Scandinavian Offshore Wind Nixed Due to Russian Threat

Scandinavian Offshore Wind Nixed Due to Russian Threat

While the EU has seen a remarkable increase in offshore wind, a Swedish project in the Baltic Sea has been cancelled due to a growing threat from Russia.

What would have been a gigantic two-nuclear-plant-sized (2 GW) offshore wind farm in the Baltic Sea; Blekinge Offshore AB was denied its permit in December due to recent heightened tensions in the region.

Blekinge would have been sited 5 kilometers southeast of Sweden’s island of Hanö. It had been eight years in the development process, and would have supplied 5 percent of Sweden’s electricity; 8,000 GWh of electricity annually.

Initially it was to have been a 700-turbine project, but was eventually scaled down to 350 turbines to accommodate the military needs of the region.

Even scaled back to half size; at 2,000 MW Blekinge Offshore AB would have been a massive step up. Baltic Sea projects have been 50 MW and under, with only five in recent years that are over 100 MW.

Military Threat in the Baltic

The Swedish government decided in December 2016 that this area of sea near Hanö island now must be reserved for military exercises, given a growing threat from Russia, which has stationed nuclear warships off the coast of Kalingrad; just two hundred miles across the Baltic from Hanö.

“Parliament has made it clear that Sweden’s ambitions are to improve its defense,” Sweden’s Environment Minister Carolina Forest said in a statement. “Hanöbukten is one of the strategically most important defense areas Sweden has. The government has considered this issue carefully and concluded that in this case it is not possible to combine the defense business with wind turbines.”

Russia has flown jet fighters through Swedish airspace during training exercises in the Baltic, and Russian submarines have entered Swedish waters, according to the International Business Times.

In October, Finland was forced to scramble its jets twice in one day toward Russian airspace violations.

Finland has been independent from Russia for a century. But a propaganda campaign driven by the Kremlin, designed to create uncertainty about the legitimacy of its independence, is an increasing threat, according to Finnish Director of Communications Markku Juhani Mantila.

Neither Sweden nor Finland are NATO members, but both were considering joining by 2016, according to reports.

Will the Grid Become the New Gas?

This tension arises at a time when Europe is expanding offshore wind in the Baltic region. But new clean energy generation is not the only issue. The grid in the Baltic is under attack, literally.

Russia is trying to retain grid control of three EU member states that are connected primarily to the Russian grid, though aligned politically with the EU.

When HVDC cable was laid under the Baltic Sea connecting Latvia, Lithuania and Estonia to Sweden through Lithuania, Russian warships repeatedly disrupted the underwater cable-laying.

Europe was shaken when Russia used its control of natural gas deliveries through Ukraine to effectively hold more than a dozen European countries as energy hostages during the cold winter of 2009.

So the expansion of Baltic renewable electricity options, for both new generation and a new grid is seen as a path to energy independence at a time when the Lithuanian government has put out a 75-page guide on how to survive a Russian invasion,

“The fear of the Russian factor will be eliminated just as the fear of the Russian gas factor was eliminated with the start of the LNG terminal,” Lithuania’s Energy Minister Rokas Masiulis told Bloomberg.

Another Gigawatt is Headed to the Baltic

Offshore wind farms have been built in the Baltic Sea over the decades, gradually increasing in size from a few MW to 100 MW, but hugging the European coastline. Blekinge would have been almost out of Swedish waters.

Although the 2,000-MW Blekinge offshore wind farm is now derailed, another gigawatt of new offshore wind is still on its way to the Baltic Sea.

Norway’s Statoil is developing the 385-MW Arkona offshore wind farm in German waters, and Vattenfall is developing the 600 MW Kriegers Flak project in Danish waters, further than the proposed Blekinge site from Russian waters.

One of these Baltic Sea projects is at a game changer.

Price Records Broken for Offshore Wind: 5 Cents

Vattenfall broke the world record for EU offshore wind bids with its 5-cent per kWh price at Kriegers Flak.

This is an amazing drop from the record low price of just 8 cents per kWh from Denmark’s DONG Energy at the 700 MW Borssele I and II offshore wind project in September of 2016.

And that had been an even bigger drop from the 21 cents per kWh typically quoted as recently as four years ago.

All three major offshore wind developers; Sweden’s Vattenfall and Norway’s Statoil and Denmark’s DONG Energy (Dansk Olie og Naturgas), are all state-owned companies that are switching from fossil energy to renewables.

Dong Energy announced at the end of 2016 that it was offloading its core oil and gas business altogether to focus on offshore wind.

Statoil leveraged its offshore oil expertise to design its floating offshore wind platform the Hywind, and was just awarded the lease for a 1-GW offshore wind site off the Atlantic coast in the U.S.

Vattenfall started in the coal business but now has more capacity in offshore wind farms and vows to make wind the cheapest energy for Europe.

Oil Firms Bring Offshore Expertise to Offshore Wind

Vattenfall’s record low bid near 5 cents per kWh at Kriegers Flak is not even an outlier. In December Shell won the tender for the Borssele III and IV offshore wind farm off the Dutch coast — at just over 5 cents per kWh.

Like these Scandinavian state-owned companies, Shell is leveraging offshore oil industry expertise into offshore wind development.

Offshore oil companies transitioning to offshore wind is good news: the experience they have in working in the harsh environment out at sea in construction and operations is helping reduce offshore wind prices.

Shell first dipped its toes offshore as one of the participants in the consortium developing the London Array in 2008, but because of the high prices in those early days of massive offshore wind farms, backed out — which Shell CEO Ben van Beurden now characterises as a “strategic error.”

The London Array is the largest offshore wind farm operating in the world, at 630 MW. Shell’s Borselle II project will be 700 MW.

Advanced Democracies Meet a Backwards Petrostate

This approach of leveraging offshore oil experience in offshore wind contrasts with that of Russia.

While Sweden, Denmark and Norway take the lead in offshore wind, led by state-owned companies that started in fossil energy, Russia’s state-owned oil company Gazprom remains committed to oil.

Russia’s economy remains dependent on resource extraction, and a third of its wealth is spread among just 110 oligarchs loyal to Putin in a nation of 145 million.

Sen. John McCain (R-AZ) has described the nation as “a gas station run by a Mafia that is masquerading as a country.”

Despite the largest landmass in the world, there is only a smattering of Russian wind and solar, (though China now proposes Russia’s first offshore wind project on its arctic coast, at 60 MW).

The contrast makes for a tense juxtaposition in the Baltic Sea, where climate-savvy democracies verge upon a petrostate autocracy clinging to its oil.

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