The investment brings into focus a question we are examining in the University of Oulu’s Kerttu Saalasti Institute project ARVO – Added Value from Sustainable Energy Business: How can a major global investment be transformed into long-term regional added value?
The billions invested indicate the scale of the investment. However, they do not tell us how much of the value generated by the investment will remain in Finland – let alone in the regions where the investments are located.
The total value of an investment, its contribution to domestic production and the added value retained in the region are different things. According to a recent estimate by the Ministry of Finance of Finland, approximately 20–30 per cent of Google’s €13 billion investment, or €2.6–3.9 billion, would be directed towards Finnish production. A substantial share of the investment value consists of servers, chips and other technology purchased from international markets.
This does not diminish the significance of the investment. Even the domestic production impact of several billion euros is substantial. Rather, it demonstrates why, in addition to the total value of investments, we should pay more attention to what actually remains in Finland and in the regions where the investments are located.
This brings us to the core of the ARVO project. From a regional development perspective, what matters is not only the amount invested, but also the investment’s capacity to generate local business activity, expertise, ownership, new products and services, and further investments.
In the ARVO project, we have interviewed investors, local entrepreneurs and other regional stakeholders. The interviews cover sectors including wind and solar energy, hydrogen and biogas. Data collection is still ongoing, so the findings presented here are preliminary.
One theme has emerged particularly strongly from the interviews: the importance of local expertise.
Investors make use of local companies and expertise when suitable capabilities are available. Local actors know the region, its conditions, its people and its operating environment. This knowledge can facilitate the implementation of investments while also strengthening their local connections.
For a local company, however, the benefits are not limited to the revenue generated by a single contract. Participation can build new expertise, references and networks. These capabilities may enable the company to participate in subsequent projects, develop new services or expand into new markets. In this sense, local expertise is a valuable currency. Its value can grow from one investment to the next.
When assessing the regional impact of a major investment, we should therefore ask: How many local companies are able to participate? What new expertise is created in the region? Do companies develop new products and services? Can they use the references gained from the project elsewhere? Are new companies established, and does the first investment attract further investments in the region?
When assessing the regional added value of data centres, their electricity consumption cannot be considered separately from the equation. According to Fingrid, data centre projects that have already signed grid connection agreements in Finland have a planned final combined capacity of nearly five gigawatts. A connection agreement does not mean that every project will be realised or operate at its full stated capacity. Nevertheless, the scale illustrates how significantly electricity demand in Finland could change.
According to Fingrid, if all consumption projects with connection agreements were fully realised, Finland’s electricity consumption could increase by almost 40 per cent compared with the 2025 level. Growth on this scale would, however, likely take at least five years to materialise.
New electricity consumption is therefore not a minor side effect of these investments. It is an integral part of assessing their overall economic and societal impacts.
Growing baseload demand requires additional electricity generation, grid investment, flexibility, storage and dispatchable capacity that is not dependent on weather conditions. This becomes particularly important during periods of low wind and solar generation. The United Nations Economic Commission for Europe (UNECE) has highlighted the same issue in its recent assessment of data centres. UNECE draws particular attention to the mismatch between investment timelines: a large data centre can be built and connected to the electricity grid within a few years, whereas major transmission grid reinforcements may take more than a decade to implement.
The issue is therefore not simply whether enough electricity is available on an annual basis. What matters is whether electricity generation, grids, flexibility and balancing capacity can keep pace with rapidly growing demand. It is also reasonable to ask what kinds of system investments new electricity consumption requires and how their costs are distributed among investors, the energy sector and other electricity users.
Growth in electricity consumption does not, however, mean that locating energy intensive investments in Northern Finland is inherently problematic from the perspective of the electricity system.
According to Fingrid, more than 70 per cent of Finland’s electricity production is located on the west coast and in the north, while more than half of electricity consumption takes place in Southern Finland. Locating new industrial electricity demand closer to generation can reduce the need for long-distance electricity transmission, limit the need for grid reinforcement and enable more efficient utilisation of the electricity system. This represents a significant opportunity, particularly for Northern Ostrobothnia.
The region’s strength lies not only in its capacity to produce large amounts of renewable energy. An additional advantage can arise when energy production and energy consuming industrial activities are located close to one another. The discussion then shifts from producing energy to making productive use of it.
The debate around data centres raises a more difficult question: how should energy resources and grid capacity be used?
