Sweden has built thousands of wind turbines over the last two decadeswhich is why there is so much cheaper and clean electricity that its prices are increasingly falling below zero, both throughout the day and for individual hours.
But the success of windmills may have a negative impact on the further development of the industry. Electricity in Sweden is expected to remain very cheap for many years to come, discouraging investors from supporting new renewable energy sources in the country.
Future demand is also increasingly in doubt as many energy-intensive green industrial projects in the north of the country are delayed or canceled altogether.
Energy prices in the Nordic countries are increasingly staying close to or below zero / Bloomberg
Growing obstacles
Sweden ended its main subsidy system three years ago for new renewable projects. This sets it apart from Europe, where countries from the UK to France and Germany still offer various incentives for renewable energy installations.
Apart from the lack of subsidies and falling prices, the Swedish wind industry faces various obstacles. The costs of building turbines are getting higher and higher, and high interest rates make it difficult to finance investmentsi. This is what they come up with urban and military objectionsas well as the elusive power grid connections.
In the first half of this year 12 out of 16 new wind projects in Sweden were rejected by local municipalities exercising veto power, and three of the remaining four were held up by the military, data from Svensk Vindenergi show.
Some countries that have faced opposition to onshore wind projects have turned to the sea. Surprisingly, Sweden has almost no offshore wind capacity, despite having the longest coastline of all the Baltic countries. Last month, the government canceled 13 applications for projects in the Baltic Sea, saying they would harm the country’s defense against Russia.
Installed wind capacity in Sweden / Bloomberg
The atom stands in the way of the windmills
Another worry for the wind industry is the government’s optimistic plans for new nuclear energy. The proposals include a 40-year contract for difference price equivalent to €70 per megawatt hour for power output. Even the best wind projects would have a hard time competing at that price.
Threat to climate goals
Investment delays threaten Sweden’s ambitious goal of achieving net zero emissions. The Swedes want to do this in 2045, earlier than the European Union’s mid-century goal.
The problem with the development of the industry does not only concern Sweden. According to the International Energy Agency, the global goal of tripling renewable energy capacity by the end of the decade is at risk because the deployment of wind turbines is too slow.
According to the latest data from industry group Svensk Vindenergi, no new turbines have been ordered in Sweden since the first quarter, the longest outage in two years. Currently, it takes as much as 8.5 years to bring a wind park in Sweden from submission of the application to launchcompared with 2.5 years in 2010, according to consultant Ernst & Young. This extended timeline creates significant challenges for developers and investors.
