Operating environment

Operating environment in Q4 2025

European power markets

During the fourth quarter, a moderate reservoir deficit at the start of the quarter turned gradually into a moderate surplus, putting some downward pressure on Nordic spot prices. However, in contrast to the previous year – when hydro reservoirs quickly moved into a significant surplus – lower wind speeds contributed to higher spot prices. At the end of the quarter, the Nordic reservoir balance was 6 TWh above the long-term average, an increase of 7 TWh compared to the end of the third quarter. Meanwhile, Continental European electricity prices developed sideways, as slightly softer gas prices were again offset by slightly lower-than-normal renewables output.

According to preliminary statistics, power consumption in the Nordic countries was 107 (106) TWh during the fourth quarter. Continuously increasing non-industrial consumption has supported the Nordic power demand, although industrial demand shows some further slowdown, mainly in Sweden. During 2025, power consumption in the Nordic countries was 395 (394) TWh. Net power exports from the Nordics to Continental Europe and the Baltics were 42 (44) TWh.

In Central Western Europe (Germany, France, Austria, Switzerland, Belgium and the Netherlands), power consumption in the fourth quarter of 2025 was 345 (340) TWh, according to preliminary statistics. Power demand in Continental Europe was marginally below the five-year average, with the recovery progressing slowly. Demand continues to lag by approximately 60 TWh compared to levels before the energy crisis. During 2025, power consumption in Central Western Europe increased and was 1,302 (1,287) TWh.

At the beginning of the fourth quarter, the Nordic hydro reservoirs were at 100 TWh, which was 1 TWh below the long-term average and 2 TWh below the level of the previous year. During the fourth quarter, the Nordic inflows were above the normal level, due to warm temperatures. Hydro generation was slightly above the normal level. At the end of the quarter, the reservoir levels were at 90 TWh, which is 6 TWh above the long-term average and 8 TWh lower than in the previous year. There was a moderate reservoir surplus in Sweden and a small reservoir surplus in Norway.
During the fourth quarter, Nordic spot prices were higher than a year ago, due to lower hydro reservoir levels and lower wind speeds. The average system spot price in Nord Pool was 50.7 (31.0) EUR/MWh. The average area price in Finland was 44.3 (41.5) EUR/MWh. In Sweden, the average area price in the SE3 area (Stockholm) was 55.9 (42.7) EUR/MWh, and the price in the SE2 ‍area (Sundsvall) was 24.2 (12.4) EUR/MWh. In Germany, the average spot price in the third quarter was 93.2 (102.6) EUR/MWh. 

In 2025, the average system spot price in Nord Pool was 39.7 (36.1) EUR/MWh. The average area price in Finland was 40.5 (45.6) EUR/MWh. In Sweden, the average area price in the SE3 area (Stockholm) was 46.2 (35.8) EUR/MWh, and the price in the SE2 ‍area (Sundsvall) was 16.5 (24.6) EUR/MWh. In Germany, the average spot price in 2025 was 89.3 (79.6) EUR/MWh. 

In late January, the Nordic system electricity forward price on Nasdaq Commodities for the remainder of 2026 was around 58 EUR/MWh and for 2027 around 43 EUR/MWh. The Nordic water reservoirs were at 73 TWh, which is about 1 TWh above the long-term average and around 16 TWh below the level one year earlier. The German electricity forward price for the remainder of 2026 was around 94 EUR/MWh and for 2027 around 90 EUR/MWh.

European commodity markets

During the fourth quarter, natural gas prices declined, due to steady LNG and pipeline imports, mild weather and reduced supply risks which eased near-term market tightness and lowered the forward curve. Oil prices remained stable in the fourth quarter, as weak demand growth and steady supply balanced out intermittent geopolitical risk premiums.

Gas consumption in Central Western Europe was 554 TWh in the fourth quarter. The Central Western European gas storage levels decreased from 503 TWh at the beginning of the quarter to 357 TWh at the end of the quarter, which is 91 TWh lower than one year ago and 102 TWh lower than the five-year average (2021–2025).

The average gas front-month price (TTF) in the fourth quarter was 30.1 EUR/MWh and 36.3 EUR/MWh in 2025. The 2026 forward price decreased from 31.1 EUR/MWh at the beginning of the quarter to 25.5 EUR/MWh at the end of the quarter, which is 13.2 EUR/MWh lower than one year earlier. 

The EUA (EU Allowance) price increased from 76.3 EUR/tonne at the beginning of the fourth quarter to 85.4 EUR/tonne at the end of the quarter, which is 14.3 EUR/tonne higher than one year earlier.

The forward quotation for coal (ICE Rotterdam) for 2026 decreased from 101.2 USD/tonne at the beginning of the fourth quarter to 95.2 ‍USD/tonne at the end of the quarter, which is 18.5 USD/tonne lower than one year earlier.

