In the Dutch wind energy sector, established corporations as well as individual investors, are always running after the next “hot project”. Despite this hunger for investments, the construction of new onshore wind projects in the Netherlands, especially in the latest years, has faced difficulties for reasons related to the bottom-up approach of the Regional Energy Strategies and in general the high population and the limited space that is available for the construction of these projects.
However, investors and service providers can overcome these challenges by considering investment opportunities in other countries, where wind energy markets are still in their development stage. Denisa Kasa, former Investment Advisor at Energy Investment Management, has been conducting research on the entrepreneurial and investment opportunities created by the energy transition in Eastern European and Balkan countries since September 2021. She published a series of country specific articles on the Dutch news site Windenergie-nieuws.nl and chaired table talks on this topic at the 2022 edition of WindDay, the yearly event for the Dutch wind sector. Windpowernl collected these country assessments in this article.
Poland
Poland, with approximately 80% of its energy coming from coal and lignite, offers vast opportunities for foreign investments and business opportunities in on and offshore wind energy projects. The ambition of the country, inspired by the Green Deal, is to have 27% of its energy mix consist of wind energy by 2050, thereby making wind the most attractive source of renewable energy in Polish markets.
Poland has signed its first Offshore Wind Sector Deal in 2021, which reinforces Poland’s commitment to accelerate its further development of offshore projects, while in the meantime, ensuring a maximum of 60,000 jobs through the years. The capacity of these offshore wind projects will amount to 16.9 GW by 2040, with 5.9 GW of these projects anticipated to be built by 2030. An auction system will be used by the government to attribute the projects to the interested parties, starting from 2025. However, as of today, Poland does not have any offshore wind farms and therefore it is lacking in expertise when it comes to the development, building and maintenance of these wind farms.
Nonetheless, the government continuously pushes for local content to be present throughout the supply chain involved in these projects. Due to the above-mentioned lack of expertise in offshore projects, domestic suppliers can only account for 20-25% of the supply chain. This offers a rather attractive opportunity for Dutch companies experienced in: project development, engineering, construction and operation & maintenance of offshore wind projects. By entering the Polish market at this stage, Dutch companies could reap the benefits of having the early mover’s advantage. At the moment, the Polish offshore wind market is quite high on the agenda of several Dutch companies, with several initiatives, supported by the Dutch trade organisation and Dutch Enterprise Agency, being initiated to close partnerships and ways of sharing knowledge.
When onshore wind is taken into account, the situation differs, as the latest intel shows that the country already has an approximate installed onshore wind capacity of 6 GW. Similarly to the Netherlands, investments in onshore wind are highly dependent on the underlying policies, which, in Poland’s case, were restricted by the “Distance Act” which stated that wind turbines could only be located in distances bigger than (at least) ten times their height from residential building. For a long time, domestic actors have lobbied against this regulation, submitting an amendment draft to the government in 2021. This July, the government loosened this act, allowing wind turbines to be built based on a modified minimum distance from residential buildings, respecting the local zoning plan but not falling behind 500 meters. This ease in Poland’s Distance Act, will translate into an increase of onshore wind projects in the country. Best case scenarios by the Jagiellonian Institute estimate that a high degree liberalization of the Distance Act, could bring forth Onshore Wind projects for 2022-2030 amounting up to 11,1 GW. While development experience is available in Poland, there is still place for contribution by Dutch companies as investor/financier or as service provider: consulting, engineering, operation and maintenance services.
Romania
Romania was accepted in the EU in 2007 and ever since, the renewable energy field of the country has been developing at a fast speed. At the time, the country had not yet directed its efforts towards introducing new technologies in efforts of emancipating their energy production ecosystem; rather, it had put a high importance on the development of hydropower plants, which accounted for 25.8% of the consumed energy. While investments in wind power in Romania have their genesis in 2004, major developments did not occur until 2008.
At that time, new legislations presented electricity producers with the opportunity of being granted Green Certificates for producing energy from renewable resources. As a matter of fact, according to one of our interviewees, Varinia Radu,partner at CMS Romania, this first wave of investments (2008-2016) increased Romania’s wind energy-producing capacities by more than 3 GW. One can derive from this that the wind energy sector in Romania is rather similar to the Dutch one when it comes to its dependability on the support schemes and subsidies that the government establishes. According to Wind Europe, the installed wind energy capacity in Romania remained the same, at 3.03 GW, between 2016 and 2020. Regardless of these facts, now Romania is once again preparing itself for a new wave of investments in wind energy projects as companies and organizations across the country are anticipating new support schemes that include enhanced policies regarding Power Purchase Agreements (PPAs) and Contract for Difference (CFDs).
A representative of the Romanian Wind Energy Association (RWEA), Kees Stiggelbout, told us that the sentiments for future investments in the wind energy sector in Romania in the upcoming years are rather positive. He mentioned that there are interesting small and middle size onshore projects planned to be developed and built in Romania in the near future. Estimations place the cumulative size of some onshore wind developments to 1.5 GW, plans which are in line with the country’s aspirations to increase the energy mix share of renewable energy to 35% by 2030 (currently 12.4% of Romania’s energy comes from wind). Interestingly enough, the World Bank has estimated that in addition to the attractiveness of onshore wind projects, Romania has an offshore potential of roughly 76 GW. However, thus far there have been no investments in incorporating wind turbines in the Romanian territory of the Black Sea.
One of the first investors in this new segment, is Hidroelectrica, a major Romanian power producer which is now diversifying its investments to not only include hydropower, but also wind energy projects. The company has pledged to build an offshore wind farm with a capacity of 300-500 MW in the Black Sea by 2026. Nonetheless, due to the ongoing conflict between Russia and Ukraine, developments in the Romanian territory of the Black Sea might be put in hold or postponed.
