There are numerous wind power companies that want to build wind turbines in the sea along the Swedish coast. But the companies have started to grumble. The recent years' soaring inflation and high interest rates have made many projects more expensive. And the slow permit processes have irritated them for a long time.
Sweden stands out compared to many other countries that have come much further. Denmark, Germany, the Netherlands, and the UK have built significantly more offshore wind farms. They have other, more organized rules with government involvement and risk-sharing compared to Sweden, which lacks a cohesive regulatory system.
Want the same rules
The European system with risk-sharing is what the German energy company RWE would like to see in Sweden as well. Otherwise, maybe there won't be any construction. That the power producers want to get paid or share the risk with the state is not surprising, but now they have started acting accordingly.
Swedish Vattenfall had everything ready, with one of the few government permits, to build a larger park on Kriegers Flak, three miles south of Trelleborg.
But last week, the management decided to put a stop to it, or at least pause the project. Vattenfall needs a government funding to build the cables out to sea, otherwise, it's not profitable.
RWE reasons similarly, but Matilda Machacek, Nordic chief for offshore wind at the German company, wants to see the same support system as other countries have.
"Will be needed"
With the current demand for offshore wind in the rest of the world and with the cost increases in the supply chain, it will be needed a support system. There, we see CFD (a risk-sharing system) as the best system, she says in an interview with TT.
The risk-sharing system is reminiscent of what the nuclear power industry would get according to the investigation proposal that has been presented, where the state guarantees a certain minimum electricity price.
So even if RWE gets a government permit tomorrow to start building Södra Victoria (the project that has come the furthest), south of Öland, it's not certain that it will happen.
"Will be necessary"
Then we would sit down and plan for an investment decision. How we get there, I can't comment on today. But as it looks now, it seems that CFD will be and will be necessary, says Matilda Machacek.
So no support, no construction?
I can't answer that today, because we haven't come that far in those parts.
There are a total of 100 gigawatts (GW) of offshore wind power under development, plus an additional 42 GW in the early stages. For comparison, a normal-sized nuclear reactor provides around 1 GW in effect.
• Permitted, a total of 2 GW. (Kriegers Flak, Kattegat South, and Galene).
• Under permit review, a total of 52 GW.
• Consultation, a total of 46 GW
Source: Swedish Wind Energy
The government appointed an investigation in early 2024 to review how risk-sharing can be done when new fossil-free electricity production is built, a system that would be based on EU rules.
The investigator shall, among other things:
propose how the financial electricity market, long-term energy purchase agreements, capacity mechanisms, and support service markets can be developed.
investigate what role marginal contracts can play in a future electricity market based on the conditions given in the European electricity market regulation.
The assignment shall be presented no later than April 2025.
In parallel, an investigation is ongoing to review whether Sweden should introduce an auction system, like many other countries, for the allocation of offshore wind projects. It shall be presented no later than November 30, 2024.
Source: The Government
