Investing in Green Transition

– New Technologies on the Way Towards Bankability

The Government Programme issued by the recently formed Finnish Government was published in June 2023. The programme sets out a vision of Finland becoming a leader in clean energy while maximising its climate handprint. The Government Programme seeks to promote effective energy policy in a predictable manner and takes a long-term view.

Finland wants to strengthen its competitiveness and attractiveness as an investment target for renewable industries by doubling its production of clean electricity. For instance, the Government is expected, during the current four-year term, to set an ambitious target for offshore wind capacity in 2035. Further, Finland wants to become a key player in the hydrogen economy, especially relating to hydrogen refining projects. Also on the Government’s agenda is the growth of the domestic mineral and battery cluster in order to strengthen both clean transition and strategic autonomy.

During recent years, Finland has seen a major building boom of onshore wind power. The majority of the plants are located on Finland’s west coast. At this point it can be said that – in terms of legal bankability – the traditional onshore wind farms enjoy established market practices. Although every project is unique, market participants have established practices with respect to, e.g., project development, licensing, contracting and commercialising onshore wind projects. The traditional key elements required for a project to be considered bankable, i.e. (i) solid offtake scheme, (ii) no or limited technology risk and (iii) no or limited regulatory risk, are typically on a sufficient level with onshore wind farms. How about offshore wind and newer energy technologies, then?

Project financing is typically based on a combination of equity, possible subsidies and debt. Generally speaking, the newer the innovation underlying the project is, the larger a part of the financing is based on equity and subsidies. Conversely, the more familiar and accustomed the market becomes with new innovations and once the projected cashflows can be demonstrated with a sufficient level of certainty, the portion of available debt financing increases and – subject to market conditions – the cost of it may decrease.

Many new technologies required for the green transition, such as scalable power-to-x based solutions, have been developed to a large extent as internal R&D efforts within industrial entities and/or with the help of private equity investments and public funds. Considering the length of the path to full commercialisation of early-stage new tech development projects, this is understandable. However, especially energy and infrastructure related technologies typically may require large scale hardware and testing in a relatively early stage of the development process. This is capital consuming. At the same time, it is widely recognised that the green transition is vital and in order to meet the targets set out in the Paris Agreement and the underlying EU and national legislation, time is of the essence. On this basis, let’s explore on a high level the said key elements of project financing in the context of certain technologies that are currently – or are expected in the near future to be – trending in Finland.

Offshore wind

The offshore wind capacity in Finland is currently merely some 42 MW, produced by a single offshore firm farm1. In various phases of project development, there are approximately 30 planned wind farms located in Finnish territorial waters and in the Finnish exclusive economic zone with a staggering combined capacity of over 57 600 MW.

Especially in the exclusive economic zone, the uncertainties relating to permitting are significant. Currently the right of exploitation granted by the Finnish Government for project development in the exclusive economic zone is not exclusive, does not entitle to build nor grant legal privilege for future permitting. Given the expected Government’s ambitious target for offshore wind power in 2035, solving the uncertainties relating to permitting should be high on its agenda. The Government has established a project in order to promote market-based offshore wind production instead of fuelling the investments with subsidies3. However, according to currently available information, the outcomes of the project are not expected until 2024. Currently the market is monitoring ongoing permitting closely as there are rumours of the first exploitation permits possibly being issued any day now.

In addition to the regulatory risk relating to permitting, offshore wind farms bear a certain level of technology risk despite the relatively favourable building conditions in the shallow Baltic Sea and the high-level quality of engineering and construction in Finland. Also, questions relating especially to marine traffic and nature remain open. As to the solid offtake scheme, although the demand for renewable energy is expected to increase significantly, the level and timeline of the increase depends to a large extent on the power-to-x industry’s development and the underlying needs for clean energy there.

P2X and RFNBOs

The power-to-x industry in Finland is prominent. There are both established industrial entities and highly specialised growth companies actively operating within various points of the value chain. Although technologies relating to hydrogen have been in use for a long time, utilising hydrogen-based solutions and products refined from hydrogen especially at a large scale is new and upcoming.