In addition to data centres, investments are being planned in Finland in areas such as the hydrogen economy, e-fuels, metals processing and other forms of clean industry. These investments differ in their employment impacts, electricity consumption, tax revenues, export income, effects on expertise and connections to the wider economy.
It is not meaningful to place these investments in a simplistic ranking. Nevertheless, one question is justified: How much economic and societal value is created per unit of electricity consumed – and how much of that value remains in Finland and in the regions where the investments are located?
The system and infrastructure costs required by an investment should also be considered. From the perspective of regional added value, the question is therefore not only how much an investment brings to a region, but also what resources and additional investments are required to make it possible.
This is not an argument against investment. It is an argument for ensuring that investments located in Finland are connected as strongly as possible to the domestic and regional economy and are implemented in ways that also support the sustainability and resilience of the energy system.
Northern Ostrobothnia has seen substantial investment in renewable energy production. This represents an important competitive advantage, but from the perspective of regional value creation, it is only the first step.
The next question is what we do with the energy produced. Energy is increasingly becoming a platform and an input for new business. Alongside energy production, we need investments that use energy, as well as longer value chains built around them.
Data centres are one example. Others include hydrogen, e-fuels and other electricity intensive industries. The essential question is whether additional economic activity can be developed around these investments.
Northern Ostrobothnia’s opportunity is therefore considerably greater than simply producing energy. The aim should be to use energy within the region to generate products, services, expertise and new business activities with the highest possible added value.
Data centres provide a concrete example. They generate substantial amounts of heat. If this waste heat can be put to productive use, one company’s side stream can become another company’s production input. From the perspective of regional added value, however, the most interesting question is not simply whether the heat can be recovered, but what new business activity can be created around it.
Could the heat become an input for a new industrial process? Could it attract new companies to the region? Could the energy and material flows of several companies form industrial symbioses in which one company’s side stream becomes another’s raw material?
In the ARVO project interviews, the circular economy and the utilisation of side streams have emerged as significant opportunities. In this context, the circular economy is not only about using resources more efficiently or reducing environmental impacts. It can also become a source of new regional added value.
The ARVO project interviews have highlighted functioning infrastructure, smooth permitting processes, profitability, and a stable and predictable operating environment as important prerequisites for investment. Cooperation between municipalities, investors, companies and other regional stakeholders is particularly important. Global companies compare potential locations internationally, which means that a region’s ability to operate efficiently, build trust and solve practical issues is a genuine competitive advantage.
Securing an investment, however, is only the first task. The next is embedding it in the region. By embeddedness, we mean the extent to which an investment develops lasting linkages with regional companies, people, skills, research organisations and other investments.
Municipalities, development agencies, education and research organisations, and other regional actors all have an important role to play. Local companies should receive information about the needs of major investments before key procurement decisions and partnerships have already been finalised.
At its best, an investment can initiate a self-reinforcing process: it increases local demand and builds expertise, enabling the development of new products and services and opening new markets for companies. This strengthens the regional business ecosystem and may, in turn, attract further investment. In this case, the most significant impact of one investment may ultimately be what happens after it.
The success of green transition investments is often measured in billions of euros, megawatts and jobs. These are important indicators, but they are not sufficient on their own to capture the long-term regional impact of an investment. Alongside them, we should examine how many local companies become part of the value chains, what new expertise and ownership are created, whether new products and services are developed, whether companies gain access to new markets, and whether the first investment leads to further investments.
At the same time, we should assess how efficiently an investment uses energy and other resources in relation to the domestic and regional added value it generates, as well as what kinds of system-level investments are required for its implementation. These are precisely the mechanisms we seek to understand better in the ARVO – Added Value from Sustainable Energy Business project.
Google’s investment decision represents a major opportunity for the region. Its long-term value, however, will not be determined by the size of the investment alone. Its significance will depend on how effectively the investment can be connected to local companies, expertise, research, energy production, the circular economy and new value chains.
The opportunity for Finland’s regions is therefore not simply to serve as locations for clean energy production or billion-euro investments. The greater opportunity is to use energy and investment as a platform for building new entrepreneurship, expertise and industrial renewal.
Billion-euro investments are only the beginning. Genuine regional added value depends on how deeply investments take root in the region – and on what new activities we are able to build around them together.
Authors:
Teresa Haukkala, Ph.D., Research Director
Tanja Kähkönen, M.Sc. (Agriculture and Forestry), Project Researcher
The authors work in the Sustainable Energy Business research group at the University of Oulu Kerttu Saalasti Institute and in the ARVO – Added Value from Sustainable Energy Business project.
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