IN DEPTH: Hope in the Baltics

There is a consensus that the three Baltic states — Estonia, Lithuania and Latvia — have the potential to become hotbeds of onshore and offshore wind.

Not only are they blessed with strong winds thanks to their coastal location and relatively flat geography, but all three have a strong urge to end their reliance on oil and gas from Russia, their loathed former ruler.

Other factors that make wind power attractive include Estonia’s desire to limit the use of its indigenous, but heavily polluting, oil shale; Lithuania’s recent rejection of new nuclear facilities in a national referendum; and the 2020 renewables targets set by the EU.

Yet despite all this promise, two factors are massively constraining wind development in the region: limited finances and a lack of political support.

“There is definitely potential; several developers are looking for new markets,” says Feng Zhao, research director at BTM.

“Wind has blown from West to East. These countries were almost ready, but the financial crisis has put a lot on hold.”

The economies of the Baltic states were hit harder by the financial crisis than any other countries in the EU, with GDP plunging in 2009 by 18% in Latvia, almost 15% in Lithuania and close to 14% in Estonia.

Although the trio are now seeing impressive growth — higher than anywhere else in the EU — their governments continue to keep a tight lid on spending.

Support for wind power has been capped in Estonia, lowered in Lithuania and put completely on hold in Latvia.


The most advanced of the three in terms of wind power is Estonia, which in 2012 reached an installed capacity of 269MW, producing 6% of its electricity from wind, roughly the same percentage as the UK.

The country offers a feed-in tariff (FIT) of €54 ($73) per MWh on top of the Nord Pool price for 12 years, and it is set to add 25MW this year. But it has put in place an annual limit of 600GWh from wind energy, prompting developers to shy away from new projects, says Martin Kruus, chairman of the region’s largest wind developer 4 Energia.


4 Energia recently won a tender for a 60MW onshore wind farm in Lithuania, which should help boost the country’s installed wind capacity beyond the 275MW expected by the end of this year.

But winning the tender came with a snag: the FIT for new wind projects shrank from an already-low €87 per MWh to €69 — a level previously unheard of in Europe. Kruus says his company has binding offers from turbine manufacturers that will enable it to meet that low price, but admits it may no longer be able to work with top-range manufacturers such as its former favourite, Enercon.

For now, Lithuania is not planning any further auctions as projects already tendered should boost its wind capacity to 500MW — enough to hit its 2020 EU renewables target, which will largely be met by biomass.

The Lithuanian wind power association, LVEA, believes the country has at least 1.5GW of potential, and is lobbying the government to extend its target to a minimum of 800MW.

But LVEA head Saulius Piksrys admits that the current leftist government does not look favourably on renewables, and says it still hopes to overturn last year’s referendum on nuclear power.


Latvia has only 60MW of wind installed, and the country’s Harvard-educated economics minister, Daniels Pavluts, is openly hostile to the technology, arguing that his poor country cannot afford such a luxury.

The government has placed a moratorium on FITs for new projects until 2016, forcing 4 Energia to put a 50MW onshore project on hold.


The same fate has hit the 200MW Baltic Wind Park offshore project in Latvian waters, which was originally planned to be completed in 2017. Andrejs Silins, chairman of the Baltic Wind Park company, tells Recharge that he is still hopeful it will eventually go ahead, as the project has a general permit.

“We want to insist on the project, as the government needs to fulfil its 180MW EU offshore target,” he explains, but adds that support regimes in Latvia will never be as high as they are in Western Europe. “If the economy is down, everyone is counting every penny.”

4 Energia also has ambitious plans for a 700MW project off the Estonian island of Hiiumaa.

“Currently, the Hiiumaa offshore project is undergoing its EIA [environmental impact assessment] process, which is expected to finish by the end of next year,” Kruus says.

Despite all the obstacles, Kruus is optimistic about the Baltics’ offshore potential.

“The Baltic Sea should be a golden spot for offshore wind energy. What makes offshore wind expensive is the limited installation time due to weather conditions, extreme wave heights, etc,” he explains. “Such days [when installation is impossible due to harsh weather] are less common in the Baltic Sea than in the North Sea, which means the final cost will be less.”

Not everyone is so optimistic, though.

“Some offshore wind development activity is taking place in all Baltic markets, but activity levels are mostly at a standstill,” says IHS wind analyst Magnus Dale. “Depending on policy backing, some pilot offshore wind projects could become realised towards the end of the decade, particularly in Estonia and Latvia.”

He adds that onshore wind installations in the Baltic states will remain sporadic, with all three countries together delivering less than 1GW of new capacity by the end of 2020, Dale estimates.

“The Baltic wind market has strong potential,” a spokesman for turbine maker Vestas tells Recharge. “[However] due to policy uncertainty, the market has not developed with the same speed as we see in the neighbouring Scandinavian countries.

“We do believe, however, that wind energy will represent a substantial share in the Baltics’ future energy mix.”

That may be so, but when it will happen is anyone’s guess.