How to accelerate electrification

Unlocking electrification’s potential requires consistent and determined policy action

The energy transition in the Nordics is nearly complete in terms of electricity production. The challenge now is to accelerate decarbonisation through the electrification of industry and the rest of society. For industries to electrify and decarbonize, there must be sufficient demand for low-carbon products. Without demand creation, electrification will stall – even in frontrunner regions.

Key actions to success in electrification

• Create stable demand signals to unlock investment. Clear and ambitious electrification and climate targets—such as increasing the economy-wide electrification rate from 21.3% today to 32% by 2030, and achieving a 90% emissions reduction by 2040—are essential to give developers confidence that demand will be there when projects come online.
• Build lead markets for low-carbon industrial products. Public procurement, product standards and labelling should reward verified low-carbon materials—starting with steel, aluminium, chemicals and batteries—to anchor clean industry and power demand in Europe.
• Enable affordable, predictable and clean electricity for industry and consumers. Member States, with the support of the European Commission and the EIB, should provide credit guarantees to extend long-term price visibility to SMEs and mid-caps, helping them to commit to electrification with confidence.
• Make flexibility market-based and bankable. Transparent multi-year auctions for demand response, storage and fast-ramping capacity will create stable revenues for flexibility providers, turning system balancing into a market opportunity rather than a cost.
• Invest ahead of demand—in grids, skills and local value chains. Transmission and distribution operators should be allowed to expand proactively where credible industrial plans exist, while Member States should develop fast-track training programmes and cross-border certification for installers and technicians.

Turning electrification into Europe's next industrial advantage

Electrification is Europe’s most obvious path to competitiveness, resilience and climate neutrality—and Fortum is fully engaged in making it happen. Our project pipeline shows that the system can deliver more fossil-free power fast, with 800 MW of ready-to-build wind and solar by 2026 and around 8 GW in permitting across the Nordics.

We are already supplying industrial customers with long-term, carbon-free power purchase agreements that provide stable prices and lower emissions—demonstrating that electrification makes commercial sense. Flexibility, too, is emerging as a business opportunity: new solutions in demand response and smart heating are helping customers reduce costs while earning revenues from balancing markets. Beyond supplying electricity, Fortum co-develops low-carbon industrial concepts and ready-to connect sites that align clean power capacity with industrial demand clusters across the region.

Barriers slowing Europe's electrification

Electrification is advancing, but progress is constrained by a web of frictions. Demand remains too weak to unlock large-scale investment. Developers hesitate to reach final decisions when industrial offtake is delayed or when long-term price visibility is uncertain. Projects are ready, yet confidence remains fragile. The result is a self-reinforcing loop: the system stands ready to deliver more fossil-free power, but demand is not picking up—and because demand is not there, investment are delayed or even cancelled.

Taxes and levies add weight to the bill and slow progress. They still treat power as a source of fiscal revenue rather than a decarbonisation tool, inflating end-user prices and distorting competition with fossil fuels. This burden is particularly heavy for households and small businesses with limited margins. At the same time, short-term price volatility complicates planning and weakens confidence, even when electrification offers lower lifetime costs. Without accessible ways to hedge risk or reward flexibility, many choose to postpone the switch.

Hydrogen could become the engine of industrial decarbonisation, yet policy holds it back. The current regulatory framework is rigid and fails e.g. to recognise nuclear-backed PPAs, limiting the supply of low-carbon electricity to electrolytic production. Nordic TSO outlooks suggest that electricity demand could more than double by 2050—from roughly 400 TWh to close to 1,000 TWh—driven by electrolysis that could represent a quarter of total consumption. Europe will need to let this market develop if it wants the next industrial wave to materialise. 

Grid bottlenecks, permitting and local acceptance also slow progress. Transmission expansion often lags behind the geography of new loads and renewable generation. Distribution operators face long connection queues and cannot always invest ahead of demand. Projects are delayed by process rather than physics. At the same time, local opposition grows when communities see too few direct benefits from energy infrastructure.

Finally, supply chains and skills remain tight. Certified installers, transformers, cables and key components are in short supply, lengthening delivery times for heat pumps, charging networks and flexibility assets. Fragmented bidding zones compound regional inequities and blur investment signals. The technology is proven, the projects are ready, but Europe’s electrification still wrestles with its own constraints—financial, regulatory and procedural—before it can reach full speed.