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Offshore wind feels the lure of the Baltic

IN DEPTH | The surprisingly low price of the Kriegers Flak project may lead to a surge in offshore projects across the Baltic Sea, writes Bernd Radowitz in Tallinn

There was one obvious reason for the positive buzz at the Windforce Baltic Sea conference in the bone-chilling Estonian capital of Tallinn last month — Vattenfall’s spectacularly low €49.90 ($52.50) per MWh winning bid for Denmark’s 600MW Kriegers Flak project.

“Is this really a trend now that the cost of offshore wind is as low as €50 per MWh?” the enthusiastic chairman of the Estonian Wind Power Association, Martin Kruus, asked delegates, before declaring that the Baltic Sea “is the most feasible and best place for offshore wind perhaps in the world, but definitely in Europe”.

So far, Germany and Denmark have been ploughing ahead with offshore wind programmes, while the sector has been held back in other Baltic Sea countries by insufficient or non-existing support systems — and politics.

But spurred on by the low price of Kriegers Flak — after all, a Baltic Sea project — this may be about to change.

Pros and cons of the Baltic

The North Sea may have six times more installations — 9.1GW at the end of 2016 — but the Baltic has some distinct advantages.

Waters are shallower, projects are usually closer to shore, tides and currents are weaker, and waves are smaller — all of which make construction easier. And significantly, salinity levels are lower, which translates into less corrosion and a longer life for foundations, turbines and blades.

“This leads to cost savings during project installation, but also during operation and maintenance, and provides a high availability of the wind farms,” explains Andreas Wellbrock, managing director at German wind group WAB, which organises Windforce Baltic Sea.

On the downside, seabed conditions can be more complicated than in the North Sea, which mostly has a sandy floor with occasional rocks. The subsea surface in the Baltic, by contrast, varies between sand, rocks and chalky soil, with hidden boulders, which can make construction tricky.

Ice can be another challenge, shortening the offshore installation window and adding to O&M costs, especially in northern areas. The Gulfs of Bothnia and Finland are frequently covered by seasonal ice in winter months, and the entire Baltic Sea was frozen during the winter of 1987.

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And depending on the site, there are also lower wind speeds, which can lead to lower capacity factors and productivity.

Holger Matthiesen, project manager for E.ON’s 385MW Arkona — under construction in the German part of the Baltic — is quite upbeat about the production at the utility’s previous Baltic Sea projects.

The 207MW Rødsand 2 array off Denmark generates 800GWh per year, and the 48MW Kårehamn wind farm off Sweden, which started generating power in 2013, is “exceeding our expectations”, he says.

Wellbrock reckons all countries bordering the Baltic could benefit from the momentum behind offshore wind, but only with clear policies that support the sector.

The Baltic Sea — including the Kattegat and the Danish straits — currently has 1.4GW of offshore wind installed. Germany and Denmark have given relatively clear visibility on how much will be added in the coming years, at least until 2020, but for other countries in the region it will largely depend on new support policy.

Denmark

With about 880MW in the Baltic Sea, offshore wind pioneer Denmark has the highest capacity of installed power in the region. Another 600MW will be added off its Baltic coast by 2022 — presuming that Vattenfall takes a final investment decision on its €1.1-1.3bn Kriegers Flak project.

But there is no visibility yet for a pipeline beyond that. Denmark’s conservative-led government last year questioned the high cost of the offshore build-out, and nearly cancelled 350MW in already-tendered near-shore capacity in the North Sea.

“We were seeing some quite new tones in the political landscape, and in that dilemma, it was quite good to say Kriegers Flak is a flagship project that can show a regional collaboration in offshore in the Baltic Sea,” says Camilla Holbech, deputy manager of the Danish Wind Industry Association (DWIA). That kept the project from being “slimmed down or cancelled”, she reveals.

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The Kriegers Flak site is close to EnBW’s already operating 288MW Baltic 2 wind farm in German waters and the as-yet-unbuilt 640MW Kriegers Flak 2 off Sweden. All three wind parks were originally planned to be linked by interconnectors to all three countries, although there are doubts the Swedish project and its transmission will ever be built (see Sweden section below).

