The government lead from the smallest of the Scandinavian countries just might inspire its neighbours, too.
Scandinavian countries expect to one day provide vast quantities of electricity to domestic and neighbouring markets from offshore wind, but progress is slow.
Higher turbine costs and political inertia are to blame and the region is now lagging behind Britain when it comes to generating electricity at sea. Of the Scandinavian countries, Denmark has made the biggest inroads, with about 400 MW of offshore wind capacity installed off its coast so far, eclipsing the 133 MW off Sweden and just 2.3 MW from a prototype floating offshore turbine in Norwegian waters. Finland, which lags behind the others in onshore wind development, has no offshore capacity at all.
Offshore wind in Denmark has been treading water after completion of the 166 MW Rodsand offshore wind farm in 2003 while the government found its bearings at sea. But with the extension to Horns Rev, Denmark's first major offshore facility, coming online this year, and Rodsand II in construction, the market is through the doldrums and several further major projects are in the works. In Norway, the government has recently proposed a law laying out a market framework for future wind power development to replace the capital subsidies it has offered to date. "Offshore wind energy may become the next adventure for the Norwegian industry and energy sector," petroleum and energy minister Terje Riis-Johansen proclaims. For its part, Sweden shows signs of shedding some of its ambivalence towards offshore wind and is examining the legal route to allowing other countries to build offshore plant on its territory as a way to meet its own obligations under the EU renewables directive committing member countries to a 20% renewable energy target by 2020.
The most-watched development in Scandinavian waters is the massive 1.8 GW project in the Krieger's Flak area of the Baltic Sea (page 10). The project site crosses borders into Denmark, Sweden and Germany. If constructed, it would entail the world's first maritime grid linking offshore wind farms with transmission connections between separate electricity markets. For this reason, the EU Commission is looking on it as a showcase for European co-operation. Transmission system operators in the three countries have completed a study on the project and the governments are now exploring further collaboration. Denmark's transmission system operator, Energinet.dk, has the green light to apply for European recovery funds for preparatory work on Krieger's Flak and the state-owned energy company behind the Swedish part of the project, Vattenfall, has permission to install turbines.
Many hurdles remain, though. Matthias Rapp of industry organisation Swedish Wind Energy (SWE) says Krieger's Flak is "completely uneconomical" under Sweden's current support system for wind. He says the government could theoretically provide funds to Vattenfall as research and development money, but he fears the public would view the needed injection as gross favouritism and "politically unacceptable." That bodes ill for cross-border partnership, warns Jan Hylleberg of the Danish wind industry association (DWIA). "If the Swedish government is not in favour of the Krieger's Flak project, I think it would be an entirely different type of project for Denmark."
Still, Denmark has plenty of other offshore ambitions. The association envisions wind power providing half of Denmark's electricity production in 2020, with offshore accounting for between 30-35% of total wind - edging toward the higher end of the range if required to make up for shortfalls in repowering of ageing onshore wind turbines. By 2025, the association wants about 8.5% of Denmark's gross energy consumption to be served by wind power, compared to between 3-4% today. Of all that wind, half would be offshore.
Since the late 1990s, though, the country has seen little market activity due to years of government lethargy when it comes to wind power development. Installed capacity has languished at just over 3 GW, after the most recent offshore project commissioned in 2003. But come December the government - which sponsors all big offshore projects - will be able to present a handful of new wind plant along with projects now in development, increasing the number of Danish offshore wind farms from six to 12 and more than tripling offshore installed capacity from about 400 MW to over 1.2 GW. The sudden spurt is driven by a desire to impress the world when thousands of delegates arrive in Copenhagen in early December for the UN's next big climate change summit.
Of offshore projects under way, two will be completed by the end of the year: Horns Rev II, a 209.3 MW development of Siemens turbines off the west coast of the Jutland peninsula in the Danish North Sea, scheduled to be fully commissioned in the autumn, and the 21 MW Sprogo project of Vestas turbines in the Great Belt separating the two halves of Denmark, to come online by December. Work is also progressing on a project of six turbines to be located four kilometres off the town of Frederikshavn on the east coast of northern Jutland, at one time a thriving shipbuilding and fishing port, but now an economically depressed area. Turbines are due online this year and next.
