Cross-border additions needed for Baltic offshore wind

Author: Tasmin Chowdhary

2019/11/01

TALLINN (ICIS)--Baltic states must add renewables capacity if they are to desynchronise from the Russian-Belarussian power grid, but a lack of interconnection capacity to higher-priced markets is restraining offshore wind investments, according to participants at an energy conference in Tallinn.

“We have so much uncertainty in the future it’s extremely difficult to see that investors [will] come if you are not getting the full guarantee of the cash flow,” Hando Sutter, CEO of Estonian state-owned energy company Eesti Energia told ICIS.

Baltic grid operators are planning to halt power trade flows with Russia and Belarus by 2025 as part of synchronisation with the continental European grid.

SUBSIDIES

Despite cost reductions in developing offshore wind projects, conference attendees were sceptical that a government-led tender in the region would attract zero-subsidy bids as in the Netherlands and Denmark.

Governments would need to follow the Danish model of conducting environmental studies in addition to covering the grid connection costs for future projects, sources told ICIS.

One source from a renewable energy investor agreed that the region lacked connection to other higher-priced markets, which would prevent developers from hedging their production portfolio.

Currently, the Baltics have cross-border connections with Sweden, Finland, Poland, Belarus and Russia.

POTENTIAL

While no official tender plans have emerged, Lithuania took the first step earlier this year with a government-commissioned study that suggested up to 3.35GW of capacity could be built on Lithuanian territory.

Estonia has a target to construct at least one offshore wind farm by 2030 but plans for three additional projects would be sent to the Estonian energy ministry in coming weeks, Anu Eslas from the Estonian Wind Energy Association told ICIS.

Environmental studies have been conducted for the first one, but the other three are still at the early planning stages, she said.

Earlier in the year, security concerns led the ministry of justice to withdraw a permit for developing the 600MW Saaremaa offshore wind farm in Estonia.