Frost, Tyrsky and Laine. In it, the three offshore wind power projects developed by the Swedish company OX2, which would bring a total of more than 6,000 megawatts of electricity production that varies depending on the wind.
The amount corresponds to the nominal power of all onshore wind power installed so far, or equivalently almost four triple units of the Olkiluoto nuclear power plant.
In Åland, OX2 still has a total of 10,000 megawatts more offshore wind projects under development. It means that this company alone has roughly the same amount of offshore wind power in progress as Finland’s entire current electricity production capacity. When all other plans are included, there can be even more offshore wind power.
Only OX2’s projects are about an investment wave of 40 billion over the next ten years. Thousands of jobs would be created.
But there are many question marks along the way. Not the least of which is who would use all this electricity.
A big question is also the conditions under which companies are allowed to use shared sea areas and what will be left for society.
To Finland in practice, two offshore wind power markets have emerged. Metsähallitus manages Finland’s territorial waters and rents project areas from there through auction. Municipalities receive property tax from offshore wind farms coming to regional waters, according to Metsähallitus’ estimate, up to 70,000 euros from one farm.
One project area could therefore generate several million euros in tax revenue for the municipality. In addition, the companies pay rent to the state for the area, and VAT is collected on the electricity sold.
The first auction for the Korsnäs area was won by Vattenfall last December. The company plans to build 1,300 megawatts of wind power in the area. Tenders for the following 3,000 megawatt areas are being prepared in front of Raahe and Pyhäjoki. The projects for regional waters could be completed in the early 2030s.
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A direct race to the economic zone has started.
OX2 however, does not plan its power plants for regional waters, but for the outer Finnish economic zone. The borders of the economic zone are based on international agreements. There, the rules of the game for wind power construction are completely open: there is no information on taxation, nor on what basis construction areas are allocated to companies.
A direct race to the economic zone has started. In addition to OX2, other foreign companies are aiming for the same areas. The companies hope that in the economic zone at least the taxation would be lighter and there would be no need for zoning, so getting permits could be easier.
For now OX2 and other companies have applied for and received research permits for the economic zone. They are granted by the general session of the Government. The development of offshore wind power is slow work, and tens of millions of euros are spent before any foundations or power plants are built.
OX2 has already spent four years on the research work of the Halla and Laine projects planned for Perämere. The environmental impact assessment (EIA) has required, among other things, an investigation of the birds in the area. The bottom of the sea also had to be studied, as well as ice conditions. Now the reports related to the yva are mainly completed.
“The aim would be to have the EIA process carried out by the end of next summer”, the manager responsible for the development of Finnish offshore wind projects Janne Lamberg tells.
But according to Lamberg, the rules of the economic zone should be clarified as soon as possible. Now several companies have been able to develop projects on top of each other.
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In Sweden, utilization rights have already been granted in the summer.
“Our should get a decision on the right to use the area”, says Lamberg.
Before that, for example, it is impossible to hold binding negotiations on the financing of the project.
The exploitation right would reserve the area for the use of a certain company for a period of five years. OX2 has already applied for such a thing, but the problem is that Finnish law so far does not recognize such a seizure of the economic zone. That is why the law is now being reformed.
Building far out to sea is facilitated by the fact that the power plants do not disturb coastal residents or cottagers, unlike mills rising in territorial waters. No zoning is needed, nor a traditional building permit. The permission to use the area is granted, if granted, by the Finnish government – a bit like nuclear power.
According to Lamberg, the utilization permits would be urgent, because the tens of billions of euros in hydrogen investments that Finland is looking for and other investments related to the green transition largely depend on Finland having enough renewable electricity production. Offshore wind power is also needed for that.
“In Sweden, utilization rights have already been granted in the summer, and new decisions will probably be made soon,” says Lamberg.
Finland point of view, on the other hand, it is not necessarily wise to give all water area leases to foreign actors just because they happened to be the first to move. These issues are now being considered in the Ministry of Labor and the Economy (tem), which is leading the legal reform regarding the economic zone.
Tem’s leading expert Outi Vilénin according to the central issues of the reform is precisely how to divide the areas if companies have overlapping efforts. When distributing rights, EU state aid regulation must also be taken into account, which may mean charging a market-based price
“Taxation issues also need to be resolved. For example, the economic zone does not have a real estate system on which the real estate tax could be based,” says Vilén.
The law reforms should be considered by the parliament in a year’s time.
Lamberg hopes that the Finnish government would also make decisions on exploitation rights before then. He does not consider property tax to be a problem, but it should be lower offshore than near the coast.
“However, we are 30 kilometers from the coast, which increases costs,” he says.
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“Now it would be important to get the conditions right for the construction of offshore wind power.”
But what the hell does this much electricity need? There has been talk of hydrogen projects, but there have been no actual investment decisions on larger projects.
Lamberg thinks that companies planning hydrogen investments need a clear signal that Finland is an attractive environment for offshore wind power and that a significant amount of it is wanted here. Green transition investments are located where there is enough cheap renewable electricity available.
According to him, the company has held discussions with many hydrogen operators.
“Now it would be important to get the conditions right for the construction of offshore wind power. Even hydrogen operators can’t make decisions until they are sure that there will certainly be enough renewable electricity production,” he says.
Second the challenge comes from the power grid. Connecting power plants of this scale to the electricity grid would require huge investments in the grid, if it were even possible at all. Even the current amount of onshore wind power occasionally causes challenges for e.g. maintaining the frequency of the electricity grid.
According to Lamberg, offshore wind farms will probably also be connected directly to hydrogen production and other facilities in time, meaning that not all electricity would even be brought to the grid.
“Now the Electricity Market Act does not recognize this. Hopefully the legislation will be developed so that the offshore wind farm could also be connected directly to the hydrogen plant or other production facilities.”
On the other hand, the government program outlines that wind power builders will be obliged in one way or another to participate in the acquisition of control power. That also creates uncertainty for wind power builders.
Although the laws would be fixed quickly, power plants will not go to sea very quickly. So far, the construction of offshore wind power is still many times more expensive than wind power plants built on land.
Builders are waiting for new, even larger power plants, up to 15-25 megawatts in size, which power plant manufacturers are now developing. They would reduce the unit cost of construction.
The first new offshore wind turbines will generate electricity in Pori’s Tahkoluoto in about five years. Giant projects in the economic zone will only start to be completed sometime in the 2030s.
“In a little over ten years, offshore wind power should already be the largest form of energy production in Finland,” says Janne Lamberg.
Read more: A revolution is dawning high in the heavens, which can create 200,000 new jobs in Finland
Correction 21.10. 2:04 p.m.: OX2 does not have an offshore wind power project called Myrsky, as was wrongly mentioned in the story. They are called Halla, Tyrsky and Laine.
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