With Copenhagen aiming to derive half of its energy consumption from renewables by 2030, the DWIA is fighting for the new post-2020 energy plan, which will be discussed this year, to include an offshore pipeline that is “as ambitious as possible”.

Germany

Iberdrola recently started to install the 70 5MW Adwen turbines at its 350MW Wikinger project, which it expects to commission in the third quarter of this year. Despite complicated soil conditions at the site, near the Polish sea border, the Spanish company completed installation of the 70 jacket foundations on schedule last year.

Next in line is nearby Arkona, a €1.2bn, 385MW project jointly owned by E.ON and Norway’s Statoil, which will consist of 60 Siemens 6.4MW turbines and is due to be commissioned in 2018-19.

Projects for the post-2020 period need to participate in auctions to be granted support. Germany’s offshore wind law (WindSeeG), passed last year, stipulates that only 500MW in new capacity can be built in 2021 due to grid bottlenecks — and it must be built in the Baltic Sea. A further 250MW are allowed to be built in the Baltic by 2025. In the country’s 1.55GW interim offshore tenders this year and next, 500MW of Baltic Sea capacity will not be competing against North Sea projects, and may thus get a higher support level. This could be good news for Iberdrola, which is working on three projects adjacent to Wikinger.

Baltic projects will compete with North Sea ones in regular offshore auctions of 840MW from 2021.

Finland

Finland currently has only one turbine in the water — a 2.3MW Siemens machine at the Pori near-shore pilot site in the Gulf of Bothnia. Developer Suomen Hyötytuuli is building the country’s first commercial offshore array, the 40MW Thakoluoto project, alongside it, with ten Siemens turbines due to be switched on this autumn. This will be the world’s first offshore array in water that is ice-locked for part of the year.

Finland’s government is contributing €20m towards the €120m overall cost of Thakoluoto, and will grant a feed-in tariff of €83.50/MWh for 12 years.

But there is no visibility for future offshore wind support beyond that, despite a pipeline of 11 projects totalling up to 2.9GW.

“There is some interest towards offshore, but at the moment they [the government] are really concerned about the costs of energy,” says Anni Mikkonen, chief executive of the Finnish Wind Power Association.

Sweden

Sweden has the longest coastline in the Baltic and the largest potential for offshore wind, but only ranks third in the region, with 190MW installed. No new wind farm has been built since the commissioning of Kårehamn four years ago.

Late last year, the government disappointed the industry when it refused to grant a permit on military grounds for the up-to-2.5GW Blekinge array off southern Sweden, arguing that the site was a strategically important training area for its armed forces.

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There are eight valid permits for other major offshore projects, but these run out in 2018-23 and the sector currently isn’t cost-competitive in the country.

Sweden has seen recent collapses in the price of electricity and green certificates, but the situation is likely to change in the coming years as the country decommissions several nuclear plants. Last year, an energy agreement between Sweden’s five biggest political parties gave its green certificate scheme a boost by agreeing to an extra 18 terawatt hours of renewable energy by 2030. 

However, offshore would have to compete with onshore, which is particularly cheap in Scandinavia due to strong winds and vast swathes of thinly populated land. As part of the cross-party agreement, grid link costs would be waived for offshore, but that probably won’t be enough to make the technology competitive.

The offshore sector is still hoping for a separate support system, but discussions have been slow.

“I think it will come, but the question is when,” says Stefan Karlsson of Havsvindforum, the Swedish forum for offshore wind. “We need to have offshore wind in the energy mix in the long term,” he adds, pointing out that the energy agreement calls for 100% renewables by 2040.

Estonia

Estonia, with a population of just 1.3 million, has no turbines in the water and says it cannot afford to subsidise the sector.

However, the government is in talks to get a large offshore wind farm in Estonian waters financed by another EU member state — one that is struggling to meet its 2020 renewable-energy target.

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Under the EU’s current renewable-energy directive, there are three co-operation mechanisms that allow member states to achieve their national renewables target in conjunction with other EU nations: statistical transfer, joint projects, and joint support schemes.

