Small-scale Electricity Production

Good planning is the starting point. Right from the start, it is a good idea to consider the potential of different forms of electricity generation in your house/system. It is also important to carry out a needs assessment, i.e. how much electricity is needed and at what time of the year/day. This is particularly important when sizing the equipment. If it is not a new building, it is a good idea to check your own daily, weekly and monthly electricity consumption, for example via the local grid company’s online service or Fingrid’s Datahub.

In addition, before purchasing equipment, it is important to be familiar not only with the technology itself and the potential of small-scale production, but also with the rules of the game for small-scale production.

The producer needs information in these areas, among others:

• the necessary permits
• subsidies
• taxation
• network connection requirements and practices
• electricity sales and obligations on the electricity market.

The clearest option is to purchase the small-scale production equipment as a “turnkey” service, whereby the responsibility for installation and equipment lies with a single party”. It is important to remember that electrical installation always requires a skilled person. In the case of electrical installations with an AC voltage of more than 50 V, a DC voltage of more than 120 V or a connection to the public electricity network, the work must be carried out by a company or person with the necessary electrical qualifications, unless the person concerned has the necessary electrical qualifications. In addition, it is always a good idea to ensure that the contractor has fulfilled his obligations under the law on public liability. You can search the register of renewable energy installers for certified installers in your area.

It is important to agree in writing with the system supplier on the content of the system delivery and any additional charges. Once the work is completed, the installer must be provided with the appropriate operating instructions and commissioning protocol. The electrical safety responsibilities for the electrical installation of the whole installation rest with the electrical contractor who carried out the work.

The law defines some relief for small-scale electricity production, including in terms of metering and taxation.

Measurement of electricity production

As a rule, a power plant that supplies electricity for transmission to the grid must be equipped with metering equipment. The grid operator is always responsible for the metering of the extraction from and the supply to the grid. The meter shall be owned and read by the system operator.

Rated power up to 100 kVA:and a power plant consisting of several generating installations with a rated output not exceeding 100 kWh do not need to be equipped with separate measuring equipment if the place of use of the electricity where the generating installation or power plant is located is equipped with hourly or quarterly measuring equipment capable of measuring both the amount of electricity drawn from and the amount of electricity supplied to the grid, or with new remote measuring equipment.

Electricity tax liability

The legislation on electricity taxation is essential for metering, as the electricity to be taxed must be metered. In general, electricity taxable persons are network operators and electricity producers, who have to declare to the customs district where they are established. However, in the case of electricity producers, exemptions apply for small producers.

The electricity tax liability refers to both the excise duty on electricity and the security of supply levy.

Small electricity producers are divided into three categories for the purposes of electricity taxation, based on the rated capacity of the electricity production installation and the annual electricity output:

• Electricity produced by microgeneration plants with a rated capacity of up to 100 kWh is exempt from all electricity taxation obligations.
• Small producers of electricity with a rated capacity of more than 100 kWh but not more than 800 000 kWh per year are registered as electricity taxpayers with the Tax Administration. Even these small producers are not required to pay electricity tax, but they submit an annual tax return once a year as a so-called zero tax return, which is used to control the limit of the annual tax-free production.
• An electricity producer who generates electricity with a rated output of more than 100 kVA using electricity generating equipment with an annual production of more than 800 000 kWh submits a normal tax return (taxable and non-taxable supplies) every month, whether or not he supplies electricity to the grid.

Naturally, the small producer is liable to pay electricity tax and the security of supply levy on the electricity it buys from the grid.

Income tax

A small producer who feeds his surplus electricity into the grid and receives compensation for it is taxable on the income from it. The Tax Administration has drawn up national guidelines on income tax on electricity sold by small producers.

According to the guidelines, income and expenses from the sale of electricity are only reported on the tax return if the sale of electricity is profitable. If there is no taxable income from the sale of electricity, nothing is reported on the tax return. In practice, the annual expenditure and depreciation associated with the sale of electricity by a household is almost invariably so high that the household’s small-scale electricity production does not generate taxable income. As a rule, therefore, small-scale electricity production does not have to be declared for tax purposes.

Notification of a power plant and preparation of a production forecast

According to the Electricity Market Regulation, the owner of a power plant does not have to notify the Energy Agency of its power plant with a capacity of less than 1 MVA. Small producers are also not obliged to submit a production forecast to the grid company Fingrid.

In a small-scale production project, the planning and building regulations of the planned location must be checked with the municipal building control department before the equipment is purchased, and thus the equipment can be installed there. The permits required vary from one municipality to another and from one type of installation to another, depending on the characteristics of the installation, such as its size and location.

