Nordics double down on green tech but won’t drop gas

Nordics energy companies are doubling down on investments in green energy technology including battery storage, hydrogen and biofuels.

At the same time, they believe they are realistic about the pace of the energy transition and the ongoing role for fossil fuels, and particularly gas, in balancing growing renewable penetration.

“Fossil fuels will have a role for decades” Kenneth Engblom, VP for Africa and Europe at Wartsila, told Gas Outlook.

Speaking on the sidelines of the Energy Week conference in Vaasa, Finland, last month, he said a complete switch to renewables would be extremely costly and difficult to implement in the short-term.

While renewables represent “the cheapest form of electricity” and have seen “incredible growth” their growing role in the grid leads to “a need to balance intermittency with energy storage and flexible engine power plants” with natural gas best suited for the role, he said.

“The idea that more renewables automatically lead to more gas reflects current system constraints rather than a long-term unavoidable outcome,” Jonathan Bruegel, a power sector analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), told Gas Outlook.

“In the near term, gas will still play a balancing role where flexibility is lacking” such as in Germany and Italy “but across Europe wind and solar are already displacing thermal generation in volume terms.”

“The priority is accelerating grids, storage and demand response.”

Nuclear can complement renewables in some systems with existing fleets like France, Sweden or Finland “but it is not a scalable option across most of Europe, where it is being phased out or not pursued,” he said.

In Finland specifically, “the strategy is clearly to combine both,” he said, adding that: “Olkiluoto 3 has just come online and lifetime extensions at Loviisa are under consideration, alongside growing renewables.”

“The main risk is framing gas as the default bridge or transition fuel; this would lock in price exposure and delay the build-out of the flexibility needed for a fully low-carbon system, net zero emissions by 2050,” Bruegel said.

Fossil fuels and specifically natural gas already have a minor role in Finland’s energy mix, with nuclear power covering over one third of power production.

The idea of combining nuclear and renewable power as a sustainable, reliable fuel is gaining traction among policymakers.

Speaking at the Nuclear Energy Summit in March, EU president Ursula von del Leyen said that nuclear and renewables “together (…) can become the joint guarantors of independence, security of supply, and competitiveness.”

But Engblom was skeptical that this is a viable mix due to the inflexible nature of nuclear energy.

“Renewables and nuclear don’t mix…The capex is huge for nuclear, so you want to use it in full” he said, adding that nuclear generation is inflexible and is not suitable for ramping up and down in response to renewable output fluctuations.

In addition, “batteries are extremely expensive if you want to store energy for more than a few hours,” he noted.

Citing the issue of ‘dunkelflaute’ in Germany — when both solar and wind generation are low — he noted how natural gas is the most suitable source of power to balance the grid, although in the future hydrogen might present a viable alternative.

Cost hurdles

Cost remains a major challenge to decarbonisation, he continued.

While the technologies are already available to reduce emissions, it is a question of “how much we want to invest in carbon free fuels and renewables… it’s a capex question,” he said.

Wartsila supplies engines to gas-fired power plants globally, as well as developing decarbonisation solutions for the marine sector, energy storage and data centres.

Another company, Swedish-Swiss ABB is involved in a number of low-carbon energy projects, including a power-to-ammonia project with Skovgaard Energy, Topsoe and Vestas in Denmark where it is providing “the full automation and electrical distribution scope from the electrolysis to the further processing of hydrogen to ammonia,” the company told Gas Outlook.

The plant started operating in December 2025 and “demonstrates how renewable power can be coupled directly to an ammonia plant while taking fluctuations in power production into account, and simultaneously producing ammonia in a cost effective way.”

ABB and Swedish nuclear energy company Blykalla signed an MoU to develop nuclear SMR technology, to support Sweden’s efforts to produce low carbon and reliable baseload energy.

At the same time, the company “recognises the transitional role fossil fuels, including natural gas and LNG, play in securing energy supply.”

This includes electrification of offshore assets to reduce CO2 as well as support carbon capture and storage projects.

ABB’s technology is deployed at the Northern Lights CCS project in Norway, which saw the first CO2 stored in August last year. The company says the project demonstrates “in real terms how technology can support industrial decarbonisation efforts.”

ABB did not want to comment on the potential risks of continuing to invest in fossil fuels-related technologies.

CCS projects have drawn criticism for potentially helping to extend the role of fossil fuels in the energy mix, with the project further highlighting the duality of Nordic countries in pioneering green energy while at the same time relying on fossil fuels.

An IEEFA study in 2024 noted that Northern Lights’ total capital expenditure is expected to be $1.9 billion, with running costs of $93 million per annum, to effectively capture and store 2% of Norway’s 2022 emissions, adding that the Northern Lights project is “uneconomic and relies heavily on government support for ~80% of the costs associated with it.”

Meanwhile Danish multinational company Danfoss is “using (its) existing technology to reduce emissions and decarbonise industries still relying on fossil fuels,” Jari Marjo, vice president, head of the Industrial Drives segment at Danfoss, told Gas Outlook.

Asked about potential risks related to fossil fuel exposure, he said that “I do not see it as a risk as such, since these are a minor part of Danfoss business mix and Danfoss is heavily promoting the renewable energy sources and is investing to electrification and energy efficient solutions.”

The company is optimistic that should oil and gas prices continue to rise on the back of the Middle East crisis, its technology can adapt by switching some generation capacity in countries like Finland.

“Finland energy production, depending on the source and year, is about 80% done with out fossil fuels and that 20% is oil, gas and coal with vast majority on oil” he noted.

“Most of our power plants are (…) multi fuel plants so they can add for instance wood or waste in the mix, which is likely to happen if oil and gas become more expensive due to  the Middle East crisis.”

(Writing by Beatrice Bedeschi; editing by Sophie Davies)