At the end of June this year, Orlen announced that construction of the Baltic Power offshore wind farm would start from the Port of Rønne on Bornholm. The information raised a number of doubts about the implementation plan for the project, including the function that the installation terminal in Świnoujście, currently under construction, would perform for the joint project between Orlen and Northland Power. Based on information from the investors, we clarify the details and implications of this information.
Contrary to many comments, both projects – Baltic Power and the Offshore Wind Terminal Świnoujście – are on schedule. Baltic Power is currently the most advanced offshore wind project in Poland and the only one under construction. Construction of the onshore substation started in May 2023, construction of the service base in Łeba started in January and construction of the onshore portion of the cable connection is currently underway. All key components of the farm including foundations, offshore substations, turbines and cables are in production. As planned, construction of the offshore part of the project will begin in late 2024/early 2025. Construction of the terminal is also on schedule.
From the information we have received from Baltic Power, the initial reservation agreement with the Port of Rønne was already signed in October 2021. This is due to the fact that the business practice of offshore wind projects requires them to be planned well in advance. This is a consequence of the very limited availability of installation terminals in Europe as well as fleets of installation vessels, which are currently booked several years ahead. Another requirement is the mitigation of project risks in the processes involved in obtaining external financing, which requires investors to have reservation agreements with ports. The project finance formula, under which Baltic Power is being developed, required the elimination of all potential risks at the stage of signing financing agreements, including delays possible with such a large investment.
Information from the investors also shows that the construction of the Offshore Wind Terminal in Świnoujście is proceeding according to schedule. The end of the works is expected at the turn of 2024 and 2025, followed by the start of operational activities as early as next year. The restrictive schedule of the Baltic Power project meant that the initial plans created in 2022 to carry out the first installation operations for the wind farm had to be revised. They did not take into account all business processes and risks, one of which was that the schedule called for the project to be handed over immediately prior to the start of construction of the offshore part of the Baltic Power wind farm itself, i.e. in late 2024 or early 2025. Thus, its realisation from the Świnoujście terminal would only be possible in the situation of its earlier start and completion by about half a year. Therefore, back in April 2023, the Board of Directors of Baltic Power recommended to its shareholders ORLEN and Northland Power, and after obtaining their consent, signed a proper agreement with the Port of Rønne for the use of the terminal for the implementation of their investment. This provided full security and a guarantee of cooperation with an already operating port.
As we found out at ORLEN Group, despite this decision, the Świnoujście investment remains a strategic solution for its offshore wind farm projects, especially as ORLEN Group has five site locations for wind farms under Phase II of the Polish offshore wind development with a total capacity of over 5 GW, which should be implemented after 2030. In the face of insufficient availability of installation terminals, with an increasing number of offshore wind farm projects in Europe, having its own modern terminal is expected to allow ORLEN to significantly reduce the risk of further investments and allow more flexible planning of their construction.
In addition, the Offshore Wind Terminal in Świnoujście is to be leased for other potential projects. It will be able to serve as an installation or marshalling port not only for projects in the Baltic Sea, but also for investments in Danish or German waters in the North Sea. The terminal is expected to offer both pre-assembly of wind turbines and the unloading, loading and storage of components used in the construction of wind farms. ORLEN Neptun is also considering using one of the berths for the service port.
Currently, the terminal construction has passed its halfway point. Work is being carried out on land and at the new quays. At the same time, the fairway is being dredged in the section from the Mielinska Rotary to the new terminal. Intensive work is also being carried out in the hydro section to rebuild the two existing quays. These will be 246 and 249 metres long. They will be ready to receive very heavy, oversized cargo. The terminal will receive the largest jack-up vessels available on the market of more than 200 metres, which are designed for the installation of 14 MW and larger turbines.
As representatives of Baltic Power have repeatedly emphasised, among Polish projects it will have one of the highest local content ratios over the entire approximate 25-30 year life cycle of the farm, i.e. at the stage of preparation, construction and operation of the farm. The project aims to achieve a 20 to 30% share of local content, which is in line with the declarations contained in the so-called Offshore Wind Sector Deal Agreement.
