Synthesis Memo · Domain D-1 · D-3 · June 2026
Continues: CN-024 · CN-025 · TN-019 · TN-020
Relates: SM-007 · SM-012 · SM-013
| Layer | Actors | Protection | Spot exposure | Cost pass-through |
|---|---|---|---|---|
| 1 | Large industry, data centres | PPA (€30–55/MWh) | None | Full (product price) |
| 2 | Industrial SMEs, larger farms | Fixed retail (€65–75/MWh) | At renewal | Partial |
| 3A | Small/medium farms, grain drying, livestock | None | Full | None |
| 3B | Forestry contractors, small sawmills | None | Full (episodic) | None |
| 4 | Households | None (reactive support) | Full | None |
Layers 3A and 3B are classified as "commercial" — therefore excluded from consumer protection — but lack any of the instruments that make commercial risk management possible. They are too large for the household safety net and too small for the industrial toolkit. The system identifies them as too large for protection and too small for power.
When a PPA-protected data centre or heavy industry connects to the grid, four mechanisms transfer cost to lower layers:
Grid reinforcement costs are socialised. Connection-driven infrastructure investment is financed through transmission tariffs paid by all users — including farms and forestry contractors who neither requested nor benefit from the connection.
PPA-backed generation reduces spot market liquidity. Fixed-price contracts remove generation from price discovery. Lower liquidity produces higher volatility, which falls on unprotected layers (CN-024 §02, TN-019).
Price spikes during scarcity. When demand peaks and wind does not produce, spot prices spike. Protected industry does not react — their price is fixed. Layers 3 and 4 absorb the full spike with no instrument to reduce their exposure.
Regional concentration. Layer 3 operators are geographically concentrated in the same regions (Pohjanmaa, Kainuu, Lappi) where data centres, wind power, and heavy industry are expanding. They host the infrastructure and bear the cost. This is the spatial extraction loop identified in CN-025 §04.
PPA contracts do not eliminate risk. They reflect it downward. The system is stable only as long as lower layers can absorb the volatility. Agriculture and forestry are the final absorbers — the structural ground of the Finnish electricity system.
Irregular income. A farm's income comes once or twice a year at harvest. A forestry contractor's income comes when timber is sold. Electricity costs are continuous. Standard hedging instruments assume regular cash flow — they do not fit the agricultural income profile.
No cost pass-through. An industrial SME can raise prices. A farm cannot — grain price is set at harvest, months after the electricity was consumed. A forestry contractor cannot renegotiate timber prices based on last winter's electricity bill.
Institutional gap. TEM (economic affairs) focuses on large industry. MMM (agriculture and forestry) lacks energy analysis capacity. Energiavirasto classifies them as commercial — consumer protection does not apply. No institution monitors the intersection. The monitoring mandate cannot be assigned without first assigning institutional ownership of the problem.
The system state can be read through three closed indicators — covering physical infrastructure, temporal synchronisation, and real-economy absorptive capacity. Together they form: grid → time → real economy.
Sweden's government (May 2026) extended agricultural diesel tax relief through December 2027 — an automatic, targeted, anticipatory intervention recognising agriculture as a captive sector unable to absorb energy cost volatility independently. Finland's equivalent system requires active application and is structured as a general fuel tax reduction, not sector-targeted support.
Evaluated against DA-007's three conditions for effective intervention: Sweden meets all three (automatic, anticipatory, captive customer recognition); Finland meets none in the primary sector context.
This is not a policy comparison. It is an empirical observation: one neighbouring government has recognised the structural exposure of Layer 3. The other has not.
Three structural changes would alter the cascade. None requires new legislation — only institutional ownership and transparency.
Measure the exposure. MMM or Energiavirasto should track electricity cost exposure for Layer 3 separately from general commercial statistics. Currently not done. The monitoring mandate cannot be assigned without first resolving which institution owns the intersection.
Collective procurement (aggregator model). Farms and forestry operators individually fall below PPA thresholds. Collectively — regional cooperatives, grain drying associations, sawmill networks — they represent substantial, predictable demand. The AAP model (TN-018) provides the institutional architecture. This would not eliminate risk but would provide a hedging instrument that currently does not exist.
Regional grid tariff transparency. If grid reinforcement costs for large industrial connections are socialised regionally, Layer 3 operators are effectively subsidising the infrastructure that protects Layer 1. This is measurable from Fingrid's cost allocation methodology — but currently unmeasured and undiscussed.
None of these conditions currently holds.
Finland has built an electricity allocation system that works well for those at the top. Large industry and data centres have stable, low prices. Households have volatility but at least political attention.
Somewhere in the middle — classified as commercial, too small for PPAs, with irregular income — are farms and forestry operators. They cannot pass costs forward. They cannot hedge effectively. They are concentrated in the same regions where grid costs are rising because of the very industry that is protected.
This is not a market failure. It is a structural design feature of the allocation system. And it will remain invisible until the next price spike — because no institution is tasked with monitoring it.
The solution is not subsidies. It is transparency (measure the exposure), aggregation (collective procurement), and tariff design that does not socialise industrial grid costs onto those who cannot pass them forward.
The cascade will continue until it finds a layer that cannot refuse it. That layer is agriculture and forestry. And it is already showing signs of stress.