The reform of the Energy Efficiency Act will bring changes to both the public and private sectors

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On 11 September 2025, the Government submitted a proposal to Parliament to amend the Energy Efficiency Act and related legislation. The Act is currently being considered by the Economic Affairs Committee and will soon return to plenary consideration. The Act is expected to enter into force before the end of the year 2025. The Act will amend the Energy Efficiency Act (1429/2014), Section 19 of the Electricity Market Act (588/2013), the Natural Gas Market Act (587/2017), the Act on the Supervision of the Electricity and Natural Gas Markets (590/2017), and the Act on the Energy Market Dispute Board (502/2023). The Energy Efficiency Act implements Directive (EU) 2023/1791 on energy efficiency.

This blog post takes a closer look at the energy efficiency first principle of the proposed legislation and the reforms affecting the public sector and businesses. Some of the obligations are completely new, while others are based on previously existing obligations, either with an expanded or modified target group or with stricter energy efficiency targets.

Energy Efficiency First Principle

The Energy Efficiency Act and the Electricity and Natural Gas Market Acts will introduce a new energy efficiency first principle, which is intended to ensure that energy efficiency solutions are taken into account in public procurement, planning, policy, and significant investments. In practice, the principle based on the Energy Efficiency Directive means that energy planning, investment decisions, and policy decisions will take into account, as accurately as possible, alternative cost-effective energy efficiency measures which can improve the efficiency of energy demand and supply, particularly through cost-effective end-use energy savings, demand response initiatives, and more efficient energy conversion, transmission, and distribution, while achieving the other objectives of those decisions.

Authorities must take the energy efficiency first principle into account in planning and policy measures that have a significant impact on energy consumption and energy efficiency, including measures already in the planning stage. However, the application of this principle is not absolute, as other factors, such as low emissions, may rise above it when necessary. The principle should therefore be applied in all decision-making, but choosing the most energy-efficient solution is not mandatory if other interests are more pressing.

In addition, operators planning investments or projects must take the principle into account in investment decisions exceeding EUR 100 million, or EUR 175 million in the case of transport infrastructure projects, when they relate to energy systems or non-energy sector and when the sector has an impact on energy consumption and energy efficiency. The requirement will apply, for example, to construction, water supply, transport, information and communication technology, and finance sectors. It should be noted that if the investment is made in stages and in installments, the value of the investment will be determined on the basis of the entire project. Thus, for example, the construction of a wind farm built in stages will be treated as a single investment decision, and the total capital expenditure for all stages will determine whether the project as a whole exceeds the threshold value for a significant investment.

In addition to applying the energy efficiency first principle, operators must notify the Energy Authority of the application of the principle so that the Energy Authority can ensure that alternative energy efficiency measures are investigated in significant projects in accordance with the obligation. In addition, operators planning an investment or project must prepare a report on the investment or project that allows for a comparison of alternative cost-effective energy efficiency solutions. However, the report and its possible outcome do not oblige the operator to use a specific energy efficiency solution in the investment or project; its purpose is only to map out the various alternatives. Drafting the report is not required if the objectives of the investment decision can be achieved in the most energy-efficient manner. If no report is prepared, the necessary information specified by the Energy Authority must be submitted to the Energy Authority to ensure compliance with the obligation.

Public Sector and Public Procurement

In the Energy Efficiency Act, a public body refers to all national, regional, and local authorities, as well as units directly financed and administered by them, which are not of an industrial or commercial nature. The reform imposes an obligation on public bodies to monitor their final energy consumption and report consumption data to the Energy Authority. If a public body is party to a voluntary energy efficiency agreement, this obligation may be fulfilled through the requirements of the energy efficiency agreement. In addition, regional and local authorities must take energy efficiency into account when drawing up long-term plans.

In addition to monitoring energy consumption, a binding target for reducing their final energy consumption will be set for public bodies. The total final energy consumption of all public bodies must be reduced by at least 1.9 % each year compared to the year 2021. For municipalities, the reduction target will be introduced in stages, but no later than 1 January 2030. Municipalities with more than 45,000 inhabitants must also draw up a plan for improving the energy efficiency of heating, based on the utilisation of waste heat and the increased use of renewable energy.

