Markets

Market development

The Nordic power market remains highly competitive in pricing and progressive in its decarbonisation efforts, demonstrating its leadership in Europe’s energy transition. Backed by robust and reliable low-carbon energy production, the region has the capacity to drive sustainable growth and support climate ambition across sectors through electrification. Fortum is well-positioned to be a leader in this transition.

The warm start to 2025 and high hydro reservoir levels led to lower Nordic spot prices at the beginning of the year, especially in the northernmost price areas with abundant hydropower. Milder-than-usual weather continued into the early part of the second quarter, but the surplus reservoir balance decreased quickly due to low hydro inflows and slightly higher than average hydro generation. These factors, along with a cold end to spring, helped bolster Nordic spot prices leading up to summer. At the start of the third quarter, below-normal precipitation levels brought the reservoir balance back to average levels, further supporting spot prices. During the fourth quarter, the moderate reservoir deficit gradually increased into a moderate reservoir surplus, which pressured the Nordic spot prices. However, the spot realised at a higher level compared to a year ago due to lower hydro reservoir levels in combination with lower wind speeds.

In 2025, the Nordic power demand remained on the same level as in 2024, driven by slightly stronger non-industrial consumption which compensated for the slightly weaker industrial demand.
In 2025, the Nordic system price realised at 40 EUR/MWh compared to 36 EUR/MWh in 2024. The futures price for 2026 baseload delivery was at 35 EUR/MWh at the beginning of the year but increased to 38 EUR/MWh by the end of the year.

Average annual baseload prices in the Nordic power market have returned to pre-crisis levels, indicating a shift in the dynamics of the Nordic power market. Growth in wind power especially in northern price areas and new interconnectors in southern Norway have led to a persistent price gap between north and south. Strengthening transmission capacity remains essential for advancing low-carbon energy across the Nordic region and supporting European climate and energy security goals.

The spot price volatility in the Nordics continued to be high during 2025 but at a slightly lower level than in 2024, with the most fluctuations seen in the Finnish, the northern Swedish and the Danish price areas. With wind production accounting for roughly 50% of Finland’s power supply on windy days and due to limited export possibilities to neighbouring areas, the Finnish spot market once again recorded some of the highest numbers of negative price hours in Europe. Conversely, periods characterised by low wind, which at times coincided with both planned and unplanned nuclear maintenance or cold weather, resulted in a high but slightly lower number of spot prices above 200 EUR/MWh compared to 2024. The Nordic exports towards Continental Europe were slightly lower in 2025 than in the previous year, at 42 TWh. There is a strong link between the difference in spot prices between the Nordics and Continental Europe and the level of Nordic net exports. For example, when wind power production is high in the Nordics and prices decline, exports to the Continent tend to increase significantly.

In 2025, gas and carbon markets diverged. Both fell in the first half of the year as supply concerns eased and demand remained weak, with gas prices dropping on strong storage levels and steady LNG inflows in Continental Europe, while carbon prices decreased as a result of elevated renewable power generation. In the second half, gas prices stayed subdued, but carbon rebounded, ending the year higher as fossil generation rose during periods of low renewable output and confidence in a tighter EU Emissions Trading System (ETS) market grew. Overall, gas prices were stable, while carbon shifted from weakness to an upward trend.

Slightly lower gas prices in the fourth quarter and rising carbon prices largely balanced each other out, resulting in a neutral effect on European power spot markets, which developed slightly stronger compared to 2024. High price volatility during periods of low wind output also supported Continental spot prices in 2025. Futures prices remained stable in several Continental European markets for similar reasons.

EU balancing climate ambition and competitiveness

At the end of 2025, the EU reinforced its commitment to climate action by agreeing on a legally binding 2040 target: a 90% net reduction in greenhouse gas emissions compared to 1990, paving the way to climate neutrality by 2050. This ambition is embedded in the European Climate Law and linked closely to EU’s Clean Industrial Deal, which seeks to balance decarbonisation with competitiveness and energy security.

While Europe continues to prioritise electrification and decarbonisation, geopolitical uncertainty and economic headwinds pose challenges for investments and industrial transformation. The new target framework introduces flexibility mechanisms such as integration of carbon removals into the EU ETS while maintaining a strong focus on domestic action. Legislative proposals (e.g. revision of the EU ETS) to implement the 2040 target will be made starting in 2026.
These developments signal a decisive shift toward a climate-neutral economy, but execution will depend on building the physical, technological, and financial systems to deliver it while keeping Europe competitive and socially stable.

The Nordics attract new demand

The Nordics have a robust energy mix, featuring flexible hydro assets and societally accepted baseload nuclear power with a ready permanent solution for nuclear waste fuel disposal in Finland. The Nordics also have strong opportunities for renewables like wind and solar, along with reliable grid infrastructure and effective energy policies. This combination enables the Nordic countries to provide some of the most competitively priced electricity in Europe.

Industrial companies, and notably data centre operators, are increasingly drawn to the Nordics for clear reasons beyond just power price levels. The region’s low-carbon energy mix, virtually free from fossil fuels, is complemented by a highly reliable grid, strong infrastructure (including roads, harbours, and airports), and abundant land and water resources.

Additionally, the Nordics offer opportunities for waste heat utilisation, a skilled workforce, and a fairly stable political and regulatory environment. Notably, the permitting and licensing processes for new energy-intensive ventures are among the fastest in Europe, offering competitive time-to-market.

The capacity for future expansion is equally compelling as the Nordics can scale up power supply as power demand grows. Currently, power prices in Continental Europe are nearly double those in the Nordics. With interconnection capacity set to rise and annual cross-border electricity import/export potential exceeding 100 TWh, the Nordic region is increasingly interconnected with Continental Europe. This integration facilitates efficient electricity trade and ensures the Nordics can respond dynamically to changing market conditions.

These fundamentals are driving more industrial investments and project activity in the Nordics. The data centre segment is currently the most active, driven by digitalisation and surging demand for cloud and AI services. The Nordics have become a preferred location for both hyperscalers and co-location data centres, supported by strong grid connections, a cold climate conducive to efficient cooling, and the capacity to build further renewable and low-carbon electricity capacity if needed.

Looking further ahead, Nordic power demand is projected to grow significantly, driven mainly by energy-intensive industries. While the recent growth has been led by district heating electrification and electric vehicles, the next wave is expected from large-scale industrial electrification. According to updated projections from the Nordic Transmission System Operators (TSOs), annual power demand is expected to reach 550 TWh by 2030 and projected to rise even to 975 TWh by 2050 – more than doubling the current demand. While there is large uncertainty to the long-term outlook, the direction is clear.

The Nordic region is ideally placed not only to serve as a major hub for fossil-free energy exports to Continental Europe but also to support strong domestic growth, with energy demand in the Nordics expected to rise significantly in the coming decades. As a trusted energy partner, Fortum is well-positioned to drive this transition, leveraging its competitive generation portfolio and deep industry expertise.