The impact of solar photovoltaics on the energy-industry transition in the Nordic and Baltic countries

Abstract

The Nordic and Baltic countries are transitioning towards net-zero energy systems relying on hydropower, bioenergy, and wind power, while rapidly falling solar photovoltaics costs are positioning it as a credible and complementary contributor. This study maps photovoltaics deployment across the region's energy system during the energy-industry transition, identifying pathways to carbon neutrality using the LUT Energy System Transition Model. Presented scenarios at country-level resolution, considering electricity exchange with Europe, examine transition speed, regional self-sufficiency, and technology cost sensitivity. The electrification-driven transition requires a four- to sixfold expansion of electricity generation capacity, with wind power and solar photovoltaics jointly supplying 79–86% of electricity in high-ambition pathways. Renewable electricity becomes the dominant source of energy, reaching 1282 TWh by 2050. Photovoltaics provides 17–22% of supply (44–54% of capacity), while wind power contributes 58–70%. The transition is characterised by declining levelised cost of electricity to 35–40 €/MWh by 2050 and levelised cost of final energy of about 46 €/MWh. A net-zero pathway by 2050 offers the most balanced outcome, maintaining renewable electricity above three-quarters of primary energy, allowing the region to develop an export potential for energy carriers, while faster defossilisation raises this cost metric to around 58 €/MWh. Energy-related CO2 emissions decline from about 194 MtCO2 in 2020 to net-zero between 2035 and 2050 depending on scenarios. Technology cost variations modify the technology mix but not the energy transition feasibility. Optimal combination of wind power and photovoltaics, supported by bioenergy and hydropower, ensures low-cost energy for the Nordic and Baltic countries.