Impressive as the growth of the global offshore wind industry has been in the last decade, the internationalist aspirations of pace-setting European utilities such as Orsted, Iberdrola and RWE, won’t be imitated – at least in the near-term – by Swedish peer Vattenfall.
There is “plenty” of construction to be getting on with in the northern seas if wind power is to play the role it needs to grow in the energy transition, says Helene Biström, head of the Stockholm-headquartered company’s wind business area.
In this context, Vattenfall, which has an offshore wind pipeline of some 2.6GW off Denmark, the UK, Germany, the Netherlands and Sweden – in addition to a market-shaping onshore and solar asset portfolio which Biström also oversees – is hugely ambitious. And, in truth, it needs to be, for overarching it all is a far bigger motivation for the utility: its mission to enable ‘fossil free living within one generation’.
“We believe BA Wind [Vattenfall’s wind & solar business] can contribute very meaningfully, by accelerating [toward] fossil-free living with the power of renewables. We are now constantly thinking about how we can do this [building wind farms] faster, better, cheaper.
“Offshore wind has seen an incredible development in the last decade and today it’s competitive [with fossils and solar power]. But now, more, we can accelerate further, faster, and we will need to support [Europe’s] offshore wind plans, quadrupling to 2030 and quadrupling again to 2050 [to reach EU targets of 300GW-400GW].”
The names of Vattenfall’s European offshore wind farms have already become synonymous with the regional growth of the sector: Thanet, online off the UK since 2010 and which Biström originally thought Vattenfall was “crazy” to develop; Horns Rev 3 off Denmark, built with then-record-setting 8.3MW turbines at an also, at the time, record-low cost of energy of €100/MWh; and most recently Kriegers Flak, off Denmark, at 604MW the Baltic Sea’s largest offshore wind farm – and brought to first power despite the pandemic.
“To make that a reality is not an easy task, as we all know. And, frankly, every developer is struggling whether because of regulatory or supply chain or permitting or other issues – the authorities needs to get in shape here and support us because if it continues to be so difficult it will only get harder for us to commit to the next project, and the one after.”
'We want to be a regional champion'
Looking at Vattenfall’s unapologetically Eurocentric offshore wind plans, though, it is hard to see anything – or anyone – standing in its way. To hear Biström list the countries that she sees as investment-worthy, one wonders where the utility won’t be building projects in the coming decades: “Germany, the UK, the Netherlands, Denmark and also Sweden. But also France, which has been very dedicated, finally coming along, Norway, Ireland, Scotland… .”
“We will stay focused in Europe and we will capture synergies from what we build here, in these different markets. We think we can leverage more from this approach than from international expansion. Europe is not a slow, mature market – remember: quadrupling and then quadrupling [to meet EU capacity targets] again by 2050,” she says.
“Some people say ‘this will not be enough for low cost’; well it will be, at least for now, keeping our focus on our core markets to make the most of them. We see a lot of interesting projects and markets around us. We want to be this regional champion,” adds Biström.
On the fast-approaching horizon is a project to cement this strategic vision. The 1.5GW Hollandse Kust South – which will run with no subsidies from the Dutch government – is due in operation in 2023 when it will become the world’s largest offshore wind farm in service before being overtaken by other North Sea projects later in the decade.
Hollandse Kust South also resonates with the wider energy transition goals at Vattenfall, as chemical conglomerate BASF has taken a 49.5% in the Dutch North Sea project, with power production to be channelled off to help decarbonise giant plants such as Antwerp Verbund in Belgium.
Biström says for Vattenfall – which is also leading a green steel consortium that includes automotive group Volvo, iron mining company LKAB and steelmaker SSAB – the BASF deal reflects the “really large interest” now being shown by heavy industry in decarbonising operations with offshore wind.
“A lot of big companies [such as BASF] are coming to us to talk about offshore wind – they want to secure supply of renewable capacity to affordable prices for their own decarbonisation journey, and they are coming sometime to talk corporate PPAs [power purchase agreements], sometimes to invest in projects. There is a growing confidence in offshore wind playing this role.
“We want to be at the heart of the energy transition. We want to do our part and we are not going to wait for others. But we cannot do it alone.
“A deal like we have done with BASF is a win-win,” she adds, “because when someone like BASF buys half of one of our [wind] farms they secure and accelerate their decarbonisation journey, but also we hedge market risk and increase our profitability along the way and we can ‘release’ this money into the next project to build it much faster.”
Floating in Vattenfall's sights
Most immediately, Vattenfall is readying finances for a potentially sector-changing shift about to take place off Scotland, with the country set to announce the winner in its first offshore wind auction, the 10GW ScotWind tender, where the utility is bidding in partnership with Norwegian developer Fred Olsen Renewables.
ScotWind, says Biström, is “super-important” not only for the capacity it will add in European waters, but also for the fact that is the first leasing round to include project sites in depths calling for both bottom-fixed and floating wind turbines.
“Taking part in these projects allow us to develop skills and knowledge and it will be super-important because for us and others since it will provide a kind of ‘step-wise’ opportunity to develop a project with a combination of fixed and floating and to learn for future developments,” she says.
“Floating is necessary for us [in the future] because we cannot always be developing close to shore in shallow waters,” says Biström, noting that Vattenfall is also bidding into the world’s first pure-play floating wind auction, in France next year, with Wpd and BlueFloat.
“Floating wind – and I must add, deep integration with hydrogen – is a key path for us to explore. We definitely believe in it, we will push for it. Like all things in accelerating the energy transition, the transition to fossil-free living, it will be a case of partnering to match up competencies to make it happen.”
“Even though some see us as a rather slow-moving creature, in fact in some areas – like offshore wind and soon floating, which we see as a fundamentally important development for the industry – we are daring to go first.”