“Some countries have trouble to reach their own 2020 target. So we could have statistical transfers, and produce a statistical balance. Or we can have joint projects,” says Tuuliki Kasonen, general manager of the Estonian Wind Power Association.

Countries could thus finance a project off Estonia and have the output contributing towards their own renewables goal.

Estonia has already identified two areas off its coast with good wind resources it considers apt for the construction of offshore arrays.

One is a 700MW-1.1GW project about 12km northwest of the Baltic Sea island of Hiiumaa that is being developed by Tallinn-based 4energia, the biggest onshore wind power producer in the Baltic states.

Wind measurements for the area have been done, and the company is about to publish an environmental impact assessment (EIA) for the project. The seabed is sandy in the area, and 4energia plans to use gravity-based foundations for the array.

A 960MW project is also being developed in the Bay of Riga by state-owned power company Eesti Energia, but is less advanced. An EIA will be carried out this year.

Poland

Last year, the nationalistic and populist government shocked the wind industry with a devastating distance rule that will soon kill off all new onshore wind construction. But offshore wind could yet become a reality.

The government may hate renewables and want to protect indigenous coal, but it will still have to fulfil Poland’s renewables commitments. So far the Law and Justice party (PiS) government has been very aggressive in its rhetoric, but sooner or later, it usually fulfils its EU obligations.

Also, the PiS’ argument of visual impact, which it used in its crusade against onshore wind, doesn’t work for offshore.

So wind at sea might just be the technology the regime could use to meet its renewables targets and still save face in front of its supporters. And the low price reached in Denmark could also help sway the opinion of politicians who previously thought renewables are an expensive toy for rich Western Europeans.

The low price reached in Denmark could also help sway the opinion of politicians who previously thought renewables are an expensive toy for rich Western Europeans

Mariusz Witonski, president of PTMEW, the Polish offshore wind energy society, thinks that Poland may not meet its official 2020 target to have 500MW in the water, but that the first wind parks could be built a year or two later — and the country’s offshore capacity may reach 2GW by 2025.

A total of 6GW could be built by 2030, on the basis of project pipelines, he adds.

State-owned utility PGE already has a grid connection permit for a 1.05GW project off the Polish coast, as does private utility Polenergia for the 1.2GW Bałtyk Środkowy 3 (Baltic Middle 3) project off western Poland. The latter received an environmental permit for half of that capacity last year, with the other half expected to get a green light this year. Polenergia expects to start building the project as early as 2019 and commission it by 2021 or 2022.

Under the Renewable Energies Act passed by the previous government, offshore wind is bundled together with biomass in an auction that is due to take place this year, but the PiS administration is lukewarm about such a move and it may not go ahead.

In the wake of Kriegers Flak, offshore projects could beat biomass in a tender.

With its coast facing a more open Baltic Sea than in neighbouring countries, wind speeds off Poland may be higher than in the rest of the region, but exact Lidar wind measurements have yet to be carried out.

Lithuania, Latvia & Russia

Prospects for offshore wind in the near future in Lithuania, Latvia and Russia are dim.

Despite importing more than two thirds of its electricity, Lithuania has not been very pro-active in offshore developments. A subsea grid link to Sweden gives the small Baltic state access to the rock-bottom prices in the Nord Pool power market, while Lithuania also achieved some of the lowest prices for onshore wind at tender.

“Offshore energy has to beat onshore very soon if it wants to develop in this part of the world,” says Tadas Navickas from 4energia.

Neighbouring Latvia still has a moratorium on any new renewable-energy projects, but may design a new clean-energy scheme by the end of this year.

However, “there will be no specific support for offshore wind until 2020”, says Toms Naburgs, general manager at 4Energia in Latvia.

Russia has no plans for offshore wind in the Baltic. But according to a note from the Russian Republic of Karelia last year, Chinese energy and engineering firm Sinomec plans to build a 60MW array in the even icier White Sea close to the Arctic Circle. Little is known about the viability of that project.

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