This article is part of our special report Funding a just energy transition in Europe.
Europe’s power and pipeline politics are playing out more and more in the Baltic Sea, as the energy potential of the sea basin shifts more into the limelight.
Nine countries border the Baltic and each of them has big energy plans that are in various stages of development.
The controversial Nord Stream 2 pipeline project, aimed at bringing Russian gas directly to Germany, has dominated the region’s energy agenda since its inception. But the Baltic has more to offer than pipelines.
The area has huge potential to provide clean wind power to those countries, as the sea is relatively shallow, wind speeds are optimal and turbines can be built close to shore, aiding construction and maintenance efforts.
Compared to the larger and more turbulent North Sea, weather conditions in the Baltic are also more stable. According to industry association WindEurope, anything between 9GW and 14GW could be installed by 2030, which would push the Baltic up into the same league as the North Sea.
Not every country surrounding the sea is convinced though. While Denmark, Finland, Germany, Poland and Sweden are all investing in offshore wind, the three Baltic States are more cautious.
Germany opened the largest wind park in the sea in April, when Chancellor Angela Merkel cut the ribbon on the 60 turbines that are already producing 385MW. Latvia and Lithuania, by contrast, have no installed capacity and political will is in short supply.
Finland opened its first wind farm in September 2017 ahead of schedule, while Estonia should have 1,700MW up and running next year.
Tapping into the Baltic’s wind potential will hinge on regional cooperation, according to WindEurope CEO Giles Dickson and the European Commission hopes its Baltic Energy Market Interconnection Plan will help countries band together.
Poland also wants to exploit its part of the Baltic and first started issuing offshore permits in 2012, although no projects have yet been finished.
According to Monika Morawiecka, the head of PGE Baltica, a division of Poland’s largest power company, the delay was actually part of a “sound strategy”.
“This was a reasonable decision not to rush with these investments and wait for the technological progress to lower the cost of offshore wind development to the level acceptable by Polish ratepayers,” Morawiecka told EURACTIV.
She added that PGE holds three offshore wind permits and that turbines at two locations are due to be connected to the grid in 2025 or 2026. Environmental impact assessments are among the major milestones in the development of the projects.
Morawiecka acknowledged that “this type of investment does interfere with the marine environment both at the construction as well as operational stage. We do not contest that, and we do want to present the best possible solution to minimise the impact.”
In May, ministry of energy official Maciej Kapalski said the government may “streamline the process” for offshore wind.
Meeting the 2020 target
Hooking up more clean energy to the grid is crucial to Poland for a number of reasons, chief among which is hitting its 2020 renewable target of 15%.
Current data show that Poland is at risk of missing the benchmark, although Kapalski insisted that new auctions for onshore wind and solar power will help contribute to the 2020 goal.
In order to avoid heavy fines, the government will have to broker statistical transfers from other member states that have already exceeded their targets, although that does come at a price too.
Luxembourg was the first to take advantage of this mechanism in October 2017, when it paid an estimated €10 million to Lithuania, which has already hit its 2020 target. Estonia is hoping to do the same to help fund more investments in wind energy.
Poland’s wind farm aspirations will almost certainly not be realised before the 2020 targets expire but building renewable capacity will still help the Eastern European country tap into its e-mobility potential.
Electric vehicles have been identified as an area of growth in Poland, with plans afoot to even build a home-grown car. But the high carbon-intensity of electricity, due to reliance on coal power, is holding back the e-revolution for now.
The electricity grids of the Baltic States are still synchronised with those of Russia and Belarus, a remnant of the shared history of the eastern countries.
But the EU has been working hard to unhook Estonia, Latvia and Lithuania from the east and fully integrate them with the west. It was identified early on as a crucial part of the Energy Union.
After linking the countries to Finland, Poland and Sweden via EU-funded electricity lines, the European Commission is now pressing on with the next stage of the process.
Last week (20 June), President Jean-Claude Juncker, along with the leaders of the Baltic States and Poland, signed up to a roadmap that will aim to complete the process and end the three countries’ status as an ‘energy island’.
“Today we can proudly acknowledge that we have accomplished all key milestones, and we are now setting the tone of the work for the future up to the end of 2025,” Juncker said in a statement.
In March, the green light was given for EU funding worth over €300 million that should cover 75% of the investment costs needed to complete the first phase of the synchronisation process. Work is supposed to be completed in 2025.
The Baltic is not just the proving ground for wind turbines and electricity cables though, as gas pipelines also feature prominently.
A Russo-German project meant to increase gas capacity, known as Nord Stream 2, is controversial for a number of factors, including environmental concerns and fears of increasing Russian influence.
The project was recently delayed by Denmark, which rejected a permit for the pipeline’s proposed northern route, asking the Russian-owned company to look into a southern route instead. Denmark is currently the only country that has not yet issued a permit for the pipeline’s construction in its territorial waters.
But there is also another project in the works: the Baltic Pipe, which will link Poland to Denmark and Norway. Scheduled to be ready in 2022, it will allow Poland to tap into 10 billion cubic metres of Norwegian gas.
In April, Polish Prime Minister Mateusz Morawiecki signed a grant agreement worth €215 million thanks to the Pipe’s inclusion on the EU’s Projects of Common Interest (PCI) list.
“The gas connection between Poland and Denmark has the strategic dimension and it is needed to diversify supplies. The investment is also beneficial for the EU, which seeks to increase trade and competitiveness of the European gas market,” said Tomasz Stępień, head of one of the companies that will build the pipe.
The Baltic Pipe will be a two-way affair and will allow Poland to send gas to Denmark and, although unlikely, to Norway. That means Warsaw will be able to sell imported gas from its LNG terminal to other countries if it has a surplus or prices are higher elsewhere.
[Edited by Frédéric Simon]