The report warns: The green transition threatens economic growth in the Nordic countries

The energy sector makes up about 10 percent of the Nordic economy. It is also a key competitiveness factor for industry. In recent years, however, the profitability of the energy sector has declined in the Netherlands. Now the weak performance threatens to become a critical issue for the economic growth of the Nordic countries, says of the Boston Consulting Group published today report.

According to the report, the cause of the downturn is at least partly the green transition, which was supposed to boost industrial growth. Now it seems that the end result is the opposite: Big investments threaten to undermine the financial sustainability of the world’s cleanest energy system.

In recent years, the yield of energy companies has stagnated to a modest level of seven percent, while the yield of reference companies has been 26 percent. Productivity development in the energy sector has been slow.

At the same time, the change has made the energy system complex. Renewable energy is often weather dependent. It means that production varies more than before. Large fluctuations in supply are reflected in larger and faster fluctuations in the price of electricity than before.

According to several forecasts, electricity consumption will increase significantly in the next few years. Data centers, the electrification of transport and industrial revolution – all of them increase the demand for electricity. However, the uncertain operating environment makes investments difficult. According to the report, projects are being delayed and their scales are being reduced. Some remain completely unfulfilled.

“The role of the energy sector as an enabler of industrial growth is indisputable, but the current development makes planning and financing investments more challenging than before”, the partner who heads BCG’s energy business in Finland Antti Belt states in the company’s press release.

According to the report, the Nordic countries have until now functioned as a kind of test bed for the green transition. The region produces exceptionally cheap and low-emission electricity on a European scale. It has been a key competitive advantage for the industry. According to BCG, the same system now faces a new test, where it has to prove its sustainability also from an economic point of view.

According to the report, energy companies must respond to the challenge with a comprehensive change. Mere growth or individual efficiency measures are not enough. Companies must simultaneously improve their productivity, manage growing complexity and prepare for uncertain demand trends.

The Nordic Energy Transformation Imperative report examines the restructuring of the Nordic energy market and its effects on the sector’s profitability, investments and industrial competitiveness.

By Editor

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