LIAA - Elwind - Energy Focus November 2023

LIAA - ELWIND

ELWIND Cooperation to Power Baltic Renewables

LIAA - ELWIND

ELWIND Cooperation to Power

Baltic Renewables PRODUCTION: Tommy Atkinson

A joint venture between Latvia and Estonia will see a major offshore wind project built in the Baltic Sea from 2030. Generating clean, secure, sustainable power, the ELWIND project will provide long-term opportunity for the region with new value chains and investment prospects created over the next 25 years.

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INDUSTRY FOCUS: WIND

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In Latvia and surrounding Baltic states, the intentions of driving an energy transition are solid. Hydro, biofuels and waste, wind and solar renewables, and natural gas are up and coming in the region’s energy mix. But coal and oil continue to be burned in large volumes to meet demand with electricity supply. Latvia’s energy mix sustains mostly from hydropower and natural gas, the aim is to decrease the dependence on natural gas and increase the amount of green energy.

Latvia knows the potential for renewables. It has seen the success in the UK, the Netherlands, and other European nations. The economic impact alongside the energy generation benefits are well-documented. But, more recently, the need for energy security has become increasingly apparent, and in 2020 the country

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began exploring a tangible rollout for offshore wind in the Baltic Sea, signing a MOU to research possibilities.

ELWIND is the result, a joint venture between the states of Latvia and Estonia. The project aims to produce green energy locally, at scale while improving interstate connectivity. The vision of at least 1GW of clean, offshore wind energy production, across the Baltic Sea is ambitious and require collaboration.

BIG IMPACT To help build the investment case for this major project, the Investment and Development Agency of Latvia (LIAA) has been engaged. When operational, the ELWIND project could achieve delivery of one fifth of total electricity consumption in the two countries, saving around three million tonnes of CO2 equivalent

annually, and so raising funds quickly and sustainably is essential.

“Offshore wind parks provide an opportunity to harness the power of the sea to produce safe, environmentally friendly, and affordable energy for the prosperity of the society,” LIAA states. “The development of offshore wind parks will create new business and learning opportunities as well as new jobs for the coastal regions.”

Laura Štrovalde, Deputy Director in charge of investment and energy at the Investment and Development Agency of Latvia, tells Energy Focus that the eventual rollout of the project will bring benefits far beyond just clean energy generation.

“This project is developing infrastructure too,” she says, “and that is very important for the Latvian economy. Our main ports will be involved in the value chain and they

LIAA - ELWIND

have their own strategies around how they grow. The economic elements that this will bring will be a big boost for the Latvian economy.”

A NEED FOR NEW VENTURES The Latvian economy has grown at 3.1% on average over the past decade (2012 – 2022) and while the region holds strong potential for economic development, the recent stats suggest a slowdown could be on the cards.

Rating agency Fitch expects Latvia to grow at 1.4% in 2023, Estonia to contract by 1.5%, and Lithuania to hit just 1.1%. strong fundamentals make the region appealing, but larger notable projects are required to provide international investors with a real flavour of the ambition.

“There is a need for new ventures, for example with wind generator parts.

Latvia has the possibility to create a home for some manufacturers, especially at the ports. That will be a big bonus as the funding would come from foreign investors. The auctions will be open , and we hope to attract international developers that will be able to construct ELWIND wind park and deliver electricity.”

She explains that there are already two companies operating locally, undertaking training and development of employees destined for the cold Baltic Sea. To date, at least 2700 people have been upskilled and the next step is to broaden horizons beyond wind.

“We have the workforce, and we can prepare them here,” states Štrovalde.

“Hydrogen projects are taking off and the Freeport of Ventspils has

// LATVIA HAS THE POSSIBILITY TO CREATE A HOME FOR SOME MANUFACTURERS, ESPECIALLY AT THE PORTS //

specific plans to attract investment.

They already have ammonia storage facilities and are looking to begin green ammonia production.”

“Regarding the electricity market,” Štrovalde adds, “As we look to the future, there are big plans for electrification in Latvia and that means there will be extra need for electricity which will partly be covered by ELWIND.” Štrovalde explains: “When it comes to the electricity market, if ELWIND’s total capacity exceeds 1000MW, it will cover not only local consumption, but partly could be exported as well. Looking ahead, there are significant electrification plans in Latvia and Baltics, which will result in an increased demand for electricity of domestic market still ensure the energy export possibilities.”

