Finland invests in wind energy

An overview

Thanks to a lucrative feed-in-tariff, Finland has seen a significant boost in the wind energy sector in the recent decade. While the current feed-in-tariff is being phased out, the Finnish Government remains committed to carbon-free, clean and renewable energy.

During its term, the Government intends to invest a total of 300 million euro in bio-economy and clean energy. The objective is to increase the share of renewable energy to 50% by 2030. Wind energy will play an essential role in implementing this target. While Finland is currently producing 4.8 TWh of wind energy, the national Energy and Environment Strategy has set a target of 9 TWh annual production for wind energy by 2025. The Finnish Wind Power Association believes that there is potential to increase this up to 30 TWh by 2030.

A new support scheme, based on technology neutral competitive bidding, was introduced in 2018 and the tendering process is expected to take place at the end of this year. At the same time, Finland has recently seen the announcement of the first projects envisaged to operate without subsidies – a trend that is likely going to continue.

Opportunities for international businesses

Currently, international investors own approximately a third of the Finnish wind capacity and foreign businesses will continue to play a major role in the Finnish wind energy sector.

Despite the boost triggered by the feed-in tariff, the total installed capacity (2044 MW at the end of 2017) is still comparatively small and there is still a large potential for new wind power. With more than 200 projects currently in the pipeline, there are opportunities for international businesses to get involved in a variety of ways:

Feasibility, construction, service, and maintenance: Collaboration opportunities exist at all stages of wind park projects for foreign companies who are experienced in the sector. This includes feasibility studies, technical planning, various consulting services as well as service and maintenance.

Turbine and component suppliers: While some developers are already committed to specific turbine manufacturers, there are many projects in the pipeline where turbines still have to be agreed and contracted.

Private investment funds and institutional investors: Given the Government’s commitment to clean energy and the recent emergence of the first merchant projects, one can expect that the Finnish wind energy sector will remain attractive for investors also in the future.

Banks and financing Institutions: While project financing has been used successfully in the international wind power sector for many years, it is still somewhat new in Finland. Until project financing has become more established, there is a significant market for foreign banks to provide project financing either alone or in collaboration with Finnish banks.

Offshore: Commercial offshore wind is still at the very beginning but there is a large potential for the future. Finland is expected to be an interesting market for experienced service providers and suppliers in the years to come.

The Finnish wind energy sector

Onshore wind

The most immediate developments in the wind energy sector are onshore. The west coast of Finland and Lapland are perceived as the most advantageous areas for wind power production, which is also highlighted by the total share of wind energy projects under construction and in planning in these regions.

Some of the projects under development are significantly larger than those currently in operation or under construction. Among the projects that have successfully completed the Environmental Impact Assessment, there are more than 20%, altogether 32 projects, of an expected capacity of 100 MW or more with the largest one reaching 650 MW.

In addition to large-scale projects, there are a great number of smaller projects in different stages of development. Opportunities exist especially for companies who are prepared to invest at an earlier stage of development and carry part of the development risk.

Offshore wind

Finland offers one of the largest capacities for offshore wind parks in the Baltic Sea Region. While shallow waters, low waves, and close distances to the coastline offer considerable logistical advantages compared to the North Sea, arctic weather conditions and icing bring about their own challenges.

To evaluate and investigate the risks involved in offshore wind power and to develop offshore wind power best practices and technology, the Finnish Government granted an investment subsidy of EUR 20 million for a demonstration project in 2014. The Tahkoluoto wind farm developed and operated by Suomen Hyötytuuli Oy was commissioned in 2017. The park is located 1.2 km offshore and comprises of 10 turbines with combined output of 40 MW. The knowledge acquired during the construction, operation and maintenance of the park will be shared with other developers.

Especially with new technologies making offshore wind more cost-efficient, offshore wind power is expected to pick up in Finland in future years. For experienced offshore suppliers and consultants, Finland should therefore be an interesting market to watch.