In late January, the TTF forward price for gas for the remainder of 2026 was approximately 31.5 EUR/MWh. The forward quotation for EUAs for 2026 was around the level of 84.0 EUR/tonne. The forward price for coal (ICE Rotterdam) for the remainder of 2026 was around 97.0 USD/tonne.

Regulatory environment

EU adopts measures to end imports of Russian energy

In December 2025, the European Parliament and the Council agreed on measures to end imports of Russian gas and to advance the phase-out of Russian oil. The objective is to reduce the EU’s exposure to supply risks and market volatility associated with Russian fossil fuels and to support long-term energy security and stability.
Imports of Russian LNG will end by the end of 2026 and pipeline gas by autumn 2027, subject to limited and clearly defined derogations. In line with the regulation, the member states will be required to submit national diversification plans subject to the Commission’s assessment. In addition, the Commission confirmed its intention to complete the phase-out of Russian oil imports by the end of 2027 and to adopt a legislative proposal to phase out imports of Russian nuclear materials, further extending the scope of EU action on Russian energy dependencies.
Fortum supports a coordinated phase-out of all Russian energy, including nuclear materials. Fortum has already diversified its nuclear fuel supply with Western-origin fuel at Loviisa 2 nuclear power plant since 2024. Given the time needed to design and license alternative fuels, Fortum supports increased investment in Western fuel-cycle capacities and cautions against immediate disengagement without viable alternatives. 

EU agrees on the 2040 climate target

In December 2025, the European Parliament and the Council reached a provisional agreement on amending the European Climate Law, establishing a binding 90% net greenhouse gas reduction target for 2040 compared to 1990 levels.

The new target consists of an 85% domestic emission reduction plus a 5% use of high-quality international emission reduction credits. The agreement also included a postponement of the emissions trading system for transport and buildings (ETS2) from 2027 to 2028. In order to respond to the concerns from many industrial sectors, the Commission is asked to consider a slower phase-out of free allowances in the 2030s.

Fortum welcomes the 2040 climate target as an important step towards the EU’s long-term climate neutrality by 2050. Although the Commission's original proposal was diluted to some extent and several details are pending, the decision brings long-term visibility for investments in the clean transition.

EU approves the sustainability Omnibus package

The EU aims to reduce regulatory burdens and boost competitiveness by streamlining existing legislation with several so-called Omnibus packages. The European Parliament and Council agreed on the Sustainability Omnibus package in December. The agreed package includes simplifications of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

Fortum generally supports the objective of reducing companies’ regulatory burden and improving their competitiveness. While reducing unnecessary administrative burden, Fortum believes, however, that the Omnibus package should have aimed to safeguard the objectives of the earlier sustainability legislation. The impacts of the package on Fortum will ultimately depend on the national implementation, though a reduction in reporting requirements is anticipated.

Swedish TSO faces challenges to secure a capacity reserve 

On 7 October, the Swedish TSO, Svenska Kraftnät, announced that the purchase of 800 MW back-up electricity capacity (so-called strategic reserve) for the 2025–2026 winter season had failed. All tenders received exceeded the maximum price cap of 10,900 EUR/MW as specified by the tender regulation. Lack of reserve capacity could have severe consequences, such as black outs and forced disconnect of consumers. 

However, on 8 January 2026, the TSO announced an agreement securing 350 MW of strategic reserve mainly relying on Karlshamnsverket (330 MW), a fossil-fueled power plant in southern Sweden. This was enabled after a re-interpretation of the price cap concept. In Fortum’s view, the regulatory framework needs to be revised in order to better provide for low-carbon or fossil-free alternatives.

Finnish tax increase for data centres creates uncertainty for investors

In October, the government decided to increase the electricity tax on data centres from 0.05 cents/kWh to 2.24 cents/kWh, effective from July 2026. To compensate for the increase, the government stated in December that it will prepare a new subsidy mechanism, also effective from July 2026. The starting point is a fixed-term, ten-year tax refund subsidy based on the electricity consumed by the data centre. The maximum amount of the subsidy is EUR 30 million. 

In Fortum’s view, the tax increase sends a very negative signal about Finland as a stable investment environment for international and domestic investors. Data centres are part of critical infrastructure and play an important role not only in the digitalisation of society, but also in the clean transition. It is important that energy taxation and energy policies are predictable and supportive for clean transition investments. 

Preconditions for onshore wind power will change in Finland

In November, the government agreed on setting a new minimum distance requirement of 1.25 kilometres between wind turbines and residential buildings. The decision is part of the new Land Use Act, which aims to regulate the placement of wind power and facilitate construction. The government proposal will be submitted in early 2026. Previously, no specific distance was defined; instead, the distance was determined through modelling of wind turbine noise. In Fortum’s view, tightening wind power regulation is not desirable; however, the new distance requirement is acceptable.