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CEE recognises the benefits of offshore wind projects

Despite the outbreak of the coronavirus pandemic, which in a way moved the focus from climate change to the economic and health crisis, before assuming the presidency in the Council of the European Union, Germany had already included offshore wind as one the main priorities on its energy agenda, the other one being hydrogen.

After a few months, the European Commission’s long-awaited EU Offshore Renewable Strategy came out, suggesting an almost thirty-fold increase in the capacity of offshore energy in maritime waters.

Europe’s offshore wind industry has an important first-mover advantage and a very strong home market, as over 40 per cent of the world’s existing offshore wind capacity is in EU waters and more than 90 per cent of offshore wind capacity in Europe has been produced by EU companies. However, according to the Commission’s estimates, an investment of almost 800 billion euros is required to scale up offshore capacities to 300 gigawatts (GW) by 2050.

“Many countries, in particular those in Central Europe, are already phasing out coal or they will in the future and the offshore energy will give us what we need” observed Commissioner for Energy Kadri Simson in her opening speech at the 5th Central European Day (CEDE), organised by international NGO Central Europe Energy Partners (CEEP).

According to Mrs Simson, offshore wind will also be one of the key instruments driving the economic recovery as it already employs 62,000 with potential for much more.

Different countries from Central and Eastern Europe have recognised the benefits that come from the expansion of offshore wind projects. In August, the Polish Electricity Association (PKEE) urged to make offshore wind farms one of the pillars of the transition to a low-emission energy system. Indeed, Poland is by far the leading country in the region in terms of installed onshore wind capacity. And, according to the PKEE, offshore wind potential in the country is estimated at more than 10 GW by 2040 and may significantly contribute to reaching renewable energy targets.

At the beginning of June, power utility company Enea announced its interest in offshore wind farms in the Baltic Sea with a possible total capacity of up to 3.3 GW. Furthermore, Poland’s largest power producing company PGE Capital Group is engaged in the development of offshore wind farms, up to 2.5 GW of installed capacity in the Baltic Sea by the end of 2030. Energy holding company Tauron is exploring the possibilities of offshore investments under the Tauron Green Turn update of strategic directions. Also, Energa is following this path through the envisaged participation in the construction of 1.2 GW in offshore wind farms, carried out by its shareholder PKN Orlen.

“We expect 5.9 GW of offshore wind by 2030, but we hope to see the first parks earlier,” commented Poland’s Undersecretary of State Adam Guibourgé-Czetwertyński during CEDE.

In the Baltic region, eight Energy Ministers (from Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland and Sweden) signed a declaration with Mrs Simson committing themselves to closer cooperation on offshore wind in the Baltic Sea. In fact, in the Baltic Sea alone, the potential for offshore wind power will be substantial, reaching up to 93 GW. This potential can be achieved, most efficiently, through a cooperative, regional approach.

The two Baltic countries of Latvia and Estonia had already signed a Memorandum of Understanding which aims to create a high capacity offshore wind park by 2030, which is up to 20 per cent of the power consumption of the two countries.

Also, Lithuania’s draft Government Resolution envisages that the installed capacity of the wind farm would reach 700 MW. A wind farm of this capacity in the Baltic Sea would meet 25 per cent of the country’s current electricity demand and an auction could take place in 2023.

“We have five developments in Lithuania,” pointed out the Minister of Energy Žygimantas Vaičiūnas, speaking at CEDE. “We have laws, a support mechanism, the connectivity to the grid and the onshore, we are carrying out the environmental assessment and also the infrastructure, including the ports, is prepared for this capacity.”

And while everybody is busy looking at the Baltic Sea, the Centre for European Policy Studies (CEPS) noted that slowly stakeholders are discovering also the potential of the Black Sea, whose offshore wind is a major economic opportunity for EU and non-EU countries in the region to unlock large volumes of low-carbon electricity and deliver on the commitments of the European Green Deal. The World Bank estimated in its recent study that the technical offshore wind potential for Bulgaria and Romania alone to be more than 100 GW, which amounts only to a fraction of that of the North Sea, however, it equals about five times Romania’s installed electricity generation capacity, while in Ukraine it is two and half times that of Bulgaria and Romania combined.

However, Mrs Simson also pointed out that it is important to redirect investments to the grid and work more on international and regional cooperation. Also, Giles Dickson, CEO of WindEurope underlined a less positive aspect of offshore wind, which is very capital intensive.

“It is crucial to reduce the costs of financing for offshore wind because we loan money for this, therefore, it is crucial to create action schemes that put in place revenues stabilisation mechanism so that banks can lend money at low rates of interest,” he stressed.

Additionally, as also underlined by Mrs Simson, offshore wind can be a viable option to substitute increasingly uneconomic coal, without increasing dependence on imported Russian gas, including for landlocked countries such as Hungary, Serbia, Moldova and Northern Macedonia, or neighbouring Greece.

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