Wind

OX2 CEO: lack of costly offshore wind seabed auctions in Sweden and Finland 'very beneficial'

Nordic developer expects decision on further final central government permits for more gigascale Baltic Sea projects in Nordic countries this year and next, Paul Stormoen tells Recharge

OX2 CEO Paul Stormoen.
OX2 CEO Paul Stormoen.Foto: OX2

The absence of “costly auctions” for seabed leases in Sweden and Finland is “very beneficial” for developers, OX2 CEO Paul Stormoen said as the Nordic developer is hopeful to win further final permits for offshore wind projects in both Nordic countries this year or next.

Stormoen spoke to Recharge after OX2 and its partner – the investment arm of Ikea owner Ingka group – had obtained a Natura 2000 environmental permit for its 1.5GW Triton offshore wind project off southern Sweden. That was the last key prerequisite to obtain one of the much-coveted final approvals for the project by the central government in Stockholm, which Stormoen reckoned could come at the end of this year or in 2024.
The company in May had already received a final government green light for its 400MW Galene project and is “preparing for a construction start no later than 2026” at the site in the Kattegat Strait that links the North and Baltic Seas.

Unlike most other countries, the Swedish central government does not hold seabed lease auctions or tenders for support in offshore wind. It instead allocates acreage at sea according to a kind of first-come-first-serve principle, once developers have passed environmental zoning and received a recommendation at a regional level, as well as the Natura 2000 permit.

Before handing out a final permit, the government is also consulting with other marine interest holders, such as fishery, shipping, or the military, which in the past has blocked offshore wind projects. After a final government permit, developers still have to apply for a grid connection, but that is usually granted.

Finland operates a similar system for all projects in its exclusive economic zone, Stormoen said.

The Swedish permitting and allocation system for offshore wind projects has been very slow, holding up dozens of gigawatts of projects in a second wave of offshore wind development, and the country’s wind industry has repeatedly asked the government for more speed.
But the system has also avoided the kind of excesses recently seen in other markets. Oil and gas giants Bp and Totalenergies as part of a so-called ‘dynamic bidding process’ recently have pledged to pay the German state €12.6bn ($13.7bn) for the right to develop a combined 7GW of new offshore wind farms – money the industry laments will either put further pressure on the supply chain or make drive power prices up, or both.

“The discrepancy between costs and income from offshore [is] a delicate issue that a lot of developers need to handle now, and governments need to acknowledge this if they want … a stable energy transition and new industrialisation,” Stormoen said.

“I think systems like you have in Sweden and Finland are very beneficial, where you don't have these very costly [seabed leasing] auctions that you see in other countries.”

OX2 and Ingka Investments want to spearhead offshore in Sweden, and “demonstrate that commercially viable projects can be built without subsidies, in partnership with Swedish industry,” he added.

After Galene and Triton, OX2 and Ingka’s Aurora would be next in line for a final government permit. The developer is expecting to have fulfilled all prerequisites for a final application for the 5.5GW project between the Swedish Baltic Sea islands of Gotland and Öland by the end of this year.

That would be followed by applications next year for the 2 to 3GW Neptunus (off southern Sweden) and the 3.9GW Pleione (east of Gotland) projects, which so far are not included in the partnership with Ingka.

The developer in the spring has also closed a partnership with the investment arm of the Ikea owner on 6GW of Finnish offshore wind capacity.

OX2 for the three Finnish projects has already secured an exploration permit and is currently working on environmental impact studies.

“The three projects will be ready for a [central government permitting] decision in 2024,” Stormoen revealed.

Offshore wind expansion across Baltic Sea, the US, and Australia?
Finland, like Sweden, is hurrying to build significant volumes of new electricity-generating capacity. Both countries are weaning themselves off Russian energy imports after that country invaded Ukraine, and both will require much more power to electrify transport, industry, and heating.

“You don't have that many alternatives if you want significant volumes to come online at the end of the 2020s and the beginning of 2030s,” the CEO said.

“Then you need to actively manage your offshore wind ambition as a country. There aren't that many alternatives,” Stormoen said, pointing to the recent “lengthy and costly process” of building a new nuclear reactor at Olkiluoto in Finland.

Construction of the 1.6GW plant had started in 2005, but commercial operation only began earlier this year – 14 years later than originally envisaged and reportedly at a cost of some €11bn, or three times the amount originally planned. New nuclear power stations in France and the UK have faced similar delays and cost explosions.

OX2 could imagine venturing into other offshore wind markets, particularly those surrounding the Baltic Sea of Kattegat, Stormoen said.

“Of course, it's natural for us to explore offshore opportunities in other markets, both where we’re active already in onshore [wind] and PV. But also in other markets,” he said, adding that Australia and North America also have potential.

“I think that's enough to keep us busy for the coming decade.”

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Published 24 August 2023, 07:10Updated 24 August 2023, 09:32
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