Rapid growth of solar power in Finland could crash summer electricity prices – new study warns of economic risks

Solar power is a key part of Finland’s and Europe’s green transition. Yet its rapid expansion may bring unintended consequences: a new study shows that large-scale deployment of solar power could drive summer electricity prices close to zero – undermining the profitability of investments.

The phenomenon is known as solar cannibalisation: when many panels produce electricity at the same time, the market price collapses during those hours, reducing producers’ revenues. For consumers, cheap – even free – electricity might sound purely positive, but researchers say the long-term risks are significant.

'Solar power is well suited for Finland, but too much solar at once can ultimately become an economic risk’ says lead author Dilshika Heenatigala Kankanamge, doctoral researcher at Aalto University.

Using scenario analysis, the researchers explored what would happen if several gigawatts of new solar capacity were built in Finland, in addition to the current plans for 2030. They found that producers’ revenues could fall to just 40% of the average market price.

The challenge is particularly acute in Finland. Wind and solar power depend on the weather, while the country’s nuclear plants cannot easily adjust to shifts in electricity demand. And, unlike in many other countries, Finland’s wind and solar projects receive little government support. Unless market structures evolve alongside technological developments, the rapid expansion of solar PV could erode the profitability of future investments.

‘Markets and technology must evolve hand in hand to ensure solar growth remains economically sustainable. Otherwise, the pace of investment may slow down, and the green transition will suffer,’ says Heenatigala Kankanamge.

The study also presents solutions for policymakers, energy companies and consumers to keep solar power viable in Finland. Consumer-side flexibility could play a major role: for example, smart charging of electric vehicles and the electrification of district heating could help balance supply and demand and improve revenues.

Technological choices matter as well. Instead of traditional south-facing panels, the researchers highlight vertically mounted, east–west-oriented bifacial panels, which generate more electricity in the mornings and evenings when demand is higher.

The study was recently published in Renewable Energy Focus: Economic viability of large-scale solar PV implementation in the Nordic power market: Case Finland. It was carried out in collaboration with the University of Turku as part of the RealSolar project, funded by the Strategic Research Council of Finland (STN).