She highlights the fact that Germany (50Hertz) has already signed memorandum regarding a

connector project that will see various wind parks in the region brought together and linked into Germany.

“If we look at hydrogen strategies and projects, ELWIND plays a key role there when creating available infrastructure for hydrogen. We don’t yet know how all of these things will play out but there are many connections that are being made. Everything is still in the planning stage at this point.”

The spin off benefits from a project like ELWIND are major. Money moving through multiple industry sectors and several regions mean that new skills are developed and new value chains emerge to serve a long-term, sustainable market that will drive capital expenditure as well as energy security. In Estonia, the benefits are being promoted by the Environmental Investment Centre (KIK) where Project Manager Tõnn Tuvikene is excited about the possibility for the wider Baltic

Laura Štrovalde, Deputy Director in Charge of Investment and Energy at LIAA

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INDUSTRY FOCUS: WIND

region, highlighting the project as one with potential to be a role model for collaboration going forward.

“The goal is to introduce another concept to the market, helping to derisk the area by organising nessecary studies. Therefore, we raise the value of the sea area, help to achieve 100% renewable energy target and energy independence in a cost-effective way for society.

“Offshore wind is much needed to achieve Estonia’s renewable energy targets and contribute towards stabilisation of the energy prices in the region. To achieve this two aspects must be hilighted. We need more domestic renewable production and we need more and better transnational electricity connections. ELWIND project is aiming to solve both of these aspects.

“This whole industry would give a boost to Estonian economy,” he adds. “Potential excess energy

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energy would attract enegry intensive industry, and Estonia would have good potential of moving from energy net importer to net exporter.”

OBVIOUS INVESTMENT OPPORTUNITIES The energy within the investment agencies is high. Typically, in the Baltic region, these government-backed organisations have been utilised to promote private investment inflows through industries including tourism and technology startups. Recognised as one of the most startup-friendly countries in the world, Latvia provides a number of routes to market, including accelerators and incubator hubs.

Estonia is also highly appealing to start ups because of its tax environment and e-residency program.

“As an agency, we have many different projects for investment running and our main target is to attract

it – especially foreign investment.

Regarding energy, ELWIND is the main energy project for us and the country right now,” says Štrovalde.

“In energy, this is the first project that the agency has been involved in. We work under the Ministry of Economics and they have delegated us the task of attracting investment around this energy project so that is something new for LIAA,” she adds.

Ultimately, the goal is to complete the Environmental Impact Assessment (EIA) by 2026, before being auctioned out, with commissioning to occur in 2030. At the same time, legislation and infrastructure can be developed while skills and new business opportunities are nurtured locally. When operational, ELWIND will support Latvia and Estonia with clean energy and also export opportunities. From there, hydrogen strategies can be developed to build further sustainability in the region.

LIAA - ELWIND

One of most important aspects for developers of offshore wind parks will be ensuring a grid connection for the ELWIND project. In such a way developers participating in the tender of ELWIND wind farm area will receive

// OVERALL, WIND ENERGY HAS HUGE UNTAPPED POTENTIAL IN THE CONTEXT OF THE GREEN TRANSITION, MORE REASONABLE ENERGY PRICES AND OUR ENERGY SECURITY //

guarantees about the grid connection and reserved capacity. All studies of environmental impact assessment and seabed investigation will be publicly available ensuring open data principle.

“We are now running the EIA and it will take two years for us to get these studies complete. After this process, we will prepare for the auction but after that we will know many of the strategies and how they will play out,” declares Štrovalde.

“In the value chain, we have started communication with many companies and they are looking at the offshore wind industry. Many want to become greener themselves to become more attractive to foreign investors – this is always key motivation.”

Of course, the entire maritime space will be boosted by the beginning of ELWIND’s construction

phase, and many are eager to continue with development at pace so that material benefits can begin to be realised across all areas.

“Overall, wind energy has huge untapped potential in the context of the green transition, more reasonable energy prices and our energy security.

It would be wise to take advantage of it. The momentum is now!” is the clear message from Laura Štrovalde, Deputy Director in charge of investment and energy at LIAA to investors seeking safe returns for the future. Baltic renewable energy is an untapped market, and first movers stand to benefit from a raft of opportunities.

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November 2023

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