From clean energy pioneers to system builders
The Nordic countries Denmark, Finland, Sweden, and Norway have long been recognized as global leaders in clean energy. With over 90% of their electricity generation coming from renewable and low-carbon sources, the region stands out as an example of successful decarbonisation combined with energy security and social trust. Norway produces nearly all its power from hydropower, while Sweden and Finland balance hydropower and nuclear with rapidly growing onshore wind. In Denmark, wind power is the dominant electricity source, accounting for over 55% of total generation in recent years.
But the energy transition is entering a new phase. Electrification is no longer limited to light-duty transport or residential heat pumps. It is expanding into the hardest-to-abate sectors: steel, chemicals, shipping and large-scale digital infrastructure. As electrification spreads, electricity demand is forecast to increase dramatically. At the same time, new challenges are emerging with volatile markets, geopolitical insecurity and rising social and environmental conflicts around energy development.
The European Union has laid out a robust climate and energy governance framework through the Green Deal, the Fit for 55 legislative package, and the REPowerEU plan. These policies aim to reduce emissions by 55% by 2030 and achieve net-zero emissions by 2050. For the power sector, three instruments are particularly impactful, including the Renewable Energy Directive (RED III); the EU Emissions Trading System (ETS) and the EU Taxonomy Regulation.
Electrification and demand growth: A structural shift
Across all Nordic countries, electricity is emerging as the primary energy carrier for achieving deep decarbonisation. Several trends are driving this transformation:
- Rapid transport electrification, with Norway having surpassed 88% electric vehicle (EV) market share in new car sales. Sweden is approaching 60%, and Denmark and Finland are not far behind.
- Scaling of green industrial production, such as Sweden’s HYBRIT project, a joint venture between SSAB, LKAB, and Vattenfall, which has already produced fossil-free sponge iron using hydrogen made from renewable electricity. Stegra, formerly known as H2 Green Steel, plans to commission a 5 TWh/year hydrogen-powered steel mill in Boden by 2026. Finland’s Outokumpu is piloting low-carbon stainless steel using similar methods.
- Growth in data infrastructure and battery industries. Northern Sweden and Finland are home to several hyperscale data centers and gigafactories for battery cells. These projects require enormous amounts of electricity, typically secured through long-term power purchase agreements (PPAs) tied to renewable sources. However, recent delays and cancellations of some battery projects have raised questions about the stability and long-term viability of large-scale cell production in the region.
- Emergence of Power-to-X (PtX) projects, with Denmark committing to produce green fuels for aviation and shipping.
Electricity demand in the Nordics is expected to double by 2050. This requires not only more generation capacity, but smarter grids, new flexibility tools, and large-scale infrastructure investments.