SPOTLIGHT | Baltic energy independence vision changes amber light to green for offshore wind

August 4, 2023
5 min read
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The rich winds blowing off the coasts of the Baltic states of Lithuania, Latvia and Estonia is being shaped for a key role in flowing tens of gigawatts of power to shore as the three nations transition away from fossil fuels – and reliance on Russian gas, writes Maria Holm Bohsen

By Maria Holm Bohsen

The Baltic states have long known in the marrow what Europe only fully faced up to in the weeks after Russia launched first missiles into Ukraine in February 2022: the worldwide transition from fossil fuels to renewables is an unprecedented opportunity for nations to rapidly achieve energy independence as well as contributing to the climate-saving shift to clean energy systems now underway.

Progress toward this goal has been differently approached by the parliaments in Vilnius, Riga and Tallinn in the last decade, with each government having set renewables targets for 2030 and 2050, but with the Lithuanian and Latvian energy mixes now dominated by renewables, 70% and 60%, respectively, while Estonia is still relying on coal for 60% of its power generation.

By August of last year, as the geopolitical crisis deepened in Europe, it became clear long-evolving ambitions in the Baltic states to develop first offshore wind farms would be a key next step, with the three countries joining Denmark, Finland, Germany, Poland and Sweden signing the Marienborg declaration, committing the signatories to having almost 20GW of sea-based plant in operational by the end of the decade. 

Maria Holm Bohsen Headshot round

'Energy security and independence have become top priorities for the Baltic countries. Along with renewable energy targets these are key drivers for the build-out of green energy in the Baltic states.'

Maria Holm Bohsen
Head of Research
Aegir Insights

For Lithuania, Latvia and Estonia, whose territorial waters are home to heavy winds gusting through at a rich 9-9.5 meters per second, the prize in sight would not only accelerate their energy transition strategies but also underpin economic development that will come with coastal supply chain construction. The zones being cordoned off for offshore wind total some 22GW, according to the marine spatial plans published, 60% of which is waters shallow enough for fixed turbines and the balance needing floating arrays.

Strong economics

The economics are strong wherever you look in the Baltic. Levelized cost of energy (LCoE) for conventional offshore wind farm reference cases ranges from €46-66/MWh ($50-72/MWh) in the province, with low-end LCoEs found in Latvia and Lithuania on projects with short distances to grid connections, and the highest in Estonia for developments west of the island of Saaremaa, where a small onshore wind farm is now under construction.

Estonia’s offshore wind play, based on technical potential of 144GW, is the most advanced of the three with more than 40 announced projects to-date, five of which have been granted exclusivity to proceed with the licensing process. And the country – which uses and ‘open-door’ based around developer-led site selection – has slated two auctions later this year for the Liivi 1 and 2 zones in the Gulf of Riga where there is potential for some 3.7GW of plant to be built.

Saarde wind project components arrive at Paldiski port
LEADING EDGE: Wind turbine blades for the Saarde project arrive at Estonia's Paldiski port (Foto: Utilitas Wind)

Though possessed of a relatively little maritime acreage, Lithuania, with a technical potential of only 27GW, has still scoped out four commercial-scale project areas for development, in line with a target of 1.4GW turning by 2030 – and may be the first Baltic state with an operational offshore wind farm. Awards for 700MW of capacity in its first auction, in March, went ‘provisionally’ to Engie-EDPR tie-up Ocean Winds and Lithuanian state utility Ignitis. A follow-on tender is being held in September for another 700MW. If both zones are fully developed, offshore wind would cover half of national electricity demand.

Latvian lag

Latvia, despite having a technical wind potential of 113GW, continues to lag behind the other two Baltic states in terms of project plans and regulatory framework for offshore wind development, with the 1GW Elwind, a joint Latvian-Estonian state-run development with maritime cross-border connections, is the only ongoing development.

Scouting these markets are a spectrum of international and domestic Baltic players, including Orsted, TotalEnergies, RWE, and Aker Offshore Wind, as well as Eesti Energia, Ignitis and Latvenergo, among over 20 developers which have publicly express interest.

Overview of the most attractive areas in the Baltic states for offshore wind development based on site conditions and proximity to port and demand centers
BALTIC BONANZA: Overview of the most attractive areas for offshore wind development based on site conditions and proximity to port and demand centers (Image: Aegir Insights)

Completion of the synchronization of the Baltic power grids with continental Europe’s electricity network – underway since 2018 and having led to Lithuania, Latvia and Estonia now being linked by high voltage direct current (HVDC) lines to Finland, Sweden and Poland –  will allow the states to entirely disconnect from the Russian gas pipeline system, increasing regionally energy security and boosting demand for new green electricity production, including from offshore wind.

Plans for the Harmony Link HVDC interconnector between Lithuania and Poland and the Baltic WindConnector between Estonia and Germany will galvanize offshore wind in its growing role in fueling the energy transition in the Baltic states.

Aegir Insights has recently published a new subscriber-only playbook on the Baltic states, covering in detail developments and market opportunities in offshore wind in Lithuania, Latvia and Estonia. Reach out to us to learn more about our offshore wind market intelligence offerings and to access our full suite of reports.

This article was first published in Aegir Insights' offshore energy intelligence newsletter, Beaufort.

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