Horns Rev II will be followed by Rodsand II as the next major offshore project coming online in Danish waters. It is now being built in the Baltic Sea between the Danish island of Lolland and Germany. The 207 MW of Siemens 2.3 MW turbines are to be commissioned next year.
Next up in Denmark will be a 400 MW project near the island of Anholt in the Kattegat Sea between Denmark and Sweden, the largest offshore wind farm yet to be built in Denmark. It is to be fully operational before the end of 2012. The procedure for the selection of developers for the Anholt project reveals the extent of the government's new-found haste. Requests for proposals to build the project were issued in April and must be submitted by April 7, 2010. From that point the entire project must be online within less than three years. Geotechnical, environmental and shipping studies have already begun, with continuous publication of the results by Energinet.dk. In this way, bidders will have all the necessary information available before the April 7 deadline.
Energinet.dk is also providing the cable to shore for Anholt and the offshore transformer station. The industry is expecting higher fixed power prices for future projects than those agreed in the most recent government concessions for offshore wind - DKK 0.518/kWh (EUR 0.07/kWh) for Dong's Horns Rev II and DKK 0.629/kWh (EUR 0.084/kWh) for E.ON's Rodsand II, both fixed for 12 years.
In contrast to fellow offshore wind giant Britain, which delegates the nuts and bolts of projects to private companies early in the development process, the Danish government is increasing its oversight role. "In the new Anholt case the energy agency and Energinet.dk are doing a much bigger share of the preparation work than they had been doing earlier. For the first time they are running all of the analysis work needed to do the environment checks. Earlier, this was done by the entrepreneurs interested in putting up the turbines," says Hylleberg. Early indications are that the model results in speedier progress for projects, he says. "But it's still far too early to do the final evaluation."
In Sweden, Denmark's neighbour to the north-east, the country could build up to 1.8 GW of offshore wind capacity from projects already permitted or likely to be permitted if the right government support existed, says Rapp. This is nearly 40% of the energy forecast to be produced from wind power for 2020 and would meet about 4% of the country's electricity demand, he adds. By comparison, expected annual energy from Sweden's four existing offshore wind plant, plus the 30 MW Gasslingegrund plant planned for commissioning later this year, will total just under 500 GWh, or nearly 25% of Sweden's annual wind power output.
As it stands, Sweden suffers from too much of a good thing. SWE estimates potential onshore wind power capacity of at least 100 GW spread across a large land mass with no shortage of windy sites far from residents liable to oppose turbines in their backyards. With untapped generation supply far in excess of demand, there is greater rationale for building plant onshore, concedes Rapp. "That would be done at about half the cost of offshore," he says. "So I think the government is going to stand pretty firm on yes to wind, but no to offshore as long as we're just going to export the electricity at half the cost that it takes to build it."
Rapp adds, however, that the government is looking into how to get around the problem under the new EU renewables directive. By allowing other member countries to finance and build offshore wind farms on Swedish territory, the Swedish resource could be used for countries without such a good resource to meet their own clean energy targets.
An immediate hurdle is that from next year the only extra income available for wind power in Sweden beyond sale of the electricity is through sale of green certificates. The certificates are awarded for each megawatt hour of green electricity generated and electricity retailers must buy them to demonstrate they are supplying customers with a rising proportion of green power. Certificates currently trade at around EUR30/MWh. Until now, offshore wind farms have also received a CO2 tax rebate called an "environmental bonus," this year worth just over EUR10/MWh. But this is being phased out to comply with European legislation barring any one energy source from multiple forms of state aid. From January 1, it will disappear altogether. Hopes are high, however, that the Swedish government will announce stronger support measures at the European offshore wind conference in Stockholm, encouraging Vattenfall and others to proceed.
That does not mean the wind industry is seeking handouts. "We would like to see a system that is not a green certificate system offshore," says Rapp. "We are not in favour of, for example, two or three certificates for offshore - something similar to what has happened in the UK." An auction system would be preferable. "The lowest price can then win the beauty competition," he says. "We would like to keep downward pressure on offshore prices as well and we think it can be done in competitive bids."
