Legal Alerts/19 May 2025

Amendments to the Finnish Electricity Market Legislation

Amendment regarding the definition of a connection line and time for network connection confirmed in April 2025

At the end of March 2025, the Parliament approved an amendment to the Electricity Market Act that changes the definition of a connection line. Under the amended definition, an energy storage facility can be built behind the grid connection point of a wind or solar power plant, or any other power plant, without the line being considered as licensed network operation.

The amendment also clarifies that power plants must be connected to the electricity network within a reasonable time. While the Act sets an upper limit of 24 months for connections to the transmission network and high-voltage distribution networks, and an upper limit of 6 months for distribution networks, the preparatory materials emphasise that the requirement of a “reasonable time” may necessitate completion of the connection sooner than these statutory maxima. The maximum time limit may be extended, where special grounds exist.

The amendment also includes multiple amendments as regards electricity retail markets. The amendment was confirmed on 25 April 2025 and will enter into force on 1 July 2025.

The Government introduced new amendments on the high-voltage network in May

In May, the Government introduced further amendments in the Electricity Market Act. According to the Ministry of Economic Affairs, the main objective of the proposal is to facilitate the integration of the increasing electricity production and consumption loads into the transmission and high-voltage distribution networks. In its mid-term policy review session at the end of April, the Government noted that at least certain changes are intended to enter into force by 1 July 2025, similarly to the forementioned amendment.

Key amendments in the Government Proposal include:

Distribution network operators to be allowed to operate +110 kV power lines: Power lines above 110 kilovolts (typically 400 kV) would no longer be automatically classified as part of the transmission network solely based on their voltage level. Instead, such power lines could also be treated as high-voltage distribution networks if they are essentially local or regional networks. Currently, power lines exceeding voltage of 110 kV can only be connection lines or part of the transmission network.
According to the proposal, high-voltage distribution networks would not be subject to the Electricity Market Directive’s requirement for ownership unbundling. Thus, also companies linked to the production or supply of electricity could build high-voltage distribution networks.

Pursuant to the proposal, no area of responsibility would be determined for high-voltage distribution networks so that a network operator would have the predetermined monopoly area where the party has an exclusive right to build such a high-voltage distribution network (as is the case with the distribution networks).

Development obligation: The proposal introduces specific provisions on the obligation to develop the network within both high-voltage distribution and distribution networks. The network operators would be required to develop their electricity networks within their area of operation and in accordance with the reasonable needs of network users, ensuring that two or more separate power plant complexes could be connected to the electricity network. The purpose of the provision is to enable high-voltage distribution and distribution network operators to develop their networks for the connection of electricity production to the operator’s electricity network. The proposal is moderated by the fact that the obligation to develop a new high-voltage distribution network will also be assessed in light of the operator’s technical, economic, and organisational capabilities. Furthermore, a power line built for an individual connector, such as a wind farm, remains a connection line and is not subject to the operator’s development obligation or network operators’ network.
With regard to the high-voltage network, the area of operation would be the area where the network operator actually operates, as no high voltage network areas would be predetermined for operators. If the connecting entity were located in the operating area of multiple high-voltage distribution networks or distribution network operators all of those network operators would bear responsibility for developing the new high-voltage distribution network. The primary responsibility falls to the operator already maintaining high-voltage infrastructure in that area, provided it has the technical, financial, and organisational capacity. Where no existing operator is capable of investing, the Energy Authority may grant a licence to a new party willing to build and finance the network or power line required for electricity transmission. During the consultation, some stakeholders understandably criticised this approach, noting that it fails to clarify from the outset who bears primary responsibility for fulfilling the development obligation.

Closed distribution networks to be allowed to build +110 kV interconnections to networks: In line with the proposal regarding distribution system operators’ right to operate 400 kV power lines, the proposal would allow closed distribution network operators to build a high-voltage interconnection exceeding 110 kilovolts to connect the closed distribution network to the transmission network. Additionally, it is proposed that closed distribution networks be allowed to distribute electricity via a separate line from production units and energy storages located outside the closed distribution network’s operational or responsibility area.

Flexible connection agreements: In line with Directive (EU) 2024/1711 on the reform of the electricity market design, the proposal introduces flexible connection agreements for areas with limited network capacity, allowing for greater connection capacity at a later stage. The Energy Authority would have the right, upon the network operator’s request, to permit the permanent use of flexible connection agreements in areas where further network development proves inefficient.

Separate lines: The report proposes that the operation of a separate line, connecting a single power plant complex to a separate customer, the producer’s and electricity supplier’s own premises, subsidiaries, or customers’ electricity usage sites or closed distribution networks would not require a licence. Under the current law, separate lines are permitted only if the power plant’s output does not exceed 2 MVA.

The proposal envisions three types of situations in which a separate line may be formed:

First, a new power plant complex may be connected by a separate line to a consumption site, which again is connected to the electricity network by a connection line.

Second, a new power plant complex may be connected by a separate line to a new consumption site, with both sites connecting to the electricity network at the same time, either via a shared connection line or via the connection line of one of the sites.

Third, a new consumption site may be connected to the connection line of the power plant complex that is connected to the electricity network, in which case part of the previous connection line would thereafter be regarded as a separate line. In this case, the capacity of the power plant complex must be sufficiently substantial in relation to the of the consumption site’s capacity.

In alternative 1 and 2, the switchgear or corresponding components connecting the separate line and the connection line must be located within the property of the electricity consumption site and in alternative 3 within the property of the power plant or energy storage facility belonging to the complex.

The aim of the amendment is to provide incentives to locate electricity production and consumption in close proximity, thereby reducing the need to use the transmission network.

Shared connection networks: The proposal would amend the definition of a connection line from the form adopted by the legislative amendment approved in April 2025. After this amendment a connection line could include lines built to connect a single point of electricity use, a single power plant complex, or one or more interconnected energy storage facilities to the network Connecting several power plants and/or energy storage facilities with the same connection line would require a functional link between them. If there were no such link, the arrangement would constitute an electricity network serving multiple parties. Such network could constitute a connection network for electricity production (in Finnish: sähköntuotannon liittymisverkko) which would not require a network licence.
In connection networks for electricity production, two or more separate power plant complexes could be connected to the electricity network with a common connection and a possible reserve supply connection. In principle, such a network would be subject to third-party access. The operation of a connection network for electricity production would not qualify as a licensed electricity network activity provided no electricity is supplied to wholesale customers or end-users. The network would have to be under the control of one or more electricity producers or energy storage operators using it, or of a company under the control of some or all of them. No electricity trading would be permitted.

Preliminary decisions on the need for network permit: The Energy Authority would be empowered to issue an advance ruling on whether electricity network operations require a licence in a particular case. Currently, the Energy Authority may only through ex post supervision decide that an operator is conducting unlicensed electricity network operations.

Extending the transmission system operator development responsibility: The responsibility area of the system operator is proposed to be expanded to include the exclusive economic zone (EEZ). This change is intended to facilitate the integration of future wind power projects within the EEZ into the national grid, ensuring a clear responsible party for these connections. That said, the responsibility for the costs and construction of the connection line from the offshore windfarm to the national grid connection point would remain with the windfarm developer.
The Finnish EEZ Act was amended at the beginning of this year so that Finnish and EU electricity market legislation now applies to artificial islands, structures, devices, and any pipes or cables installed or used in connection with their operation in the EEZ.

If you have any questions about this Legal Alert, please feel free to contact the undersigned or your regular Borenius contact.