the end of 2027. The goal is for the power line connection to be completed during 2033.

The power line connection between Huutokoski in Joroinen and Kontiolahti, planned by Fingrid, would significantly strengthen the transmission grid in Eastern Finland. The 400+100-kilovolt line would run through a total of eight municipalities in the provinces of North Karelia, North Savo, and South Savo.

– The transmission grid is a long-term infrastructure, and its development is always planned well into the future. Fingrid works closely with regional stakeholders and project developers. It is important that electricity consumption and production projects take advantage of the future power line connection. We are actively working to ensure that the planned power line connection can be completed during 2033,says Fingrid CEOAsta Sihvonen-Punkka. 

The environmental impact assessment (EIA) process for the power line project is underway, and the assessment program to be completed in the first phase will be finalized next fall. The environmental impact assessment procedure is expected to be completed in its entirety by the end of 2027, after which the coordinating authority’s reasoned conclusion will be issued. This will be followed by the actual decision on the project’s implementation, taking into account the area’s connection needs. The connection would increase opportunities to integrate consumption and production investments into the transmission grid, particularly in the Joensuu region.

Source: Fingrid

LUT University Study: The Importance of Energy Security Is Highlighted During Crises

LUT University has published its third energy report, which provides a timely overview of the opportunities and challenges posed by the accelerating energy transition. The main theme of the report is energy security, which is examined from technological, environmental, and societal perspectives. The report aims to help strengthen Finland’s energy security on the path toward a fossil-free electricity system and industry.

– The security of energy systems is vital both for the functioning of society and for international competitiveness. The energy transition is already well underway, but geopolitical changes, the climate crisis, and biodiversity loss are bringing new kinds of risks and uncertainties, saysOlli Pyrhönen, Dean of the Faculty of Energy Systems at LUT University.

A record 41 experts from the Faculty of Energy Systems contributed to the writing of the energy report. The publication is available free of charge in Finnish and English.

Check out the publication here

Source: LUT University

UPCOMING EVENTS

Future Energy Solutions, September 8–9 in Lappeenranta

Future Energy Solutions brings together industry leaders, innovators, decision-makers, and researchers under the main theme “Energy Meets Industry.”

Join us to hear thought-provoking presentations, participate in interactive sessions and high-level discussions, and take advantage of excellent opportunities for networking, collaboration, and discovering new ideas. 

The Finnish Hydrogen Valley Association is helping to organize the event. The program is being updated continuously.

Partner Search

We are currently looking for partners to help us create the most impactful energy industry event of the fall. Learn more about our partnership opportunities here. 

Register for the event here.

Date:September 8–9, 2026

Location:Lappeenranta City Theater, Kaivokatu 5

Join our growing team today!

We already have 70 members, to whom we provide interesting and up-to-date information on the opportunities offered by the hydrogen economy and renewable energy. We are your organization’s voice in the industry and ensure that the issues important to you are brought to the attention of decision-makers. We actively network, regularly meet with key players in the energy sector, and obtain the latest information on industry developments for your benefit.

We will provide you with regular updates on industry developments, company visits, a newsletter published six times a year, media coverage of topics important to you, visibility on social media channels, and we’ll support your organization’s communications when you want to bring your message to the attention of your stakeholders. Protecting your interests is our job.

Join our growing community here or call Jami at 040 055 1435 or Tommi at 0400 885 747, and we’ll tell you more. 

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Green hydrogen and carbon dioxide to power South-East Finland is an ERDF-funded group project in the Renewable and Competent Finland 2021-2027 programme. The main implementer is LUT University, where the Finnish Hydrogen Valley Association is one of the co-implementers.  

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