Three Scandinavian nations have come to the offshore wind party.
The Danish government last week gave support to 6GW of offshore projects, while neighbouring Norway has opened tendering for schemes totalling 4.5GW in two zones.
But it is the activity in Sweden that has most captured our interest.
Spain's Iberdrola last week agreed to buy majority stakes in eight Swedish projects with combined capacity of 9GW that have been developed by Svea Vind Offshore. Six of the projects totalling 5.1GW are in a zone called Gavle and two of 3.9GW are in the Oxelosund region. The first, the 250MW Utposten 1, is set to be operational in 2029.
This week, we caught up with Svea Vind’s founder and chief executive Mattias Wärn fd Eriksson to find out more about the deal, as well as the appetite for offshore wind in the Nordics.
He tells us that Svea Vind has been talking to potential partners since 2019, but finalising the deal with Iberdrola in the last month has happened quickly.
Eriksson has worked in wind for 15 years and set up Svea Vind four years ago. This means that the company has strong experience in the Swedish market, but it needed a utility partner that could bring strong offshore engineering knowledge and financial strength.
Svea Vind started working with Ernst & Young to find a partner in 2019: “We went out last year, but there’s been a wide process until we came to this final part of the process. We’ve been in this finalising part just the last month."
As part of the deal, Svea Vind will continue working on the projects and Iberdrola has the option to buy majority stakes in them.
It is the latest tie-up offshore for Iberdrola, which has strengthened its offshore wind development pipeline in recent months with deals including a 3.3GW tie-up with Polish utility Enea and increasing its stake in the 496MW French scheme Saint Brieuc from 70% to 100%.
In onshore wind, Iberdrola is also on track to buy Australian renewables developer Infigen for A$856m ($589m) after its offer was accepted on Tuesday, and agreed a €100m deal in May to buy French developer Aalto Power.
Svea Vind is part of this diverse strategy. The transaction also shows support for the Swedish offshore wind industry, which is a country that hasn’t always been kind to developers.
Swedish utility Vattenfall and its partner Wallenstam axed their plan for the 300MW Taggen Vindpark in October after the military rejected it. But Eriksson is confident that Svea Vind’s projects won’t suffer a similar fate as it has had a strong focus on site risks during the project planning process.
Eriksson explains that offshore tendering in Sweden doesn’t leave developers at the mercy of an auction-based system.
“There’s a decentralised market, so no auctions or tendering. Each project applies for an environmental permit and takes that process on for the project… It’s up to the developer to estimate if the project has the features and conditions to be viable and legally granted,” he says.
This puts the onus on the developer to find an off-taker at a power price that ensures the scheme makes financial sense. Eriksson sees strong appetite for wind from large Scandinavian industrial players, including for 'green hydrogen' production, and data centre operators such as Microsoft.
“The Nordic region has markets that are known for renewables and for conditions that are good for optimising levelised cost of energy,” he says
He adds that he isn’t concerned about the current low power prices as that will need to be solved closer to commissioning. For Utposten 1, that is still nine years away: “We will have to see when we come to that stage,” he says.
The tie-up with Iberdrola shows the potential in Nordic offshore wind. He says Svea Vind could see the company expanding outside the region in due course, but for now its priority is showing that offshore wind in Sweden makes sense.
“We want to set an example in showing that we can protect the environment and also create jobs. We want to show a roadmap to a sustainable society. That’s what we are committed to do and we’re going to be focusing here in the coming years.”