The new investments that will be made to comply with the Green Deal, will not be exclusive to wind farm developments, but rather, will extend to investments in the grid and conventional capacities. In addition, as the cost of labor in Western Europe is surging, it can be beneficial for Dutch manufacturers of various components for wind energy projects to relocate their manufacturing centres to Eastern European countries.
Dutch wind energy companies ought to be alert for support schemes or amendments of law that the Romanian government might introduce in the future, as these represent an opportunity for sales of such equipment to the country. Netherlands-based companies working on consultancy projects, in the upcoming years can hop on the opportunity that the introduction of offshore wind turbines in Romania for their line of business. In addition, solutions for energy storage would also be welcome in Romania as the southern region of the country – where most wind farms are located – is currently experiencing an over saturation of the grid as nuclear reactors, coal-fired power plants and also wind and solar farm are concentrated in this part of the country.
Baltics
Governmental policies, permitting procedures, environmental regulations, supply chains and availability of work-force in the wind energy sector is known to be highly volatile when moving from one country to the next.
However, as new deals are endorsed by the European Union, the development of new projects is no longer a “one-man job” that can be performed by solely relying in local expertise. For instance, the ‘Baltic Sea Offshore Wind Declaration’ got Denmark, Germany, Estonia, Latvia, Lithuania, Poland, Finland, Sweden to agree on increasing their combined efforts in developing offshore wind farms, as this maritime region has an untapped potential of 93 GW. This declaration requests its participants to “cooperate on identifying potential joint and hybrid projects across the Baltic Sea and fostering their development among the countries involved”. Following this official proclamation, a first collaboration in the offshore wind sector was announced by Estonia and Latvia, who have agreed on the joint development of a 1 GW offshore wind farm. Both countries have attributed space to this project in their updated maritime spatial plans and intend to hold a joint auction in 2026 while commissioning the wind farm by 2030. Between the two countries, Estonia is more familiar with the wind sector as it currently operates onshore wind farms, the capacity of which amounts to 312 MW. Its government has expressed that wind energy will be one of the main bearers of renewable energy in the country. Additional plans are currently being laid down by the Estonian government.
The government has postulated that in its new maritime spatial plan, 1700 square kilometers will be allocated to offshore wind farms (the capacity of which can amount to 7 GW). On the other hand, the Latvian government has been more reluctant to increase its wind capacities. Apart from the shared offshore wind farm with Estonia, it has allocated no budget or EU funds to other on/offshore projects that would be beneficial for the country.
Finally, Lithuania is similar to its neighbours as it pertains to ambitions in creating new offshore wind farms. Its government has developed the “National Energy and Climate Action Plan of the Republic of Lithuania for 2021-2030“ which predicts the building of 700 MW installed offshore wind capacity.. In addition, estimations for onshore wind development in Lithuania by Wind Europe predict a potential increase of capacity of approximately 1 GW.
Taking into account the different levels of expertise available in on/offshore wind developments in Estonia, Latvia and Lithuania, there are a lot of opportunities for Dutch companies to get involved in the above-mentioned energy transition plans. For instance, Dutch consultancies can contribute by developing impact assessments, technological project designs, aiding in documents submitted for permitting, and most importantly, conduct R&D.
Other attractive opportunities lie in its developed logistic capabilities, which have been inherited by the oil and gas companies. As new offshore projects are developed in the Baltics, European supply chains ought to be engaged. Dutch logistics and installation companies can take the lead here due not only to their experience in the Dutch markets, but also because of their already-established links with the Baltic Region.
Bulgaria
Old energy systems in Eastern Europe are being abandoned as the European energy transition goals foster new developments in the sector, and Bulgaria is no stranger to these developments. Having joined the EU in 2007, Bulgaria opted to increase the share of renewable energy in its energy mix to more than 11% by 2010. Following this agreement, and establishing the Renewable and Alternative Energy Sources and Biofuels Act, the country started operating its first onshore wind farms in 2008. Since then, the capacity of wind energy in Bulgaria has seen a steady increase throughout the years, amounting to approximately 700MW in 2021. Furthermore, the country’s plans to deploy wind energy have not stopped at that. The Bulgarian government has executed the Bulgarian Energy Strategy for 2020-2030, which prioritizes the acceleration of efforts to increase renewable energy deployment even further for the upcoming years. The minister of energy has made public plans that stipulate the doubling of wind energy capacity by 2030 in efforts to meet the goals established by the Green Deal.
When offshore wind projects are concerned, enthusiasts will have to wait for developments to kick off. Bulgaria possesses a share of the Black Sea but due to uncertainties resulting from the ongoing conflict between Russia and Ukraine, the development time for projects in this area has increased. Regardless, the potential for developments in Bulgaria’s maritime territory has been estimated at 116 GW, thereby inspiring a desire for the introduction of this segment of the sector in the country.
In a piece by CSD (Center for the Study of Democracy) named “Wind Power Generation, Assessment of the Black Sea Offshore Potential”, researchers have further elaborated on the potential of offshore wind in Bulgaria. They estimate that of the 116 GW of potential, 26 GW can be realized with mature bottom-fix technology whilst also depicting the Shabla/Romanian maritime border, Varna, Obzor and the Turkish maritime border as the most attractive areas to place floating offshore projects.
Similarly to the input that the Dutch can give with the previously discussed economies (Poland, Romania, Estonia, Lithuania, and Latvia), in Bulgaria there is still place for contribution by Dutch companies as investor/financier or as service provider: consulting, engineering, operation and maintenance services., As well as with offering assistance in the supply chains that will be formed, especially when the offshore wind sector is inaugurated. •
This article appeared in the September 2022 edition of Windpowernl magazine