The permit required for a small power plant can be a building permit, a permit for an operation or no permit at all. Solar panels installed parallel to the roof slope are exempted from permits in several municipalities, so that only the installation or construction of a solar panel or collector that has a significant impact on the urban landscape or environment requires a permit. Exceptions include protected buildings, and large systems may also require a building permit, for example. Even in protected sites, solar power is not directly excluded, but is considered on a case-by-case basis. Small wind turbines are often subject to landscape impact assessments. In most cases, small-scale wind power generation in a planning area requires a building or intervention permit. Outside the zoning area, typically only an operating permit is required.

Information on permits for construction projects can also be found in the LUPAPISTE.fi website. The site allows permit applicants to submit requests for advice on construction, and construction project plans can be prepared from start to finish electronically in cooperation with the authorities and other construction professionals. Lupapiste streamlines the permit process and frees the permit applicant from office deadlines and the need to submit paper documents.

You should also ask the municipal building inspectorate when it is necessary to consult your neighbours. For example, the installation of solar panels may not necessarily require a neighbour’s opinion, but the construction of a small wind turbine is likely to do so if the installation is within sight of the neighbouring house. Even if no formal consultation is required, good neighbourly relations mean that neighbours should still be informed of their intentions.

If you plan to connect to the grid, you should contact your distribution system operator as early as possible. The Energy Industry Association (ET) has produced a notification form to inform the network company of the connection of the equipment. Usually the installer of the equipment submits the form to the grid company. At the same time, the installer must submit to the customer and the network company the commissioning inspection report for the installation.

According to the Electricity Market Act, the network operator has the obligation to develop the network and to connect production to electricity generation plants that meet the technical requirements in return for reasonable compensation. According to the law, the conditions and technical requirements must be fair and non-discriminatory. In addition, the subscriber must be given an estimate of the connection costs, which may not include the costs of network reinforcement if the nominal output of the generating installation is less than 2 MVA. The network operator is also obliged to transfer generation against reasonable compensation. The maximum charge for transmission in the distribution network shall not exceed 0,07 cents/kWh.

Technical requirements for connection to the microgeneration network

Before commissioning, the production installation must be notified to the network operator, who must also be provided with the required technical information in advance. The generating set shall meet the technical safety requirements, such as the protective configuration of the ballast, the protection against islanding and the isolating switch for work on the network or on the premises.

The distribution system operator shall have either unrestricted access to the disconnector or remote connection. In addition, the generating installation must not cause any disturbance to the network and must be connected only by a qualified person holding the appropriate electrical installation licences. Generation and consumption behind the same electrical connection shall be metered separately.

In 2025, the Finnish Energy Industry Association (ET) published an updated recommendation for its member companies on connecting small-scale generation to the distribution grid to facilitate the acquisition of a generating plant and the grid connection process. ET has also published recommendations on the technical requirements for grid-connected equipment and related guidance.

Contracts

When connecting to and transferring electricity to the grid, a production network service contract must be concluded with the local distribution network company. Depending on the size of the generation plant and the installation site, a separate generation connection contract may also be required. If the generating installation is connected to a consumption site where a consumption connection contract is already in place, it is generally not necessary to conclude a separate generation connection contract. In such a case, the existing connection contract can be continued.

In the case of microgeneration, the network service contract can be concluded by extending the existing network service contract with an annex on the production network service. In practice, it is therefore not necessary to conclude a new network service contract with the customer, but it is sufficient to supplement the existing contract if the site is already connected to the network.

Elsewhere online:
Small-scale electricity generation and electricity storage
Small-scale electricity production and electricity storage
201/2025 Act amending the Electricity Market Act

Often, the greatest benefit from microgeneration plants comes from replacing purchased electricity with own generation. However, occasionally there may be situations where the generation plant produces more than the site’s electricity consumption. In particular, photovoltaic power plants can also provide enough electricity for sales in the spring and summer. Anyone has the right to transfer electricity to the grid, provided that the connection and metering of the generating installation meet the requirements and the generator has a buyer for the electricity.

The network operator is not allowed to buy electricity, except for the energy lost in the network, and the small producer must conclude an electricity sales contract with the electricity seller. Most electricity traders buy their customers’ generation. The electricity sales contract can be concluded with the company from which the electricity is purchased or with another company. Often the conditions are better if you also buy electricity from the same company. The Energy Agency’s electricity price comparison website can help you find companies willing to buy electricity produced by a small producer. There are links to the companies’ own websites where you can compare prices and request a quote.

It is a good idea to discuss the pricing principles in detail with the electricity company. The compensation for the electricity produced varies from company to company. The most common compensation principle is the spot price on the electricity exchange minus a reimbursement of expenses. As a condition of the purchase contract, the electricity company may require an electricity sales contract with the company concerned, or the electricity company may charge handling costs for the purchase contract if no sales contract has been concluded with the company concerned. There are also a number of ways in which billing can be handled, depending on the electricity company.

The electricity producer must also agree on a balancing service with the electricity company. Balancing obligations are part of the producer’s electricity market obligations. The balancing liability and declarations for installations below 1 MVA are handled by the buyer of the electricity on behalf of the small producer.