Potential offshore wind developers in Sweden are moving several gigawatt of projects through the pipeline while they wait for a decent market framework. In January 2008, Vattenfall officially switched on Sweden's largest offshore wind farm, the 110 MW Lillgrund project seven kilometres off the coast of southern Sweden in the strait between it and Denmark. The Gasslingegrund wind station is under construction on lake Vanern in south-central Sweden with commissioning expected in September. All ten 3 MW turbines, supplied by Finnish turbine manufacturer WinWind, are in place. The 150 MW Skottarevet wind farm in the Kattegat waters, between south-west Sweden and Denmark, has fared less well. In March, a court barred developer Favonius from installing the planned 50 turbines, fearing their effect on the local cod population. Favonius appealed and Rapp expects a higher court to overrule the ban. A number of other projects are awaiting environmental impact statements or permits.
In terms of total installed wind power capacity, Norway ranks third behind its two Scandinavian neighbours, with 436 MW compared to 3.2 GW in Denmark and 1 GW in Sweden. Norway's only offshore capacity is the floating Hywind pilot wind turbine, moored about 12 kilometres off Karmoy, in south-eastern Norway. Its developers, Norwegian oil and gas company StatoilHydro and Siemens, which supplied the 2.3 MW turbine, bill it as the world's first large-scale floating turbine. Connection to the local electricity grid is expected in September.
Oyvind Isachsen of the Norwegian Wind Energy Association believes Hywind may one day prove a game-changing technology. "They are made for Japan and other areas where they don't have any shallow water - where you have depths of 150 metres," he says. Whatever technology is employed, with stronger policy support Isachsen believes Norway could generate up to 15-20 TWh a year from wind power by 2020 (requiring around 7 GW of capacity), with 90-95% coming from onshore plant and 5% from offshore. Like Sweden, Norway could also help EU neighbours meet 2020 renewables targets, he says, but it requires new cross-border grid connections to be built. "We should save Europe and get paid for it," he quips.
There are positive signals from government. It currently supports the offshore industry via twice-yearly invitations for proposals to build projects, with around half of a winning bidders' installation costs subsidised. A new wind law proposed in June seeks to establish a more solid framework for offshore wind that will also identify maritime areas suitable for development, pending environmental impact assessments. The proposed act also lays out regulations for applying for concessions, installation, operation and de-commissioning of offshore plant and electricity transmission.
Norwegian wind developer Vestavind Kraft, meanwhile, wants to build Norway's first large-scale offshore wind farm. In June, it bought the 350 MW Havsul I offshore wind project from fellow Norwegian developer Havgul. Planned off Sandoy municipality, in More and Romsdal county in western Norway, it follows Vestavind's 32.5% stake in the 400 MW Havsul II offshore project planned nearby - in which Havgul holds 50% and Tafjord Kraft 17.5% - as well as planned onshore projects. A permit for Havsul I from the Norwegian Water Resources and Energy Directorate was granted last year. Bird protection activists and citizens are appealing against the decision, opposing the project on visual grounds. But Havgul and Vestavind hope the region's high demand for electricity, partly to pump Norwegian gas to the UK, will sway the petroleum and energy ministry in Havsul I's favour when deciding on the appeal (Windpower Monthly, September 2009).
Like Norway, Finland is approaching offshore wind from a standing start. The government is currently targeting a total installed wind power capacity of just 2 GW by 2020, up from 144 MW today. Developer pipelines, however, indicate that as much as 5.9 GW of wind plant could be built offshore alone - project plans exist for around 4.6 GW, while a further 1.3 GW is still at the early feasibility assessment stage.
Under current policy, the government pays for about a third of construction costs. It is though studying a proposal for a guaranteed power purchase price of EUR83.5/MWh for wind. The difference between the market price of electricity and this target would be paid to wind power producers as a government mandated purchase price. The guarantee would be introduced in early 2010 and last 12 years. A decision on the pricing mechanism is expected at the end of the year and parliament will vote early next year, says Pekka Tervo of the ministry of employment and economy.
Anni Mikkonen of the Finnish Wind Power Association is cautiously optimistic. Many offshore wind projects, she says, have the advantage of backing by strong owners such as Suomen Merituuli, a 50% joint venture with regional power group Etela-Pohjanmaan Voima, energy company Pohjolan Voima's wind unit PVO-Innopower Oy and the Finnish arm of veteran German wind developer WPD. "What we are trying to achieve is some sort of higher support for offshore," she says. "We are in a waiting situation." The association is now co-operating with the government's working group to find the right solution.