As the comment period on proposed legislation transferring the responsibility for connecting offshore wind farms to the grid from the developers to the Swedish TSO runs out today, offshore wind build-out looks ready to take off in Sweden after years of waiting and watching.
If passed, the new legislation would enter into force in August this year. The aim of the law is to even out the competitive edge land-based wind has had over offshore wind in Sweden so far, kick-starting the build-out in a country that has all the right technical conditions but has so far lacked political will to support offshore wind.
Strong wind resources make offshore wind build-out attractive for Sweden
To coincide with the comment period ending, Aegir Insights also today publishes its market report about offshore wind in Sweden. The report concludes that Sweden has a winning combination of exceptional wind resources (up to 10 m/s) and shallow waters, both in close proximity to a seasoned, pre-existing European supply chain. This combination means that Sweden can by-pass the normal ramp-up phase of new offshore wind markets and quickly reach subsidy-free levels.
Furthermore, the most attractive sites lie in the southern part of Sweden, close to populous regions that currently suffer from an energy deficit and rely on imported electricity.
Offshore wind offers a straightforward solution to strengthen both energy security and the energy transition in line with government ambitions to get to net-zero-emissions by 2045. Nuclear plant closures in the near future will further drive the need for new, green electricity sources.
The new grid law and marine spatial plan can move many offshore wind projects forward
Long permitting processes and a lack of revenue support have stalled projects so far, with almost 21 GW currently in the development phase.
Historically, several projects have been delayed or cancelled due to municipalities exercising their veto rights during permitting. But an upcoming Marine Spatial Plan that outlines areas for offshore wind development is expected to ease the permitting process for projects in these areas.
Discussions about limiting the municipalities’ veto rights with regard to offshore wind projects are also ongoing, and if this comes to pass, Aegir Insights predicts that the permitting process for offshore wind farms in Sweden could be shortened to about five years going forward.
The second constraint has been the absence of subsidies to support a kickstart of the industry, and that the cost of grid connection has fallen on the offshore developer. This will be addressed by the new legislation, which if passed makes the Swedish TSO, Svenska Kraftnät, responsible for offshore grid connection for future offshore wind farms. This should allow offshore wind in several regions to be competitive at merchant prices, if developers can deploy at scale and timelines similar to its neighbors.
If the grid support legislation passes and permitting is eased, Aegir Insights expects that offshore wind development in Sweden will move ahead, with new offshore wind farms of 800-1000 MW contributing to the grid from around 2026.
Learn more about the outlook for offshore wind in Sweden and Aegir Insights’ research subscription service by reaching out to us.