Warm winds across the Baltic

If you’ve ever heard the phrase “it’s Baltic in here” you might be forgiven for thinking it’s bad news, but for countries bordering the Baltic sea the winds of winter are a much more positive force this year. Last week Denmark, Germany, Estonia, Latvia, Lithuania, Poland, Finland and Sweden signed the Baltic Sea Offshore Wind Declaration with the aim of working towards increased offshore wind electricity supplies and better transmission infrastructure across the Baltic Sea - whilst considering sustainable, competitive and secure electricity for consumers.

The signatories to the Declaration, some of which are currently heavily reliant on coal-fired power stations, are cognisant both of their commitments under the Paris Agreement and the Renewable Energy Directive (Poland, for example, is targeting 15% of renewable energy by the end of this year under the RED but there are concerns that it may struggle to meet its Paris commitments) as well as the certainty that a joined-up approach may bring for potential investors. The Declaration states that the parties intend to intensify their cooperation in offshore wind development within the BEMIP (Baltic Energy Market Interconnection Plan) High-Level Group, a European Commission working group established to help achieve an open an integrated regional electricity and gas market between EU countries in the Baltic Sea regions.

The BEMIP High-Level Group’s members are the same as the signatories to the Declaration (together with Norway as an observer) and the Group has already successfully implemented a number of domestic infrastructure projects designed to help the Group achieve an open and integrated regional electricity and gas market between the countries in the Baltic Sea area. Investors will no doubt be eagerly awaiting to see whether the Group can kick-start further development in the region, some of which has been in the works for a while; Poland’s draft legislation with respect to their intended regime (the “Offshore Wind Act”) is currently awaiting adoption in parliament. You can read our Warsaw team’s article on the points to note in the draft legislation here, but a key point to note is that the revised draft brings forward the timeline for issuing their first round of CfD contracts to 2021 instead of 2022, demonstrating that their intentions are real. And with an estimated 93 GW of potential offshore wind power in the Baltic alone, if the Group manages to crystallise some of their intentions, there could be a seismic shift in the region’s green electricity market.

Wind-ter is coming.