Finland’s long-anticipated offshore wind build-out may finally be emerging out of deep freeze, with Helsinki promising hard 2035 targets and a first 6GW of auctions underway. But it might still be far from plain sailing for the fast-evolving play

By Maria Holm Bohsen

The stars appear to be finally aligning for Finland’s long-awaited big build-out of offshore wind power. The country’s recently elected government has promised to soon announce a hard target for plant construction by 2035 as part of its carbon-neutrality strategy, and a first 6GW is cued-up for new auctions to begin harnessing one of the richest resources in Europe – which currently has only one small operational wind farm at sea, the 42MW Tahkoluoto (pictured (foto: Hyötytuuli)). 

Despite its slow start, Finland has all the makings of a thriving international offshore wind play – a technical potential of over 310GW streaming around the Bay of Bothnia, Bothnian Sea and the Gulf of Finland at a brisk nine meters per second (m/s), along with a fully-developed coastal industrial sector and modern grid infrastructure, for a start.  

But what separates it from some other emerging offshore wind markets are bullish forecasts of explosive growth in power demand in Finland between 50-300% by 2045, throwing up a clear route to market for the tens of gigawatts of renewables production ahead, as both clean power and – electrolyzed – green hydrogen.  

'Much of the offshore wind ambition in Helsinki is being fueled by the country's vision of itself as future green hydrogen market leader.'

Maria Holm Bohsen
Head of Research
Aegir Insights

The political volition in Finland to capitalize on its offshore wind wealth has been crystalizing around a regulatory framework that is bifocal: territorial waters managed by the state-owned Metsähallitus – where auctions are planned this year and next – and an economic exclusive zone that uses an ‘open door’ model that is not tied to government planned auctions. 

In a lead-off auction last year, Vattenfall won the rights to develop the 1.3GW Korsnäs project and in June 2023, Skyborn signed a reservation agreement for the 2GW Pooki, nearby in the Bay of Bothnia.

Much of the offshore wind ambition in Helsinki is being fueled by the country’s vision of itself as future green hydrogen market leader. Finland aims to generate at least 10% of the EU’s total output by 2030, with an eye on pulling in €16-34bn ($18-38bn) a year in revenue into the Finnish economy and creating some 60,000 new jobs.  

Finnish TSO Fingrid’s latest strategy plan outlines four different scenarios marrying offshore wind power to hydrogen and Power-to-X, with most ambitious envisioning 32GW of sea-based turbines turning by 2045 at a levelized cost of energy (LCOE) of between €55-65/MWh for bottom-fixed projects to €68-73/MWh for floating projects. And at that level of LCOE, Finland’s robust corporate power purchase agreement (PPA) ecosystem is expected to also provide a key route-to-market for Finnish sea-winds.  

There are three key zones being scoped for offshore wind development. In the far northern Bay of Bothnia, near the port city of Oulu, where waters are shallow enough for fixed turbines but which faces challenges linked to military air space and winter sea ice; farther south in the Bothnia Sea, near Pori, where the world’s first-ever floating wind turbine hull was fabricated in 2008, and water depths would accommodate fixed and floating projects; and in the south in the Gulf of Finland, near Helsinki, which sees the country’s highest offshore wind speeds, of 9.5m/s, and a range of water depths but is heavily constrained due to defense and shipping sector demands.  

There are a number of market crosswinds that could buffet Finland as it makes its way out of harbor for offshore wind build-out. Topmost, is that there is no subsidy scheme for projects so all development will need to take place on ‘merchant’ basis, starting with leasings now in motion for Finnish seabeds in 2023-24. 

There is also the matter of ‘property tax’, which in Finland is applied to power plants bigger than 10MW. For utility-scale offshore wind farms this could be a substantial expense, with a 1GW project having to pay around €5m in its first of operation alone. The former government had tabled changes to legislation to trim property tax on offshore wind, but the new administration has yet to confirm it will sign off on the plan. 

For a world-class play that to this point has been dominated by local Nordic developers including Vattenfall, OX2, Ilmatar and Eolus, the coming auctions could work as an ‘invisible hand’ to radically reshape the future for Finnish offshore wind as international wind majors join the merchant market fray – and, at the same time, supercharge Finland’s green hydrogen dreams. 

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