THE VIEW | Northern lights: could Nordic offshore wind plays brighten Europe’s market outlook?  

December 1, 2023
4 min read
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Strong winds blow across the waters off Denmark, Finland, Norway and Sweden, but together these four nations have just over 2.5GW of offshore wind in operation. How each navigates development ambitions in the next couple of years will be key to northern Europe’s build-out, writes Maria Holm Bohsen. 

Nordic nations Denmark, Finland, Sweden and Norway are all blessed with high-velocity offshore wind especially in the North Sea where average speeds top 10 meters per second. A cost comparison across the four markets clearly shows the attractiveness of the Danish sites, where strong winds, shallow waters and shorter distances to shore will translate into lower cost levels overall.  

However, potential does not equal power production and other important factors in the mix in these markets are set to unevenly impact their governments’ hopes in harnessing this clean energy resource. 

Denmark, with 2.3GW of operational​ offshore wind projects, is the most mature of the Nordic plays, with Copenhagen’s sights trained on having 13GW online by the end of the decade and 35GW by 2050. The government shut its ‘open-door’ scheme this year, and all future sites will be allocated via auctions remodeled to phase-out subsidies and introduce 20% state-ownership, as part of a framework that underscores “financial contribution” to Danish society. 

Finland, which has less than 400MW turning today, has the objective of having 1GW installed by 2030. State-owned Metsähallitus is set to hold auctions for acreage in territorial waters, with tenders for two projects totaling 3GW expected to kick off imminently and further awards planned, along with a range of open-door opportunities in its exclusive economic zone ahead. 

Maria Holm Bohsen Headshot round

'Overarching the Nordic’s large pipeline of prospects is a potentially unprecedented new market dynamic where governments may need to lure developers to build in their waters more than developers need to win over governments'

Maria Holm Bohsen
Head of Research
Aegir Insights

Sweden’s almost 200MW of operating offshore wind could soon be added to, though its open-door model and regulatory framework is a patchwork of legislation that is not specific to wind at sea and could prove a stumbling block. Still, over 60 projects have been announced by developers for its waters, with a first three having gained site exclusivity via government permits.  

Norway brought online the world’s largest floating wind array this year, the 95MW Hywind Tampen. However, its first two 1.5GW auctions, one for bottom-fixed projects in the southern North Sea and another in the deeps off its western coastline, have been postponed several times due to pending approvals hinging on European state-aid rules. Oslo has a target of having 30GW of offshore wind allocated for development by 2040, which will hinge on floating arrays.  

Floating wind remains something of a wild-card, with the sector slow-down in the past year due to challenges with viable routes to market and supply chain. This could delay development in Norway’s deep waters and will likely set up extra hurdles for the almost 20 prospect floating projects in Sweden, which makes up 40% of the pipeline announced by developers.  

The Nordic markets – like the rest of Europe – will nail their colors to the mast on offshore wind in 2024-25 with the launch of 20-35GW of auctions. This could translate to more than 35GW of offshore wind plant coming online by 2035, according to our calculations, which would provide future visibility needed for development of the wider regional supply chain needed to build the gigawatts ahead could be spurred. 

Overarching the Nordic’s large pipeline of prospects is a potentially unprecedented new market dynamic where governments may need to lure developers to build in their waters more than developers need to win over governments, as has been the case in the past.​ Site attractiveness, subsidy opportunities and regulatory frameworks could matter more than ever across the region’s – and the rest of Europe’s – various offshore plays in the very busy auction years ahead of us. The next two years could be determinant.  

Keep up to date on the many offshore wind auctions coming around the world – what the volumes will be and when the auctions are starting. Aegir Insights releases a monthly auction intelligence package for subscribers, including an updated auction database and timeline. Reach out to us to learn more about our auction intelligence offerings.

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

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CVR no.: 39104792

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