The regulatory landscape around hydrogen and power-to-x industry is currently forming. Although many of the EU level legislative initiatives have progressed recently, a lot remains to be seen especially at the national level. The EU Commission published, in June 2023, two delegated acts under the EU’s Renewable Energy Directive (RED II) outlining detailed rules on the EU definition of renewable hydrogen. The acts define under which conditions hydrogen, hydrogen-based fuels or other energy carriers can be considered as renewable fuels of non-biological origin (RFNBOs) as well as the methodology for calculating life-cycle greenhouse gas emissions for RFNBOs. In addition to defining what constitutes renewable hydrogen in the EU, the principle of “additionality” for hydrogen set out in the RED II is clarified. One of the goals of these delegated acts is to provide regulatory certainty to investors. This has been called for by the industry as well as the investors.

Despite the legislative progress in the field, certain regulatory uncertainties still remain. For example, to what extent can the industry rely on analogous application of natural gas legislation to hydrogen considering the physical differences of the gases? The Gas Package that is currently subject to the approval of the EU Parliament and the Council is expected to provide answers at least to some extent. The Alternative Fuel Infrastructure Regulation (AFIR) enters into force this autumn. It requires, among other things, that Member States deploy recharging stations and refuelling stations for alternative fuels, such as hydrogen. At the same time, there is no specific EU or national legislation or regulation on safety requirements for hydrogen fuelling stations. The Finnish Safety and Chemical Agency (TUKES) is expected to publish guidance on certain safety requirements for hydrogen operations at the end of 2023. Given the specific characteristics of hydrogen, the guidance is expected to be more rigorous than corresponding guidance relating to natural gas.

While more and more hydrogen projects are progressing towards bankability, certain uncertainties still prevail relating to both regulatory and technology landscapes as well as offtake schemes. We believe, however, that the industry, together with the investors and financing institutions, will be eager to overcome the uncertainties by working together.

Energy storages

The need for battery storages supporting the operation of the electric grid in Finland is expected to increase due to, among other things, the lack of inertia produced by wind and solar plants. In addition to grid operating purposes, energy storage solutions are expected to be used for optimising purposes relating to the balance between energy supply and consumption in general. There is currently an operating industrial size battery storage in Finland capable of storing energy up to 30 MWh, with larger ones under development. These battery storage investments are stated to be market based.

Battery storage facility projects can be deemed to qualify as bankable for various reasons. For instance, technological development of large-scale battery storage systems has taken major steps in recent years. The permitting process for an industrial battery storage facility is relatively light, as no environmental permit is required but only a building permit. In theory, very large storage facilities could, however, require a chemical permit due to the quantity of dangerous substances used in the batteries.4

The European Council has recently adopted new regulation on batteries and waste batteries (Regulation on Batteries, EU 2023/1542). The regulation regulates the entire life cycle of batteries from production to reuse and recycling. The regulation applies to all batteries including all waste portable batteries, electric vehicle batteries, industrial batteries used in, for instance, energy production, lightning and ignition (SLI) batteries and batteries for light means of transport. The regulation entered into force in August 2023 and will be directly applicable in all Member States as of 18 February 2024.


The number of industrial size solar power plants is also expected to increase. Although Finland is not known for its all-year-round sunny weather, there are areas here where the annual solar radiation levels correspond to levels in northern Germany.5 Combined with wind and energy storage technologies, solar power can also be advantageous in hybrid power plants.

There is no standard nationwide permitting process for solar power plants but the process for an individual plant is determined based on the characteristics of the specific location in accordance with the Finnish land use and building legislation. This has led to variable interpretations at the local authority level, causing certain challenges with individual projects.


We are closely monitoring the legal landscape evolving around technologies relating to the green transition. We are also engaging in continuous dialogue with the market participants in order to provide our clients with the best possible advice when executing transactions, making investments or considering business opportunities within the field. Please feel free to contact our experts if you wish to discuss these subjects.

1 Finnish Wind Power Association’s overview of operating wind turbines as at 6/2023
2 Finnish Wind Power Association’s overview of projects under planning as at 5/2023
3 Available in Finnish: Merituulivoiman edistäminen | Tieto käyttöön (
4 Guide on the Safety of Industrial Lithium Ion Batteries by Gaia Consulting Oy on 18 June 2019 (updated in August 2019)
5 University of Turku (available in Finnish): Aurinkoenergialla on Suomessakin valoisa tulevaisuus | Turun yliopisto (

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