A government-commissioned inquiry into offshore wind power in Sweden has proposed a new system for licensing projects, aiming to streamline the process and create clearer conditions for investors. The core of the proposal is to empower the government to designate suitable maritime areas for wind farms. Interested companies can then apply to build within these pre-approved zones, and permits will be awarded through an auction process. This model, borrowed from countries with successful offshore wind programs like Denmark, the UK, and Germany, is expected to reduce uncertainty and facilitate faster project development. However, the inquiry also delivered a politically charged message: even with a streamlined permitting system, new offshore wind projects are unlikely to materialize without government intervention and financial support.
The inquiry’s research, including a report commissioned from the engineering consultancy Sweco, reveals that nearly all successful offshore wind projects in other countries have benefited from some form of government backing. This stems from the significant upfront investment required and the risks associated with such large-scale infrastructure projects. In the absence of support mechanisms, the economic viability of offshore wind in Sweden is questionable. Magnus Hermansson, the government’s investigator who led the inquiry, explicitly stated that without government intervention, few, if any, of the current applications for offshore wind projects are likely to become reality. This assessment is underscored by the fact that no new offshore wind farms have been built in Sweden for several years.
While the proposed auction system addresses the permitting process, the crucial question of financial support remains unanswered. The inquiry highlighted various support models employed in other countries. These include guaranteed electricity prices (as in Denmark and the UK) and government funding for grid connection infrastructure (as in Germany and the Netherlands). Often, these mechanisms are combined with auction systems to ensure competitive bidding. Sweden previously had a policy of covering grid connection costs for offshore wind projects, as part of a 2016 energy agreement. However, this support was withdrawn after the 2022 election by the current governing coalition, a move cited by Vattenfall as a key factor in pausing its Kriegers Flak project.
The government’s response to the inquiry’s findings has been noncommittal regarding financial support. Climate and Environment Minister Romina Pourmokhtari, while acknowledging the current system’s inadequacy, deferred the issue of financial support to other ministers, particularly those responsible for nuclear power development, which is also slated for government support. This leaves the future of offshore wind power in Sweden hanging in the balance. The inquiry’s clear conclusion that government support is essential for new projects contrasts with the government’s hesitant stance, creating uncertainty for potential investors. The implication is that while the proposed licensing reforms are a welcome step, they are insufficient to unlock the significant potential of offshore wind in contributing to Sweden’s renewable energy targets.
The details of the proposed licensing reforms include a shift in responsibility for identifying suitable areas for offshore wind development from individual project developers to the government. This centralized approach aims to streamline the process by conducting upfront assessments of potential environmental, defense, and maritime traffic impacts. By designating suitable zones in advance, the government hopes to reduce conflicts and delays in the permitting process. Once areas are designated, interested companies can compete for permits through an auction system, promoting cost-effectiveness and transparency. Crucially, the new system also proposes to tie permits to a binding obligation to actually construct the wind farm, preventing speculative applications that tie up resources without leading to actual development.
The transition to a government-led designation process also alters the role of municipalities in the approval process. Currently, municipalities have veto power over offshore wind projects within territorial waters, which extend 12 nautical miles from the coast. Under the proposed system, this veto power would be removed, centralizing decision-making authority with the national government. This shift reflects a growing recognition of the national strategic importance of offshore wind in meeting climate and energy security goals, potentially overriding local concerns. While this change may streamline the permitting process, it could also lead to increased tensions between national and local interests, underscoring the need for careful consideration of local impacts and community engagement. The overarching challenge, however, remains the lack of clarity on financial support, which continues to pose a significant barrier to the expansion of offshore wind power in Sweden.
