Sweden is waiting for a reply from the incoming European Commission on alternatives presented to waive grid connection fees for offshore wind projects, a move that could trigger a fresh wave of construction activity in the Baltic Sea.
Anders Ygeman, Sweden’s minister for energy and digital development, at an energy conference in Stockholm earlier in September said his country’s plans for a waiver of grid link fees were currently being reviewed in Brussels, and Sweden was waiting for an answer from the Commission over which model for the waiver it can use.
“We are waiting for an answer. That could take another [few] months or so,” Ygeman said at the SvD Energy Summit 2019, answering a question from Mattias Wärn, chief executive of Swedish offshore wind developer Svea Vind Offshore.
“The [incoming] EU Commission currently is a bit busy with forming itself.”
The models presented to the EU do not represent an official notification process yet, but rather "informal discussions" with the Commission on two alternative models for reducing or removing grid connection fees for off-shore wind farms connecting to the transmission network, a ministry spokesman in Stockholm explained to Recharge today.
"We want to have the Commission's views on the models’ compliance or possible compliance with EU state aid law," he said.
"We are starting by concluding if there will be a need for a formal notification and, in that case, which changes to the alternative models we might need to make."
The government has no exact schedule yet when the changes may enter into force.
Rickard Nordin, the energy and climate policy spokesman for the Centre Party in the Swedish parliament, earlier this year told Recharge that he expects a scheme for the waiver of grid fees could be in place as early as from the first of January 2020.
But the member of parliament now is not so sure anymore.
"I am afraid that the government hasn’t really pushed this discussion and reform. Therefor my estimation about January 2020 is mostly likely too optimistic," he told Recharge in an email today.
"There is still a chance that we will have a political deal by then, but the legislation will not be in place."
Nordin's Centre Party is not part of Prime Minister Stefan Löfven's minority government between the Social Democrats and Greens, but in a so-called 'tactical abstention' in parliament has made the Löfven's election possible.
Developers in recent years had shied away from building new projects off Sweden due to a lack of a support system for offshore wind, while power prices in the NordPool wholesale market have been too low to make merchant developments viable.
At the same time, the country is undergoing a boom in onshore wind, the construction of which is cheap in many parts of Sweden due to good winds and a low population density.
Rising wholesale power prices, coupled with the expected waiver of grid fees and rising demand are likely to prompt a revival of offshore wind in Sweden.
Sweden has only 192MW of operating offshore wind farm capacity in the Baltic Sea, but close to 3GW is already permitted or in the permitting process.
"An abolishment of grid connection costs is necessary if offshore and on shore shall compete on the same terms," Hans Ohlsson, the Sweden head of German developer Wpd, told Recharge.
"Wind projects are built today where we have a wind resource, of course, but only in areas where you also have an existing grid connection."
Wpd holds a permit for the 630MW Storgrundet project in the Baltic Sea off the city of Söderhamn in central Sweden.
The Swedish Energy Agency (SEA) last year outlined two different models on how to waive grid fees. One under which the state would cover grid connection costs – including cables and offshore substations – within a system in which design and delivery of links would be the responsibility of developers.
Under a second model, Sweden’s transmission system operator (TSO), Svenska Kraftnät, would take direct responsibility for the design, delivery, and funding of grid connections under a so-called ‘centralised’ model.
UPDATES with comment from developer Wpd's Sweden head Hans Ohlsson