Obligations will also be imposed on public sector construction projects and lease agreements. Public bodies should only purchase existing buildings or enter into new lease agreements for existing buildings that meet the requirements for nearly-zero energy buildings specified in the Building Act (751/2023) and the requirements of Section 37 of the Energy Efficiency Act. Exceptions to this obligation are situations where the purpose of the procurement is to renovate or demolish a building, resell it without using it for the public body’s own purposes, or preserve the building as an officially protected site.

Energy efficiency requirements and the requirement to comply with the energy efficiency first principle are also set for public procurement in the case of construction, product and service procurement, as well as for concession contracts that exceed the EU threshold values, provided that compliance with the requirements is technically feasible. The scope of the Act is extended from central administration authorities to cover all contracting authorities and entities. However, the requirements do not apply to contracts covered by the Act on Public Procurement in the Fields of Defense and Security (1531/2011).

Monitoring and Control of Energy Consumption

The reform will affect companies’ operations, particularly through provisions relating to energy management systems and energy audits. A threshold value for final energy consumption will be added to the Energy Efficiency Act, and companies exceeding this threshold will be required to implement a certified energy management system. In addition, companies exceeding the final energy consumption threshold will be required to notify the Energy Authority. According to the government proposal, the threshold value is set at an average annual final energy consumption of more than 23,600 MWh over the previous three calendar years.

Under certain conditions, companies may be exempted from implementing an energy management system. If a company i) implements a certified environmental management system and prepares an energy audit of its operations, ii) implements a certified environmental management system and is part of a voluntary energy efficiency agreement, or iii) utilises an energy service agreement to the extent that the company’s final energy consumption is covered by the agreement, there is no need to implement an energy management system, as the benefits targeted by the energy management system are achieved through the aforementioned alternative methods of implementation.

The obligation to conduct an energy audit has previously applied only to large enterprises as defined by the number of their employees, balance sheet, and turnover. With the reform, the scope of the obligation is defined on the basis of the company’s final energy consumption, and the obligation applies to all companies whose average annual final energy consumption exceeds 2,700 MWh over the previous three calendar years. The energy audit, which must be carried out every four years, must include a review of all the company’s operations, and in addition to the audit, the company must draw up an action plan specifying the measures to be taken to implement the recommendations made in the audit. If the company has an energy management system or an equivalent alternative method of implementation in place, the audit does not need to be carried out. However, all companies exceeding the 2,700 MWh limit must submit a notification to the Energy Authority.

Heating and Cooling Systems and Data Centers

In addition to the above, the reform of the Energy Efficiency Act introduces changes to contracts related to the retail sale of heating and cooling, the criteria for district heating and cooling systems – for example to limit the use of fossil fuels – as well as to the regulation of data centers with regard to the utilisation of waste heat.

The obligations concerning the retail sale of heating and cooling are intended to improve and clarify the position of end customers. In the future, retailers of heating and cooling contracts will be required to provide all end customers with information on, for example, the services to be provided, availability of information on prices and other payments, the terms and conditions applicable to the renewal and termination of the contract, and the rights of end customers. Retailers must also make their price lists, service charges, and general terms and conditions publicly available on their websites. In addition, the law will include provisions on changes to contract terms and conditions and the suspension of heating or cooling supply. As a result, the threshold for the right to suspend heating or cooling supply will be raised.

New obligations are also being imposed on district heating and cooling system operators who are planning to build a new efficient system or new heat production units. Certain criteria have been set for efficient district heating and cooling systems, which the system must meet at the time of commissioning. With the amendment to the legislation, new or significantly renovated heat production units with a capacity of more than 1 MW will also be prohibited from using fossil fuels, with the exception of natural gas, the use of which will be permitted until the end of 2030. The criteria also apply to existing systems with a total output of more than 5 MW. If such systems do not meet the criteria in 2026, operators must draw up a plan to meet them. For plants with a fuel capacity of more than 10 MW, a cost-benefit analysis must also be prepared to assess the plant’s performance as an efficient cogeneration plant.

In future, data centers with a capacity of more than 1 MW will be subject to an obligation to utilise waste heat. Waste heat can be utilised, for example, by feeding it into the district heating network or by recovering it for use in other plants. If the waste heat from an existing data center is not utilised, the operator must demonstrate through a cost-benefit analysis that utilisation is not technically or economically feasible.

 

Would you like to know how the new regulations will affect your organisation or project? Our experts are happy to discuss the matter in more detail and are ready to advise clients on all issues related to the reform.

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